I think the biggest difference between the cassette/vinyl argument is two-fold. Distribution and quality.
Let me ask this. I picked up Bryan Ciyou's book this last weekend at the 1500. How about I scan it, load it onto a bunch of blank discs, and give them away at the next 1500?
And yes, authors are initially paid by publishers. Their deal doesn't end their. They also receive additional payments on units SOLD.
Like I said before, if you want to sink your own money into it, purchasing the original product, the blank discs, and the time invested, you should be free to do it. If someone wants to protect their ideas from the world, they shouldn't unleash them.
You're trying to make arithmetic into economics.
That all sounds fine, but if the publishing company who buys it from me doesn't make as much money because their market is eaten up by all the copiers and renters out there who only paid a tiny portion of the cost of bringing that book into being, then they won't pay me, the author as much.
The book is just paper and ink. You can buy that anywhere. What you can't buy anywhere is my unique arrangement of that ink and paper. It's the very fact that you can take something that has great value and easily reproduce its value with little to no investment of your own that makes intellectual property laws necessary.
So only the publishing/record/film company has the right to make unlimited reproductions (iTunes, Kindle, etc...) at a profit? Why? They didn't create the words on the paper. They get to do it because they bought it from the creator, as we all do when we purchase a CD, movie, or book. I just don't see the difference. You can't sell something to someone with a hidden message after they open the product that notifies them that the product they just bought still doesn't belong to them. That's just wrong.
And as I said before, the music and film industry seem to be doing fine, with all the pirating, stealing, and copying going on. The scenario you laid out about the creator getting screwed out of more money isn't happening with all of this "free" copying currently in place. Libraries didn't put authors out of business. And why aren't libraries illegal? Because they're run by the government? It seems like everyone except the tax payer/consumer get to freely reproduce media at a profit.