The interesting thing about this is that, fundamentally, the Music industry and Software industries were fine with Piracy, it was when they became more available to the general population- rather than something more "underworldy" that they started to sit up and take action.
This is also why most of this focuses on punishing the End-Consumer, rather than those that Distribute it. Make no mistake that there are lots of people involved. There are Couriers- who basically work to get the software product to the Crackers. These people typically work in a Boxing factory or a factory that stamps the CDs or DVDs, if the product is on DVD. Other times they work on the distribution service that makes them available, such as Valve (Steam), and are able to push out a version of that digital copy to the cracker. Couriers are generally well paid.
The Cracker does what one might imagine; they basically break any copy protection on the product.
Once a product is cracked, the distributors jump in. These are usually people that took control of a powerful internet backbone and can upload and download several gigabytes of files in a few seconds. They take the "finished" pirate copy and spread it around underground sites. These underground sites generally pay them based on how fast they get the 'release'. Payments on the order of several thousand were not unheard of in the mid-2000's.
Finally, a more "well-known" site, such as the Pirate Bay or another site that is available by searching for "torrents" grabs the data and somebody uploads a torrent.
There are a lot of ways to fight piracy given this, but the general consensus is that while they cannot really stop the underground piracy, they can try to put a stop to the rampant piracy of software (and music) that consumers have been partaking in more recently.
