You know what I use to convince people to buy music? I get them to break out their phone or MP3 player and pick a song I have gotten legit, they play it and listen, then they listen to mine. Almost immediately I hear "wow, sounds clearer". I dunno where most "pirates" download their music but its most often terrible quality with lots of noise and static in the background, and its extremely obvious when listening to headphones. I can't listen to music people give me in my headphones most of the time because they don't pay for it.
Sure, some of the pirated stuff is decent, most of it is low quality rips and the like. The music industry could do well in advertising that fact alone. I love clear crisp sounding audio. And I'm willing to pay for it for sure. So stuff like Jimi, The Beatles, Doors, Yarbirds, etc has to sound the best to me, especially since the recording tech back then wasn't as great, so the sound quality to me is ever more important.
99.9999999999% of all piracy is not a lost sale as there would not have been a sale in the first place. All it does is get the artist known and listened to, thus making them more popular, having a better chance at publicity and therefore selling more CD's and merch. If Piracy could be stopped tomorrow, the MPAA and RIAA would freak out... They want to make as much money as possible, but they see the potential there is as well, they just want to make sure pirating is not easy for the majority of users IMO. They may be greedy, but they are not stupid.