The media companies seem to like the model they have in place...you scratch up a CD, they make you buy a new one at full price. However, if you make a copy, they claim you actually bought a license and not the CD itself. They can't have it both ways.
You either bought a license to use the music how you wish, or you didn't. The license should grant you the ability to buy as many formats/copies of the media (within reason) that you want at the physical cost of the media. If i buy Pirates of the Carribean on DVD, i should be able to buy it on PSP for the cost of the disc, since i already own the license.
The problem is they want their cake and to eat it too. They want to charge you, full price, for every different format, copy, replacement that they can. They want to lock your hardware so you can't use the items you bought in the way you want to use them. Suing your customers isn't a successful business model, no matter what economic theory you subscribe to.
The record companies are going to have to change their business model if they want to survive. No longer is it necessary to have promotion and radio play to sell music as it was in the past. Viral marketing, the internet, and word of mouth is now as effective as radio play. Any band can get heard and sell well if they have good songs without needing a label.