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Truer words have never been more spoken Mr. South.
Great rundown of the economic madness that is the current porn market.
One thing that I would add is that the price structures on websites often encourage piracy. For example, there are a lot of sites that allow both streaming and downloading. They charge a per minute fee to stream and a flat fee to download. As a result, on a per video basis, the cost to download a complete version of a video is a fraction of the streaming costs.
I'm sure that the rationale behind this pricing structure is that users will pay more for the instant gratification (bad pun, sorry) of streaming. The side-effect of this pricing, however, is that it encourages people to download files (which allows easy copying and distribution) instead of stream (which is difficult to capture, copy, and redistribute).
I think that part of the solution to this problem is going to be the creation of a distribution system that (1) allows easy delivery of content to televisions rather than computers and (2) allows users to pay for scenes rather than entire videos at a reasonable price.
Oh yeah, making fewer, better scenes with performers who are actually enthusiastic and appealing would be a nice touch, too.