I understand the recording industry's hesitation to "give away the master", but I really feel that they would enjoy greater sales if they did so. The MP3 piracy of the late '90s and early '00s is all but gone today with the onslaught of scores of streaming services that will let you listen for free as long as you don't mind the odd advertisement here and there or not being able to skip songs. I was in on the ground floor when napster started (because I was also there for the death of many of the piracy-plagued file-sharing applications prior to napster), but I haven't done anything like that in over a decade. I don't know, maybe piracy has moved to some dumb Snapchat-esque phone app that I know nothing about, or torrents have moved to the "dark webb!!!" (intentionally misspelled for the sake of underscoring the idiocy of that term). Anyway, I just don't see the huge push of music piracy I once did prior to streaming even though I'm still in many of the online places where that sort of activity was a common talking point (IRC chat, gaming forums, etc).
Now, aside from my belief that piracy isn't as prevalent now as it once was, I really think that a certain group of customers would flock to the albums of a recording studio who would put out music that was at least close to master-quality. I know I would. I always fall for the "this device has 'ALL TEH FEATURES!!'" because I am just not willing to purchase something that isn't either 'good enough' or 'future-proof.' When it comes to music, I probably can't really hear the difference between a 24/196 FLAC and a 300mbps AAC, but I bet if I wanted to re-encode to a lower bitrate lossy (or a lower bit depth/rate lossless) encoding to save space or to match compatibility with a playback device I could tell in the finished product between two re-encoded files (even if they both had the same target codec and bit rate/depth).
Given the choice, I would purchase an album I liked from the studio giving me master-quality source material over the studio that might have an album I wanted more (I can always just add that album to my Tidal HiFi favorites). As I create my local collection, it's definitely going to consist of 24/96 FLAC or better. Until I can buy an album I like in lossless at that bit depth/rate I will just stream it. I don't even care if the albums cost a modest amount more than the iTunes going rate if I'm getting something that I can re-encode without issue.
Oh, and another item of contention regarding codec and bit depth/rate: Android and computer EQs have a nasty tendency to add distortion or clipping to lossy codecs, while the lossless codecs are much less likely to have issues. I like a thump and growl to my music (I listen to a lot of Drum&Bass/Jungle/Dubstep/Breakbeat electronica and other genres of music that have similar bassy hard hits, even though I also enjoy a wide range of other genres of music that are completely different) when those qualities are called for in the song and I am using Sennheiser HD 650s and Noble 3 IEMs to listen to the majority of my music. While the 650s are described as "warm," they aren't what I would consider bass-head-friendly, so I EQ the bejesus out of my music in Android and my PC to bring up the lows and highs (a sort of lop-sided V, with the low end boosted a bit more than the high). Some songs sound like they were originally recorded with that sound, while others sound like I dumped them in the garbage disposal with a bunch of broken glass. The main difference between them is that the lossless songs very rarely come out sounding awful, while the lossy ones almost always do. Sometimes just relaxing the level to which I boost the frequency groups is enough to fix the issue, but that always leaves me with music that lacks the sub-bass I crave (that low end of the audio spectrum that makes you feel like you just got punched in the chest, even though you know you couldn't possibly feel that because you're wearing headphones). Releasing lossless music means that I can use the headphones I currently have, rather than having to spend money that I would otherwise spend on albums to buy a new pair of headphones that may or may not meet my needs (which means selling it for a loss and trying out another pair over and over again until I find something that doesn't require the EQ adjustments while retaining the sound stage and clarity of the headphones I already own. (yeah, the V-Moda M100 is on my list).
Now, back to crap-mastered music, which describes basically all the music I want to buy right now: C'mon, engineers! Really?!? Be an artist, not a producer's lap-dog! Give the listening public what they want. I know the vast majority of teeny-boppers aren't going to give a flying f-bomb about the dynamic range and realism of the music, but a decent portion of your listeners do. I also think that if a recording studio started selling an "Audiophile" release of some of the more popular albums for a while, they would find that it outsold the "Consumer" version of the album as regular customers got the chance to A/B the two versions. This is one of those places where Piracy would be a good thing. People would likely pirate the audiophile versions of albums they already own just to see what the difference is. Many of them might go out and buy the Audiophile version even though they already own the brickwalled iTunes version of the album. I would ask retailers who were selling the Audiophile version to try to track whether customers already own the Consumer version... maybe by offering them a coupon on a future purchase if they can prove they already own the original version of the album or something. I'd put money on them being able to sell more copies of the Audiophile version than the Consumer version after a short period where the public decides which they like best. Obviously, some people will prefer the "brick wall of sound" version, and it also may be advantageous to use that version for radio or for the clips of songs that make their way into TV commercials, but I really think giving customers what they want is what your company is supposed to be doing.
TL;DR: There are reasons to sell master-quality lossless encodings of your music, including customer re-encodes and digital EQ. I am willing to pay a modest amount more than the iTunes going-rate for an album just to get a lossless 24/96 or better encode, even if I can't hear the difference. People would buy a non-brickwalled "Audiophile" version of an album they already owned after hearing the difference between it and the "Consumer" version, and eventually those versions would outsell the "Consumer" offerings.
