I buy lots of electronic music where I would neither bother to see a live show, nor wear their merchandise. What are those bands supposed to do? Be more controversial to make t-shirts attractive? Change their business model by becoming rock bands?

It's like saying that authors can still make money through public readings when pirated ebooks are everywhere, <cue famous example here>. Or that games can just have unpiratable multiplayer. That's all true, but it kills off whole genres.