The proper way to do it is determine what price the market will bear, more specifically what price will maximize profits, and then create the product only if you can develop, produce, and distribute it somewhere around that price point.
I am one of the people who refuses to pay for DRM, or an exorbitant price (more than the physical version) for a virtual item, etc. You are wrong about them being simply "justifications." When a service appears that meets my expectations, I use it, regardless of the free options, because it is more convenient and provides more value. allofmp3.com was an example of this. The prices were reasonable (and directly linked to the cost of providing service) and the content was provided in many formats, leaving me free to choose.
Of course, instead of learning from allofmp3's model, the RIAA just threw money at lawyers and lobbyists to try to shut it down.