It's very difficult to out-innovate 'taking things someone else made and giving them away completely for free', when you have to make tens or hundreds of millions of dollars to break even.
So the best way to encourage innovation is give companies big fat monopolies like infinitely expandable copyright?
It is of course the exact opposite: it is very difficult to innovate when you have guaranteed monopolies, because they are effectively money for nothing, and the easiest way to keep the business going is to focus on manipulating the law and enforcement in your favour instead of working on innovation -- which is indeed exactly what the MPAA/etc. lot have been doing.
What are you going to do? Work hard to create new ways to improve the service, or call a lawyer and have the government shut down your competitor overnight? It is an all too easy choice, and it is one the media industry has been taking year after year.
