The issue here stems, as I see it, from the fact that most art falls into the category of intellectual property. In other words, it isn't usually something as tangible as a manufactured good. We are talking about ideas, concepts, things that can be digitally reproduced with little difference from the original.
An artist should be compensated for both their art and their work.
Most of the payment for art (as opposed to work) has been managed through the licensing of copyright. If you wish to play a song on your radio station, you pay a license fee. If you want to air a television program on your channel, you pay a license fee. When you purchase a CD of music or a DVD of a film, you are in effect, playing a license fee (though we don't really call it that) to play that music under certain conditions. For example you are not permitted to do public performances of the CD or the DVD. They are mean for personal use.
The issue is that as our world has become increasingly digitized, it has become increasingly easy to break copyright. The easier it has become, the more that people have viewed this breaking of copyright as a victimless crime.
The knee-jerk reaction of the industry has been to clamp down on those that break copyright (filesharers, mashup artists, etc.). In the past, a lot of this was covered under fair use agreements or through hidden payments on blank media (cassette tapes carry an additional charge that is dispersed via Collection Societies to various licensees -- i.e. artists). It has been suggested that perhaps iPods should also carry this additional charge.
Regardless, it's my opinion that copyright is damaged or at least it is being used as a blunt instrument when something more surgical is required. There have been some attempts such as Creative Commons that offer one way forward. It will be interesting to see where things go over the next few years. There is a lot at stake over this issue.
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"My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars."
- Old Man Luedecke
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