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Is The Copyright Industry Really Shooting Itself In The Foot?

45

Lobby Efforts – Zacqary Adam Xeper

Lobby Efforts – Zacqary Adam Xeper

It’s tempting to mock the copyright industry for being unable to understand the Internet. Why, we ask, do they sue their fans, play whack-a-mole with torrent sites, and push for net-restricting legislation that savvy users can easily get around? Why don’t they just change their business model? But we never ask these questions expecting an answer; we just want to laugh at how stupid they are. Maybe they’re not. Maybe they know exactly what they’re doing.

It’s said that we should “never attribute to malice that which is adequately explained by stupidity.” The copyright industry’s behavior is not adequately explained by stupidity. It’s filled with people sapient enough to dress themselves in the morning. Their strategists, accountants, and lawyers are well-educated. They know how to use a computer. They read Techdirt and TorrentFreak. They’ve heard our side of the debate.

The industry has considered changing their business model. They’ve run the numbers, believe me. And the numbers don’t add up. There is no way in which Viacom, Warner Brothers, and Disney can coexist with a free and open Internet.

The copyright industry doesn’t need us to tell them that piracy isn’t a problem. They know. We don’t need to tell them that people will still go to concerts and movie theaters even if they can get it at home for free. Their spokespeople who seem not to know any of this are lying.

They are not afraid that The Avengers is on The Pirate Bay. They are afraid that Adobe Premiere and Final Cut Pro are on The Pirate Bay. They’re not afraid of people creating YouTube videos with popular music in them without paying a licensing fee. They’re afraid of people creating YouTube videos, period. They’re not afraid that their music is on SoundCloud. They’re afraid that your music is on SoundCloud. They’re afraid that you can mix an album with software that ships standard on every new Mac. They’re afraid that for the price of a high-end laptop, you can buy a video camera that rivals $100,000 Hollywood cameras, in image quality if not resolution. They pray to god that you’ll never get any good at using Blender. They’re petrified of Kickstarter.

Deep down, the copyright industry isn’t all that concerned with a monopoly on what they put out. They just want a monopoly on our attention. The size and structure of the industry’s corporations is not sustainable if they have to compete with some random dude from Stockholm for our hearts and minds. For a huge movie, album, book, or game, the competition isn’t piracy; it’s a small movie, album, book, or game.

Unfortunately for the copyright industry, they can’t make it illegal to release your work independently. That would probably require a complete repeal of free speech, which would make for an insanely expensive lobbying campaign. What they can do is cripple the Internet.

SOPA was criticized because it would do just that. YouTube, Facebook, Wikipedia, comments threads on blogs, all would be crippled or unable to operate due to the new law. Maybe this wasn’t an accident. Without forums and social networks to tell you about the hot new indie band/film/game, and without cheap and easy ways to distribute it, there’s no more competition to the copyright industry. Underground culture remains underground, only breaking out into the mainstream if the copyright industry buys it and allows it to.

So is the copyright industry full of diabolical evil geniuses rather than blabbering morons? Not necessarily. It’s possible that they don’t actually think any of what I’ve just said, and they seriously believe that piracy is going to kill them. Maybe they’re pursuing a smart business strategy completely by accident. Because destroying the free and open Internet is a very, very smart strategy to save the copyright industry.

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About The Author: Zacqary Adam Xeper

Zacqary is an activist in the New York Pirate Party, where his official title is "Cat Herder." He is an open source game developer, and the Chief Executive Plankhead of Plankhead, a free culture arts collective. Despite believing that money is a superfluous social construct, he has a Gittip profile.

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45

  1. 1
    Caleb Lanik

    An interesting point. Probably the truth lies somewhere in the middle, there are certainly those of the older generation who feel that not having total and complete control over any and all copies of any work they create is tantamount to theft. I’ve met some, and they get violently angry about the idea of work being pirated. It is also of note that paying to format shift brings in quite a lot of money for the industry. In the last twenty years a single family may well have payed to see a popular film like The Lion King in theatres, on betamat, VHS, DVD, Blueray, and from iTunes, usually at around $20 a format, if people can digitally change formats to keep up with new technology, a rather large revenue stream closes. Lastly, one can’t help but notice how much addition power to control public thought governments get in return for anti piracy legislation, and since Joe Biden’s best friend heads the MPAA, collusion is certainly not impossible.

    • 1.1

      “Probably the truth lies somewhere in the middle…”

      Yeah, we have to remember that stupidity or just lack of awareness – as is the case with many of the well-meaning older generation who can’t get past the “theft” metaphor, IS itself dangerous too. Sometimes even more dangerous than the fully aware, calculated efforts of the industry power players. At least when people – both in and out of the industry –are informed, they can call out the BS.

