I would be willing to be 100 downloads of my app that price isn't really the issue on music piracy. If you charged $0.10 per song, it wouldn't result in a massive sales increase. The barrier to paid downloads is that people have to use a credit/debit card, usually register somehow and other things that form a barrier to entry. I think $0.99 isn't much to pay for a song or an app, but there are people (a fairly sizable number) who just want to download without going through the presumed hassle of the payment process. I bet if you were giving away CDs outside of the mall and charged $0.25, people wouldn't think twice about tossing a quarter into the can. Take that same song and put it online and the same people happy to toss you the quarter would rather steal the song than process a payment of 25 cents.
The problem isn't price -- it's the barrier of payment.
Now that is probably the most sensible thing that's been written in this entire thread.
Figure out a way to make the transaction as seamless & low-risk as "tossing a quarter into the can" and you've gone a long way to solving the piracy problem.
How you do this, I have no idea. I would look at iTunes & Steam as examples of services that have been successful at smoothing the friction & establishing trust. People spook easily when asked for CC info…
The problem isn't price -- it's the barrier of payment.