The consumers can and do. We collectively decided that a .99 cents for a song or $15 for a physical album isn't worth it. Equilibrium will eventually happen, the smart artists are already making money in the new music industry.
Yes and no. The pirating situation isn't that simple. I used to pirate a lot of games, but then Steam came along and I've pretty much not pirated anything since. Pirating was, for me, not just about being free in cost, but also a way to get the games via the internet without having to go into a shop and see if they had it, then possibly wait until they ordered it in. There was also the pain of license keys when they didn't work - it only takes a couple to start making you gun-shy.
Admittedly it's not music and I'm not familiar with the pirating in that arena, but it seems to me that pirating is a more complex beast than most people paint it.
In the words of a good friend of mine:
"You wouldn't download a car? Man if I could download a car off the internet for free, you bet your sweet ass I would!"
The recent HN post about xx comes to mind. http://news.ycombinator.com/item?id=4504851