This is a good question. LOTR is being actively commercially exploited and the commercial exploitations are darn good. Meanwhile, it's cultural impact hasn't been noticeably blunted by copyright -- that novel launched at least one industry, to say nothing of being repurposed by virtually every book in adjacent genres.
I don't see what that has to do with anything. Public domain works can still be commercially exploited. The only difference is that LOTR wouldn't have sat in preproduction hell for years because of squabbles over the rights. Peter Jackson could have gone ahead and made his very fine movies — instead, copyright almost got him forced out of The Hobbit.
Another possibility: Instead of squabbling with the publisher/Tolkien Trust, Michael Bay could have simultaneously made a movie as well to compete with Jackson's vision of the movie.
I don't understand your point. If you mean he could have made a LOTR movie, I still don't see how that's relevant, given that:
1. That wouldn't happen, for a large number of reasons.
2. That happens even in the current system (see "The Exorcist: The Beginning" for an example in the movie world).
3. Michael Bay already had movies in competition with the LOTR franchise — copyright does nothing to prevent that. It just requires that some people distantly related to people who paid some money to Tolkien get paid if you want to use the LOTR names and characters.
>LOTR is being actively commercially exploited and the commercial exploitations are darn good.
Darn good, but not perfect. We are now denied the right to re-interpret LOTR, perhaps because we want to include the Scouring of the Shire--not because the movie was necessarily worse without it, but because we _want_ to.
And heck, take a better example: the Harry Potter movies are in great need of re-interpretation, but don't expect to see independent film-makers getting a bite at that apple anytime soon.
Yes. Fanfiction is an artificial term imposed on us by our current IP regime. It is not a natural kind and simply refers to normal literary practices that run afoul of current laws. Why isn't Shakespeare's _Othello_ fanfiction of Cinthio's short story? Because there was no copyright to run afoul of, and so it was 'only' a retelling or adaptation.
Copyright didn't seem to stop authors of D&D or many derivative fantasy novels that have more in common with Lord of the Rings than West Side Story with Shakespeare.
Right. But a copyright law that doesn't have the purpose and effect of promoting that progress is unconstitutional. Congress can't just hand out intellectual property rights on a whim, nor can they be used to stand in the way of progress.