It works equally well in neoclassical price theory: the marginal cost of producing an ebook is approaching zero. (I learned this from a pirated Mankiw a few years ago.)
It's an interesting moment in history. If things go on the way they are, the entire publishing industry could become a loss-leader for people who make their money elsewhere. Maybe in a few years the only novels left will be those published by the Cato Institute.
Otherwise, I think the future of literature will have to be guaranteed by social benefits. I think a Universal Basic Income would massively increase the production of progressive nonfiction. (Imagine what Marx would have written if he'd had a guaranteed income, plus instant access to every book ever published.)
Ebookcollective adopt an absurdly moralistic posture on all this. They are the ebook version of the stereotype vegan, who thinks the whole world would be able to live off dumpster-diving if only they were really committed.
A data point on ebook piracy: based on the forums on the websites I frequent, a lot of the "customers" are third-world students (particularly from South Asia and Africa) who are unable to afford the mandatory textbooks. Textbooks are a racket and I fully endorse their piracy.
Cheers
CWS