In a free and competitive market, the price of any good trends towards the marginal cost of production.

Producing de novo some valuable information--a YouTube video, blog post, software program, news article, song, etc.--has a real cost that must be paid for each new information good created.

But making copies of information in our digital world with gigabit networks and terabyte disks is now very nearly free, so the marginal cost of production of copies of any piece of information is very nearly zero.

This is why centralization and scale are such powerful strategies for IP-based industries: They offer enormous leverage. And it's also why they are so dependent on government intervention to ensure unfree markets.

These creators can only make a profit if they are able to monopolize their information goods. If a new "factory" opens up down on BitTorrent Boulevard literally giving your product away for free, how can you compete with that? Moreover, what incentive do you have to produce new goods in the first place, if anyone can just offer infinite copies of your product to the market for free?

Thus, these creators rely on government intervention to make it illegal to offer copies of their information goods. But there's a fundamental tension between the twin economic realities that the marginal cost of production is ~zero yet the marginal price of consumption is nonzero. Thus, piracy.

In my opinion the copyright system is broken in the digital age. Instead of granting monopolies on information goods produced, we ought to figure out an alternative economic structure that incentivizes the production of these information goods in proportion to their consumption while accepting that their marginal cost of production is zero and abandoning any attempt to control the copying, transmission, creation of derivative works, etc.