I still don't see how they are trying to do this when about all of the major labels let you buy their music via iTunes, Amazon, Rhapsody, Spotify, etc...
One of the most important concepts in economics is scarcity[1]. It is what drives the whole supply/demand cycle. When somebody says the labels are trying to create artificial scarcity, the logic is this:
A. High demand, low supply raises prices. If I reduce the supply, I can increase the price (up to a certain limit).
B. Music has high demand. Music labels have controlled supply for years, giving us the "normal" pricing for CDs.
C. With the Internet, the incremental supply costs go to zero. Supply is also infinite (anybody can create a copy), so the price drops to zero.
D. The only way to keep the price above zero is to create a scarcity that doesn't actually exist. The labels have done this by fighting putting anything online, suing people who copy files, getting the government to criminally try a class of people who copy and using DRM to prevent copying. The whole goal of all of this is to introduce a scarcity into the product so people will pay.
I think you're misunderstanding everyone here. "Scarcity" is a technical term in the academic field of economics, and was being used as such. You appeared to think tikhonj meant that the labels were limiting the supply of music to a fixed number of copies, making copies of the music "scarce" in the sense you're used to.
tikhonj then attempted to clarify what she or he meant, but rather than explaining that your interpretation, while reasonable, was different from what was meant, just went ahead and explained the economics definition of "scarcity". Based on this later reply, you appear to have read that as tikhonj disagreeing with you on what scarcity is, rather than clarifying what she or he meant. Your reply at the time "I still don't see how", however, doesn't make this clear at all.
Now, SoftwareMaven and tikhonj both interpret your reply as you not seeing how the music industry has, in fact, created "scarcity", in the technical sense, and proceed to reason through exactly how the actions of the music labels resulted in a phenomenon that satisfies the technical definition of "scarcity".
It sounds like what is trying to be said is that the labels are somehow in the wrong trying to force people to pay for every copy of an mp3 album, but that since it is so easy to copy digital media that they should be allowing this to happen for free without consequence.
If Person A buys a song, rips it, and puts it on bittorrent, when Person B downloads one or more copies he has not stolen anything from anyone nor broken any contract with anyone.
He has stolen the time and effort of the person who created the song.
This is not hard to understand. You may choose not to understand it, but you're playing a game with yourself that the rest of us are not obligated to accept.
The time and effort were already expended. You can't steal those anymore than you can "steal" a digital file you made a copy of.
If I build an app and sell it for a $1 and someone purchases it for that amount and then makes a copy for his friend I have simply missed out on revenue, but my time wasn't stolen nor was my app.
For the amount the artists actually get for the price of the music you pay... The intermediates get a much larger share of the cake. The artists get the crums.
Scarcity is a limit in resources. The music labels are using the government to limit their songs by stopping you from creating copies.
Without these restrictions you would be able to make an effective unbounded number of copies because each copy has a resource cost of basically zero--there would be no scarcity. With these restrictions, you can only make as many copies as the labels allow you to, which means the number of copies is bounded.
I should note that this is orthogonal to whether you think they are justified in seeking to be paid for their songs: in either case, they ensure being paid by making the songs more scarce using copyright.
