This time in an interview with someone at Defective by Design (I'll leave the freedom of contract issue for tomorrow):

When we live in a age where all digital works of art and all human knowledge can be transferred at (next to) zero cost, and where the cost of making one more copy is zero. Is it right to be building digital fences and digital handcuffs around this art and knowledge?

I think I'm going to found the Society for Prevention of Cruelty to Economics. It ought to be, but for some reason isn't, easier than working with feral cats for the SPCA. Here is the problem, again:

Yes, yes, when information or transaction costs are low enough, prices drop to marginal costs. While this model is an interesting academic exercise that tells us something about the tendency of prices in the real world, it was simply never, ever intended to serve as an example of how the real world ought to work. In the real world, transaction costs and information costs are part of the picture and it makes no more sense to assume they are zero than to assume transportation costs or labor costs are zero.

So think about pricing models that give us dynamic rather than static efficiency. That is, think about what pricing structure is needed to support future creativity in a real economy where events are spread out over time and where investors observe what happens to past investments. Not about a pricing structure for an economy in which existing goods are assumed and the only problem is distribution.

Here, for the serious reader, citations to economic literature:

Ronald Coase, “The Coase Theorem and the Empty Core: A Comment,” 24 J. L. & ECON 183, 187 (1981) ("[W]hile consideration[s] of what would happen in a world of zero transaction costs can give us valuable insights, these insights are, in my view, without value except as steps on the way to the analysis of the real world of positive transaction costs."); see also Harold Demsetz, “Information and Efficiency: Another Viewpoint,” 12 J. L. & ECON 1 (1969)(explaining the “Nirvana Fallacy”); Gordon Tullock, “The Two Kinds of Legal Efficiency,” 8 HOFSTRA L. REV. 659, 668 (1980).