I think should look at the purpose of copyright. The idea behind copyright is not to pay the author. This is a common misunderstanding. There are plenty of people in society doing usefull work that did not get legal protection to get paid. The reason why copyright was that if there was a commercial incentive to produce cultural works, more works would be produced.
This is only half the story. If you read early supreme court intellectual property decisions (any IP law book will include them, probably available online too) you'll see the supreme court has said repeatedly that IP laws (copyright, trademark, patent, trade secrets) have the goal of balancing 2 interests:
1. as you say, the interest in the author to create his work. Why go through all that effort to write a story if the moment you show it to someone w/more resources he's allowed to go out and produce copies of your story and sell it for profit, leaving you in the dust. The fact that the author can make money to reinburse his cost and hopefully make a profit is his incentive, and the government needs to protect this right in order to protect his incentive to create in the first place. But its to benefit us all, so that we can all partake of his creation, by securing his incentive to act.
2. the opposing interest is society's interest on the whole in having more new IP works out there. Innovation. Thus, copyrights/patents/trademarks are all limited. Copyrights are limited in time. Thus, you can re-write shakespeare and not have to pay royalties to anyone. But if you change it at all, you get a new copyright on your new and innovative changes to the story you made, so I couldn't copy your copy, even if the underlying work is still copyright free, though I could still also rewrite shakespeare on my own, I just couldn't copy your new changes to it. We want, at some point, these ideas that are being protected by the various IP laws to become free to the public to experiment with and improve upon, giving us all the benefit all the new creations in the marketplace. To get a patent you have to submit a working model or blueprints detailed enough to allow an expert in the field to make their own, and what you submit becomes available to teh public (this is why some people would rather partake of trade secret laws rather than rely on a patent). Once the patent runs out, not only are people free to impinge your patent, they have the blue prints on exactly how to do so, which helps foster competition and more importantly - innovation.
If you have too much of #1, you get a stranglehold on innovation, a chilling effect against new ideas. You get kids making star wars mods for UT getting sued by lucasarts and shut down, so no star wars mods for any of us, no fan fiction, no spin-offs, nothing even remotely similar to anything star wars, ever. That sort of thing. If you have too much of #2, you lose the incentive people have to put the time and resources necessary into making anything in the first place, so you again have a chilling effect. Too much of either is bad.
Unfortunately, today, we've been slowly losing sight of #2, in our courts, as companies like disney use their lobbying strength to do things like carve out exceptions for corporations (giving them longer copyright periods than individuals) and such, because they don't want mickey mouse to become public domain. This really hurts the country in which this happens, because then person A in your country who comes up w/a good idea can't pursue it because of an overly long IP interest held by some company which prevents him from acting upon his idea, while in a competing country, person B is legally allowed to pursue the same idea because in that country the IP protection has expired w/in a reasonable time frame, and thus the product becomes made in the competing country, and profits and jobs go there as well, even though person A came up w/the idea first in your country. Nowadays, in this world economy, I'd say there is even more weight on interest #2 above than when this balancing test was first put forth by the supreme court. If you don't balance your IP laws w/#2 in mind, your neighboring country might, and over time they will become the home of comparitively more innovation while you slowly fall behind.