The Future of Copyrights and All Intellectual Property

I've been thinking about copyrights alot lately. And about digital piracy.

The truth is that both have been locked in a cold war for a very long time. Every new advance in delivery media (vinyl LPs, magnetic tape, etc.) has been met with a counter to enable theft. The largest barrier for the casual thief was the enormous price of the equipment. But as that equipment got cheaper, the rate of theft has increased.

For some reason, it is very hard for humans to think of the free exchange of information as theft. I know people who are proud of their collection of stolen music and movies.

The internet is all about the free and easy exchange of digital information. It allows us to seamless communicate with anyone in the world.  The cost barrier for internet access gets lower every day.
Pretty soon it will be impossible to enforce copyrights. The cold war between content creator and info pirate just got very hot. The internet makes it impossible for the enforcers to stop piracy. They can stop one site, one service but dozens more will spring up. It's the Hydra Effect.

So...

1. Keep fighting a losing battle until all copyrights become worthless.
2. Find an alternative solution.

As someone who creates content, I prefer Option 2.

So, let's figure it out. What does an alternative to copyright look like? What should it include? How is it enforced? What does 21st Century Copyright look like?