> The only reason copyright exists is to incentivize the creation of new shit. If we need to fund sock R&D, maybe we need a revenue stream for that

OK. So how do we do that?

There are two issues that need to be solved when it comes to funding the development of things that have zero marginal cost of production.

1. How much total funding should we provide for a given category of such goods, such as music or movies or books or computer programs?

2. How do we decide what particular creators or particular works to fund?

Historically the answer has often been "government does both". For example the rulers of renaissance city states would choose artists to fund. These states would compete to have the best artists. The church was also often a major source of funding for music and painting and sculptures (I say "the" church because there was usually a state mandated religion).

In the US "government does both" would probably not be politically tenable. It probably needs to be something that at least approximates a free market.

The first thing that comes to mind is to actually have a free market in these goods. The issue there is that free markets work best when certain requirements are met. The mathematical economists can prove that if goods have some certain properties ("rivalrous" and "excludable" goods) then a free market in those goods leads to optimal production and consumption of those goods.

Some examples of such goods are food, bicycles, washing machines, and basically most physical goods that an individual can own and use.

That does assume a somewhat ideal free market with plenty of competition, low barriers to entry, and things like that, so real free markets usually aren't actually optimum, but they can decently approximate it.

When you have goods that are non-rivalrous and non-excludable free markets, even ideal free markets, are not optimum. The market under produces the good, in the sense that consumers can afford more of and want more of the good than the market produces.

Digital music, movies, books, and software are generally in that category.

There are a few approaches that have been suggested to handle this under production problem.

1. Don't handle it. Individual artists can make their money elsewhere and do art as a hobby, or make their money off of donations, or find a wealthy patron, or something like that. If it means we no longer have new big art, like movies that involve several hundred people working for several years to make, so be it.

2. Government funds it and chooses which art to fund. Maybe based on polls or something, or maybe there is a Ministry of the Arts that picks. As mentioned earlier, this is probably too "not free market" for the US.

3. Government funds it, but funding is distributed via some objective method that doesn't involve the government deciding what art to fund. For example they could get statistics from major download sites and divvy up the money based on popularity.

Richard Stallman has suggested such an approach for music copying, with the money distributed in proportion to the cube root of popularity.

As far as how much to fund, that could also be somewhat tied to how much people download, probably by a tax on something that correlates somewhat well with downloading. Since the vast majority of copying will take place using the internet, and the vast majority of people consume art, the most common suggestion I've seen is for the tax to be on internet service.

4. Legally treat these goods as if they were rivalrous and excludable. This is the approach taken under current copyright law. Then the free market does handle the production problem. The market determines how much money goes to new art and to which art that money goes. But it does mean the consumer pays more than the ideal free market price for that art which would be the marginal cost of production (which is essentially zero for digital goods).