An argument can be made that copyright and patent worked before the digital era.
The trick that Claude Shannon introduced may have been intended to remove noise, but that's not all it did. Digital encoding allowed data to be repeated indefinitely. Put another way, data was scarce when it gains noise (lower s/n) each time it is re-amplified; Shannon's encoding schemes allowed perfect copies, and thus data was no longer scarce.
> copyright and patents exist exactly to create artificial scarcity
Copyright and patent cannot create scarcity, nor were they intended to. They rebalanced existing scarcity.
Also you're right, patents and copyrights are not there to create scarcity - an IP owner can use a license that allows absolutely everyone to use it. They exist to give the owner a timeframe with which to recooperate costs of IP generation (and yes, the copyright timeframe is too long but patents are reasonable).
That isn't a comparable claim. Microsoft is responsible for their choice of business model.
> because CDs are easy to copy?
You shouldn't expect profit when your business model relies on scarcity that doesn't exist in nature. Attempting to impose artificial scarcity doesn't work, for the same reason you cannot make a law that changes gravity. Trying to change laws of nature by fiat only makes you look foolish.
Note that Microsoft can still run a profitable business even when their CDs are easy to copy. They did this for decades. For most of that time, they didn't spend much effort trying to stop piracy; unpaid copies helped maintain their desktop monopoly. If they were successful in stopping piracy, people might have learned about an alternative OS.