I think you're vastly underestimating the effect of a quality user experience.

If they do it right, people will pay for it. People will want it to an irrational degree.

But they probably won't do it right.

That wasn't my point exactly. What I meant by fair price was a price that would be somehow accommodated to a market. If someone makes $20 a day, you can't expect him to pay $40 for a game (or $5 for a 30min TV show). And sellers won't risk setting a lower price for certain market ...even if it meant bigger income in the end. It's a risky business since Internet is a global market by default.. whatever content providers try to do about it.

In many cases yes. That's why content owners won't sell for such price and piracy will continue.

But not because of technical reasons. See: Steam.

Mostly because of copyright holders. Even with steam you can't buy many games thanks to publishers having exclusive deals with local distributors. It's even worse with tv/movies. Then there are different laws around the globe, but I guess that just takes some effort to solve.