I agree with you that demand isn't dependent on costs always - and I don't think the author is either.<p>He's saying that demand is still high, as is supply. But because the <i>marginal</i> cost of each unit is so low (on the postulation of infinite copies), that piracy is how the price is "fixed" economically speaking.<p>This isn't a pro-piracy position, but if you see it as each copy of the game had to be physically manufactured piracy would drop to zero - otherwise it'd be called theft.