How should writers be paid for their work?

Will literary piracy will take away writers' motivation to write? A british authors' society claims it may.

http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/books/article3648813.ece

This brings up the question of how should writers be paid for their work? Writers just want to write and be paid for it so they don't have to work multiple jobs (is that so much to ask?), but digital piracy steals bread from authors' mouths (and the mouths of their children). Should fiction writers be subsidized with grants? Will writing grant proposals take up all of the creative time and energy writers need to create fiction?