The internet chapter of the Anti-Counterfeiting Trade Agreement, a secret copyright treaty whose text Obama's administration refused to disclose due to "national security" concerns, has leaked. It's bad. It says:Since the Obama Administration is making such a big deal about network neutrality, I can't imagine that many of these provisions make it into anything remotely ratifiable, but I suppose the entertainment industry could yank Obama's chain hard enough to make him do something here.
* That ISPs have to proactively police copyright on user-contributed material. This means that it will be impossible to run a service like Flickr or YouTube or Blogger, since hiring enough lawyers to ensure that the mountain of material uploaded every second isn't infringing will exceed any hope of profitability.
* That ISPs have to cut off the Internet access of accused copyright infringers or face liability. This means that your entire family could be denied to the internet -- and hence to civic participation, health information, education, communications, and their means of earning a living -- if one member is accused of copyright infringement, without access to a trial or counsel.
* That the whole world must adopt US-style "notice-and-takedown" rules that require ISPs to remove any material that is accused -- again, without evidence or trial -- of infringing copyright. This has proved a disaster in the US and other countries, where it provides an easy means of censoring material, just by accusing it of infringing copyright.
* Mandatory prohibitions on breaking DRM, even if doing so for a lawful purpose (e.g., to make a work available to disabled people; for archival preservation; because you own the copyrighted work that is locked up with DRM)
I have no idea how to rework copyright to make it viable in the internet age. Obviously, something profound is going to have to happen. Fair use changes a lot in a hyperlinked world, and it is simply impossible to enforce copy protection long term. Content providers can derive some amount of value from convenient and reliable delivery services. (Oh, wait! No they can't--not with network neutrality in place.) And there is some market value associated with producing "free" content and getting people to through money into the hat. But I doubt sincerely that there would be enough money in it to produce a blockbuster movie.
Frankly, I'm not sure that we don't already have approximately the right system. Content providers lose a fair amount of money, but they can prop up their prices somewhat through scorched-earth enforcement actions. Their deterrent allow them to inflate their prices somewhat, while the threat of mass rebellion if they get too obstreperous prevents them from getting, well, too obstreperous.
This seems like one of those policy questions where the answer is going to self-organize from the bottom up. The less top-down government policy, the more likely that somebody will come up with the right business model.