Who defines large-scale infringement?

Why does it need anyone to define it?

There's a clear practical demarcation here, in that clearly artists can still make a living in the face of low-level background infringement between friends, but some projects are not commercially viable in the face of mass infringement.

What worthwhile software, movies, music, or books, in your opinion, have failed due to illegal filesharing, or would fail if copyright enforcement were limited to people directly selling copied content without permission?

Well, for one thing, there are small studios and independent artists giving up all the time because people rip them off and they don't have the resources to do anything about it or the scale to absorb the losses as a cost of doing business.

But that's not even the biggest problem. The biggest problem is the works that never get made in the first place.

Obviously you can never prove that something that doesn't exist would have done, but it doesn't take a genius to look at, say, the computer games industry and see that the modern PC gaming landscape is dominated by episode 17 of FPS clone #6 and sports game #24 2012 season, often complete with console-induced limitations on gameplay and audio/video standards.

Today, hardly any studio with the resources to make an innovative game with both novel gameplay and excellent production values is willing to risk it. When only 1 in 10 copies of your game gets paid for if you're lucky, it's not hard to see why. It's not that many people wouldn't enjoy and pay for such a game. It's not that such games don't have the potential to make huge amounts of money. It's just that everyone is so risk-averse that they'll choose the relatively safe bet every time, because the big hits don't bring enough profit to prop up a huge bust with the kinds of budget that AAA games command today.

Consequently, what innovation there is tends to come from games with relatively low production values or simple concepts that can scale programmatically without requiring a lot of expensive human creativity. Where is the next Baldur's Gate or Deus Ex? There is actually a team remaking the original BG series right now, and the next DE was... Deus Ex: Human Revolution last year.

It shouldn't be this way. With modern technology, independent artists or small groups can create work with better production values than ever. With the rise of the Internet, they have the ability to distribute those new works cheaper, faster and easier than at any time in the history of humanity. The world should be full of new titles. Web forums should be packed with success stories about how the creative people behind those new titles have finally been able to write the book or make the game or record the music they always had inside, and share it for the benefit of everyone. This should be possible because markets big enough to make it financially reasonable to develop those titles while still paying the rent should be enabled by things like social networking and search tools.

What is actually happening is that a few people are trying, every now and then there's a Minecraft-scale individual title or a PopCap-scale success story for a small studio made good, and most of the time the potential just dies, because a couple of days after launching a new work, someone has already ripped it off and put it up on a Warez site or torrent or whatever and that's where a lot of the attention is going.