Here's the nutshell summary:
It is hard to see how anyone could endorse a system that declares many inoffensive activities illegal, with the tacit understanding that the law will usually not be enforced, leaving sanctions hanging overhead like copyright's own Sword of Damocles. The symbolic legal message is preposterous: "Remember, copyright is important, and you're breaking the law and you may face massive fines. But on the other hand, your [fan]site is totally great, so keep going!"
But there's a reason we do things this way: political failure. . . It all boils down to this: Harry Potter fanboys don't have K Street representation. Consequently, the political system spits out one kind of answer—an answer friendly to the "property interests" of powerful media companies but one that all but ignores the interests of the basement-dwellers. The formal result of that is what we have today: a copyright law that covers almost everything we do in the digital world.
In a well-functioning political system, the copyright law might be reformed in a grand negotiation between all interested parties, with the long-term goal of separating out the harmful infringement from the harmless. But in 21st-century America, that's not a result our political system is capable of reaching.