      That being said, I think Zacqary hits on a REALLY important point. It is so easy and (for morale-boosting purposes) tempting to laugh at the bumbling idiots in the industry. Ignoring the fact that they are not (all) bumbling idiots is incredibly dangerous, and can leave people shocked, panicked, and, much worse, disbelieving over calculated moves like SOPA.

  2. [...] Is The Copyright Industry Really Shooting Itself In The Foot? – Falkvinge on Infopolicy. Rate this:Share this:MoreLike this:LikeBe the first to like [...]

  3. [...] on falkvinge.net Share this:TwitterFacebookLike this:LikeBe the first to like this. This entry was posted in [...]

  4. 2

    the rather senseless destruction of the internet ecosystem cannot be explained in any other way, but through a concerted effort and true intent. It is too targeted and the externalities are too significant for the big players not to have noticed.

  5. [...] Is The Copyright Industry Really Shooting Itself In The Foot? – Falkvinge on Infopolicy [...]

  6. 3
    Roman

    Well they did shoot themselves in the foot by not selling what people wanted to buy for almost a decade: digital movies and music, at a price people felt was fair. Result? Over the past decade everyone and their dog learned how to use torrents to get what they want for free. Took them far too long to figure this one out.

  7. 4
    SBJ

    Well, I been saying this, and arguing it for quite some time now. Even since my attention was first brought to the fact.

    AFAIK the recording industries saw a significant increase in sales when Napster first entered the Arena. Also it’s been proven again and again that piracy increase sales, and things that doesn’t sell is also not pirated.

    The greatest threat to the copyright industry is internet because it enables artist to make it big without the need for a recording company. It enables people to make movies like “Star Wrek” and “The hunt for Gollum” and other things without big industries getting “their” cut of the profits.

    And the biggest threat to the internet in turn, is not the lobbyists, but “useful idiots” that buy in to the Copyright-mafia propaganda.

    Politicians by and large also approve of this because making the internet a one-way deal. Where only “approved” entities are allowed to post and distribute content makes it easier for politicians to keep undesired information from the citizens and control the population.

    It isn’t the copyright lobby or the politicians that are being stupid, it’s the people who refuse to see the patterns and disregard anyone pointing this out as tinfoil-hats.

  8. 5
    RolandL

    This is exactly what they are afraid of. People finding out they no longer need publishers to get their products in the hands of their customers and fans.

  9. [...] Is The Copyright Industry Really Shooting Itself In The Foot? [...]

  10. 6
    Anonymous

    ‘is the copyright industry really shooting itself in the foot?’

    we can but hope! the problem is though, regardless of whether they are or not, it’s the collateral damage to human rights, freedoms and privacys that’s being done as well. governments are jumping on the band wagon because by backing the ridiculous demands of the industries, they are able to introduce more laws concerning surveillance and monitoring of ordinary citizens.the biggest pisser to my mind though is how governments have allowed the entertainment industries to have their way with reversing ‘innocent unless proven guilty’ to now be ‘guilty unless able to afford to prove innocence’ plus the outrageous amounts ordinary people can be fined for sharing a file with friends. absolutely no way is a song worth $150,000, with $0.99 being much nearer the mark!

  11. 7
    mijj

    the huge media corporations are inflated to vast proportions by welfare via “copyright”. Freely exchanged information bypasses the taxation (“copyright”) needed to maintain the bloat and ability to control that the media corps have come to enjoy. Media corps are see their role as information dictatorships: all information must be mediated by media corps which will tax and censor accordingly. Music and flicks are the thin end of the wedge.

  12. [...]   It’s tempting to mock the copyright industry for being unable to understand the Internet. Why, we ask, do they sue their fans, play whack-a-mole with torrent sites, and push for net-restricting legislation that savvy users can easily get around? Why don’t they just change their business model? But we never ask these questions expecting an answer; we just want to laugh at how stupid they are. Maybe they’re not. Maybe they know exactly what they’re doing. [read] [...]

  13. [...] SOURCE: RICHARD FALKVINGE Share this:TwitterFacebookRedditDiggGoogle +1StumbleUponLike this:LikeBe the first to like this. Categories: Corporations, Hollywood, Lobbyists, Music, Music Industry, Science & Technology, The Web Comments (0) Trackbacks (0) Leave a comment Trackback [...]

  14. 8
    Maarten

    Maybe taking the promo bay down in the UK wasn’t an accident?

