As stated before, it's rather interesting to see how people are passionate about an extra 30 cents. Good thing most songs that are at that price don't interest me, but the few songs I do purchase, I don't mind paying an extra 30cents. Let's suppose the labels and the RIAA turn a page and become a very friendly, consumer-oriented company.......will people still pirate music? Hell yes. Piracy will never go away, for there will always be people looking for anything for free.
Variable pricing was inevitable, for the labels had the power (but not the balls) to remove all tracks from iTunes at anytime to force Apple's hand after their contracts expired. As well known as it is, the labels want to lessen the grip Apple has on the music download industry, and their attempts are not very successful. However, in any industry, if your business is losing money at a rapid rate, you can't just give in and lose even more money. Yes you have to adapt your practices, but you also must stop the financial bleeding. This is what the labels are trying to do with the price hikes. Making better music would also help too. Unfortunately their past silly decisions will always overshadow any positive decision they make.
If something has value, people should have the ability to charge for it. While most people might say that modern music acts today aren't valuable enough to pay $1.29 for it, then don't buy it. You were probably going to pirate it anyways, even if it was 69 cents. I guarantee Apple won't be losing millions of customers to Amazon anytime soon because of price hikes. The people who do stray will be but a blip in the overall world market.
Yes we are in a recession, but if you are worried about an extra 30 cents for music downloads.....you are probably in over your head monetarily anyways and haven't made the right decisions financially. There are exceptions to that statement of course.
Bottom line, there will be people moving to P2P to get songs, visiting alternative stores for other options. However Apple isn't going away, their music download control will lessen slightly, and people will still pirate. The RIAA isn't going anywhere, nor are the music labels, but they will still make bone headed decisions.