If online music distributors offer prices that customers are comfortable with, the incentive to steal music decreases. Of course, there will always be college students. The honesty of the individual consumer is quite relevant. Most people are at least somewhat honest, and will feel twinges of guilt when they know the music they download and enjoy is not in any way enriching the artist who created it. But honesty varies quite widely from person to person.
Some people get a thrill from stealing hundreds of dollars worth of music.
Other people, like my dad, register every piece of shareware they use. Demand for a specific product is important. The more demand there is, the more pressure there will be on legitimate channels to provide it, and the more piracy will flourish as people feel the urge to get in on the latest craze without having to pay for it. And, finally, the fear of law enforcement is very important. At this point, there has not been an organized crackdown on the aggressive, large-scale use of Napster to traffic in copyrighted, illegally copied MP3s.