I would encourage you to try talking to people who actually own and operate small and midsize labels. The effect of piracy is clearly visible in their sales charts; but based on the cultural treatment of it, they consider it a cost of maintaining good relations with their fans.

Their fans are hurting them, but since they like their fans, they struggle to find a way to make up the difference somehow.

Piracy is a good way for new bands to get discovered, but that benefit fades over time. When you have a devoted fan base and you're trying to sell your 5th album, having most of them download it for free offers no benefit to the artist or label.