I love this analogy. From Bruce Schneier's latest Crypto-Gram:
Every time I write about the impossibility of effectively protecting digital files on a general-purpose computer, I get responses from people decrying the death of copyright. "How will authors and artists get paid for their work?" they ask me. Truth be told, I don't know. I feel rather like the physicist who just explained relativity to a group of would-be interstellar travelers, only to be asked: "How do you expect us to get to the stars, then?" I'm sorry, but I don't know that, either.
I am a scientist, and I explain the realities of the science. I apologize if you don't like the truth, but the truth doesn't change because people wish it would be something else. I don't know how authors and artists will make money in a world of easy copyability. I'm an author myself, personally concerned about protecting my own copyright, but I still don't know. I can tell you what will and won't work, technically. You can argue about whether my technical analysis is correct, but it just doesn't make sense to bring social arguments into the technical discussion.
If I had to guess, I believe companies will find a way to make money despite the prevalence of digital copying. Television stations figured out how to make money despite having to broadcast their programming to everyone. There are lots of financial models that don't require selling individual units to make money: advertising, patronage, pay-for-performance, pay-for-timeliness, pay-for-interaction, public funding. I started Crypto-Gram when I was a consultant; I gave the newsletter away and charged for my time. The newsletter was free advertising. The Grateful Dead gave away concert recordings but charged for live performances. Stephen King kept writing chapters of his electronic book as long as a sufficient percentage of his readers paid him to.
I don't know what model will become the prevalent one in the digital world. But I do know that technical methods to prevent digital copying are doomed to fail. (This is not to say that social methods, or legal methods, won't work.) Those companies that have business models that accept this reality are more likely to succeed than those that have business models that reject it. Complain all you like, but reality is reality.
My original analysis: