If I had to guess, I'd say the intent behind it was "don't produce content which you then license out for re-use by third parties", not "you must make it physic

If I had to guess, I'd say the intent behind it was "don't produce content which you then license out for re-use by third parties", not "you must make it physically impossible for third parties to re-use the content, even if they're willing to infringe copyright".