You could similarly rationalise selling an iPad for $2,000 by 'We have a bajillion engineers, who all went to top schools after decades of non-stop education, who worked 80 hour weeks to refine every single component of this, who tested 100 different chamfers for this edge, who polished it, who ...'
The price of something should absolutely be dictated by how much the target market is willing to pay for it (and that includes ease of purchase etc) - otherwise people simply won't pay. For music, that is one of the reasons why you have so many people whining about how much piracy there is; their target market simply doesn't think that their music is worth the amount they want to charge it for.
The consumers may be incorrect, but it doesn't change the fact that the sales will be smaller because of this.
Music is frequently expensive to produce, but the sale price is largely independent of that. If you consider production costs alone, an orchestral recording should cost many times that of a band, due to its many times greater investment (an orchestral musician will be vastly more technically talented (after 2+ unpaid hours of practice per day for all but a few years of their life) than almost any band musician) and smaller market.
Meanwhile a live recording should cost almost nothing, as it can be produced simultaneously (and frequently is) released immediately after the gig.
The price is the same, because that's roughly what people are willing to spend on music.
If you can pay 100¢ for a 3-4 minutes of street performance, can't you pay 99¢ (or less) for 3-4 minutes of a high-quality recording which you can listen to as much as you like?
Even so, you compare very different things, and the result is not terribly informative.
A trip to the cinema, without paying for unnecessary and expensive food and drink, only costs about 6x-10x more for something that costs considerably more to produce than a song. Jurassic World cost $150,000,000 to create and I got to watch it for $9. Skipping the cinema altogether, I can buy it on disc for about the same price at a later date and watch it as many times as I want.
A song has a tiny fixed cost per unit sold. Personally I think that my compensation to the artist (not their total compensation) for their effort in creating a song is pretty fairly priced at about $1 given their investment and costs. If they made something amazing, maybe a few million other people will also chip in and they'll be rich.
Honestly, I'm also not convinced money has any impact on the quality of music either. Amazing musicians often do well for themselves but lots of the big names in music put forth formulaic crap and pandering lyrics too. We get bargain-barrel quality despite those musician being well compensated, while some of the best performances I've witnessed are local artists still working a day job to survive and playing gigs on the side because they genuinely enjoy doing it (knowing full well their chosen genre to perform will never be a million dollar mainstream hit-maker).
Price is largely determined by the marginal cost to produce a good, and by the consumers' willingness to pay for it.
If demand is such that consumers are not willing to pay more than the marginal cost of production, the good is simply not produced. Firms with the highest costs drop out of the industry, one by one, until the remaining suppliers can make money again.
Music isn't exactly a fungible commodity, but it's close enough. There is a powerful substitution effect, at the least. If people think $1.50 per track is expensive, then guess what? If you can't sell a track at a lower price, you're going to go out of business. If you drop your quality to lower your costs, then guess what? Consumers will adjust the price they are willing to pay based on that lower quality.
So your implication is backwards. Bargain-barrel quality yields bargain-barrel prices, not the other way around. Lower price expectations yield fewer products on the market, and the survivors will generally have the highest ratio of quality to price.
The musical skills really only come into play when price expectations rise high enough that new entrants to the market can be supported. If people were willing to pay $2 per track, you would need those skills to cash in. The skill requirement is a barrier to entry, not a cost of production.
My very favorite songs I've listened to a hundred times or more. In one case, I wanted a remix that wasn't even sold as a single, so I ended up paying about $50 for a promotional copy (given to DJs) on eBay.
It was definitely worth it.
In comparison, how much is a cup of coffee or a portion of chips (for us UK types)?
How much is a trip to the cinema?
It shouldn't be a race to the bottom. If you want bargain-barrel prices, you'll get bargain-barrel quality too.