Intellectual property in digital form is easy to copy and easy to share, which makes enforcing copyright law against it difficult, often in practice impossible. Thus the shift of Intellectual Property—music, books, movies—to digital makes it much more difficult for copyright law to serve its traditional purpose of providing an incentive to create by rewarding the creators. The obvious conclusion is that creators of intellectual property should now be much worse off than before and much less, or lower quality, work should be being created.
The question, to which I do not know the answer, is whether it actually happened. My casual impression is that books are as good as they were ten or twenty years ago. I consume almost no music and almost no video, so cannot judge their quality–do others think it has declined?
The other half of the question is the effect on producers. Have musicians gotten poorer? Do movie companies make less money than they used to? Are there fewer professional authors supporting themselves by their writing?
If the answer to all of these questions is "no," that casts serious doubt on the conventional interpretation of the function and importance of copyright law.
For any graduate student in economics who is looking for a thesis topic, I suggest that trying to find an answer to that question and then an explanation for that answer would be a project worth pursuing.