Maybe iTunes "addressed the issue," but not in a satisfactory way. iTunes is not remotely convenient for me. I can't watch an iTunes movie on my TV without either a) Buying a useless gadget from Apple, or b) Removing the DRM. Also, things are generally available for piracy way earlier (we're talking months in some cases) than they are on iTunes. That is a huge, massive inconvenience.
As for prices, yes, iTunes is also much too expensive for many things — when I can buy a physical copy and have it shipped crosscountry to my house for a fraction of the cost of iTunes' lousy crippleware, something is wrong — but that seems beside the point. Yes, a lot of piracy happens because it's free. Most of that piracy doesn't really seem to be replacing sales and so isn't really relevant from an economic standpoint. Those people just want something for free. It seems like the point where piracy really becomes a problem is when it's the superior option even for people who could easily afford to buy your wares.
Also people like the convenience of choosing and sampling from a large catalog of songs/media while paying only for things they really like. That is why flat rate streaming services are popular. $0.99 in content industry's eyes might be very low and already accessible price. But its too high for consumer who probably listens to it once a month while sampling a lot of songs - one more reason why flat rate streaming is the way to go....
As for prices, yes, iTunes is also much too expensive for many things — when I can buy a physical copy and have it shipped crosscountry to my house for a fraction of the cost of iTunes' lousy crippleware, something is wrong — but that seems beside the point. Yes, a lot of piracy happens because it's free. Most of that piracy doesn't really seem to be replacing sales and so isn't really relevant from an economic standpoint. Those people just want something for free. It seems like the point where piracy really becomes a problem is when it's the superior option even for people who could easily afford to buy your wares.