Say I buy the music for $.99, and then put it on my own service where I sell copies for $.09. And say people use my service because I've made it very simple or that I'm using a business model that people prefer to either freely downloading it or paying full price. Should this be allowed?

I do not consider piracy theft, but I do consider there to be economic issues that must be handled. If the creators aren't compensated, there are limits that wind up occurring. For music, because of factors such as the ability to be compensated through concerts and through fame (fame can't directly pay your rent, but I think it still counts as compensation because of the impact of having high fame), it is possible for people to still make money. But in other medias this may not be possible. Look at movies, if we allowed infinite copying how would we get the budget to create the expensive movies currently created? Imagine if a theater only had to make a copy and could continue to show the movie and make profits without giving any back to the creator.

If you look at indie video games, you see a truce of sorts. Most indie games have little protection, but many people still buy them even though they could copy them. Some do this because they want to support people who aren't developing game with always online DRM or similar techniques. But is this model sustainable? What happens if people begin feeling entitled to such an extent that the producers aren't able to sustain their livelihoods?

And I'm not sure my personal experiences are relevant or not, but I'm someone who use to pirate computer games back when I was a broken college student but who started buying all my games once I had a steady income.