As to the prices quoted above for CDs (including profit margins, royalties and shipping/handling), compare these with the price of cassettes (if you can still find them)
As I understand it, CDs are cheaper to produce, yet are higher priced.
Historically (when CDs were introduced) there was a larger market for cassettes so CDs needed a higher price due to the lower turnover. But how much of this higher price was to try to recoup the losses being made to home recording?
With CDs now outselling cassettes, CDs are still more expensive, but newspapers often give free CDs/DVDs as promotonal aids. presumably because of the cheap cost of production.
We seem to have a vicious circle, the price of CDs is set higher to ensure a return on capital (because of low sales due to home recording), and because people resent the high price they feel justified in making illegal copies.