Slothrop
Tight but Polite
Actually, (thinking particularly about audio software here) small developers get fucked over even harder by warez - without warez you'd have a situation where people who can afford it buy the top end thing (eg Cubase, Logic) while beginners and hobbyists and poor people buy one of the cheaper alternatives. This makes it a lot easier for smaller players to build both their reputation and their product into something that rivals the big boys, which in turns keeps everyone improving their products to stay ahead of the game.Sure, a lot of the time piracy protection merely infuriates legitimate users, and someone using your software may at some point decide to pay for it, and (in the monopolistic model) at least they aren't using someone else's software. But at the other end of the spectrum there are plenty of little fish who get screwed over the moment a crack for their application becomes available.
As it is, people tend to start on a cracked version of Cubase and move to a paid for version if and when they can be arsed and can afford it. A lot of people never even bother to try other programs, which perpeptuates the myth that you need cubase or logic in order to sound 'professional.' Meanwhile the small and medium sized developers who tend to be where a lot of innovation comes from get squeezed out of the market. It sucks, really.