Firstly, part of the high cost of an album is due to low sales. A certain profit is required to support the recording company and the artists. Obviously more sales = same profit at lower price.
Also, many people seem to follow an all-or-nothing policy of piracy. They can't afford to buy their entire collection, so they don't spend anything. I don't see any reason they can't make an effort to pay for some. Or at least pay for new-releases, when the artist makes the most money. This is because the artist makes money when a shop buys an album, not when you do (as far as physical copies. Digital is totally different). As such, if you buy the album in its prime, the shop will need to replace stock, resulting in more sales for the artist. This is why games often have a lower introductory/pre-order price. However if you buy late, such as clearances or specials, the stock will not be replaced as readily. Does this justify pirating old albums? Not with iTunes around, where you can get the album cheaper and the artist still gets royalties directly.
As for the main idea that lost sales are not lost profit, sure: many pirates would not buy an album if they couldn't download it - however a large number of people would actually pay.
I think the main reasonable case for piracy is evaluation. With games, most people will not replace it for the hassle involved in starting over. However with music and movies, many people will want to be comfortable with what they are buying before they pay for it. Software often offers a trial period to negate this, but not with music. In this case - I will often download an album and if I like it, I will either buy th album if it's new or just purchase the next one by that artist. In that case, I think it works in their favour.
