The works of Shakespeare (died 1616) were written without copyright protection (Statue of Anne 1709). It can be argued, based on the amount of copying from previous authors, that they could only be written because there was their sources were not subject to copyright.
Although copyright is one mechanism to create incentives for creative activity, it is far from the only mechanism.
It used to be hard to copy. This greatly limited the effect of copying. For example in the 18th and 19th centuries, books made almost all of their money on the first print run. By the time a copier could get a copy out, there wasn't much money left to be made from the book, and so it was hard for the copier to recoup his copying costs.
Justice Breyer, back when he was a law professor, not a Supreme Court justice, wrote an interesting article about this, arguing that copyright throughout most of its history was in fact unnecessary because of the delay and costs of copying.
From the latter half of the 20th century onward, copying technology has gotten cheaper and faster. That has shifted the balance. The copier can now, especially with digital goods, get their copy out to the market fast enough to reduce or eliminate the sales of the original.
There certainly was less creative production, but history was different. Until recently copying and distributing something wasn't free and effortless. So it used to be that you could still make a decent living out of something even if somebody else copied you. This is no longer the case.
As a result many software companies are turning to server based applications, where they can physically enforce artificial scarcity. Now consumers are not only disallowed from copying and distributing the software, but (1) they are no longer even able to (2) they often lose control of their own data (3) they lose control over their usage of the software: the company can suspend their account at any time. Is this a good thing? In my opinion it is not.