    • 8.1
      SBJ

      Probably not. You’re talking about a nation that extradited a student, one of their own citizens, to the US for something that’s not even criminal in Britain (If I recall it was for linking to a site containing links to copyrighted content) Not sure if he has actually been extradited yet, but I think so.

      • 8.1.1
        Colin

        They did a deal. He was not actually extradited but voluntarily went to New York where he paid the MAFIAA $20,000 at a court hearing. After that he was free to go home to the UK.

    • 8.2

      I think there was some evidence of this. The www. version of the domain wasn’t blocked (or vice versa), which suggested it had been added to the blocklist after all the other TPB-related domains. Swarm, help me out here, find a link talking about this?

  15. 9
    Ian Farquhar

    This article makes an excellent point, but misses the opportunity to drill down on some of the behaviors which support this business model.

    Many of you will have seen the leaked financials from “Harry Potter and the Order of the Phoenix”, which according to Hollywood accounting, LOST $160M US, despite grossing $612M.

    http://www.deadline.com/2010/07/studio-shame-even-harry-potter-pic-loses-money-because-of-warner-bros-phony-baloney-accounting/

    If you analyze the financials, you will that the studios basically strips $212M dollars as “distribution fees”, $315M for “Negative cost and/or advance”, plus $58M dollars for interest on the previous figure. Ok, fair enough you think, because distribution entails costs like stock printing and advertising, but THOSE COSTS ARE ALSO ACCOUNTED FOR HERE. Exactly what WB delivers from the “distribution fee” is unknown, as the individual advertising and distribution costs seem thoroughly (indeed, excessively) accounted for as line items. Furthermore, IMDB estimates the cost of this production at $150M, yet they seem to be repaying $315M plus interest, and that interest at a rate far above market rates. The quoted article also suggests irregularities in the line items, for example, by suggesting that advertising charged in full on affiliated networks are actually cross-funding co-payments, which don’t cost the studio as much as they claim. Yet they claim them in full.

    The sad reality, of course, is that this is nothing but fraudulent defunding of a successful movie, and it’s done to basically deprive the artists who are on residuals any payment (it was quietly suggested to me that the leak of this document came from one of those, as it looks like the sort of doc they would be provided to justify no residual payment). That also puts pay to the “looking after the artists” claim we often hear from the copyright industry.

    Yes, this is one film, in one (albeit notoriously corrupt) industry. Note that disclaimer down the bottom, which claims “without prejudice” on the document. That’s beyond grubby, as they’re depriving the individual who received it the right to use this as evidence in a prosecution. It’s a standard “red flag” for legal misbehavior.

    My point is raising this here is to note that I think you’re absolutely right that the industries are protecting their business models, but THAT THEIR BUSINESS MODEL IS INSTITUTIONALIZED FINANCIAL FRAUD.

    The sad reality is that, as the article says, this is all known behavior, even by politicians. Is it illegal? I wondered about the US law Sarbanes-Oxley, but these irregularities aren’t in the financials reported to the SEC or investors, just to those on residuals and industry insiders. However, I am not a SoX expert, so it’s something which maybe should be considered. Other areas of fraud may also be involved: for example, are those losses being claimed as tax deductions? What about other financial reporting governance requirements.

    But this is clearly an incredibly profitable business to be in, and they’ve been getting away with this for some time. In my opinion, THIS IS THE THING THEY’RE TRYING TO PROTECT. Not the monopoly on people’s attention, but the ability to freely commit hundreds of millions of dollars of financial fraud, without any legal repercussions whatsoever.

    • 9.1

      Institutionalized financial fraud is a significant part of Hollywood’s business model, as it is with the recording industry. But as Cory Doctorow is quick to point out, book publishers are pretty ethical with their finances. And the AAA game industry doesn’t do much fraud that I’m aware of, just 500-person teams with 80-hour work weeks for no particular reason. Those segments of the copyright industry seem to be doing fine without mixing fraud into their business model. So I’m sure Hollywood could jettison the fraud and still survive without changing too drastically. They can’t survive competition from indies on the Internet, though.

      • 9.1.1
        Anonymous

        I respectfully disagree that the publishing industry has been “pretty ethical with their finances”.

        Newspaper publishers are absolutely not, and especially in Australia, there are numerous examples of circulation fraud (Crikey.com.au was investigating this for some years). Circulation fraud supports increased advertising revenues, which are the lifeblood of newspapers, now that classifieds advertising has died for them. That is obviously not directly related to copyright control, but it isn’t “pretty ethical” behavior.

        More relevant to this discussion is the publishing industry in Australia has also been at the forefront of advocating “anti-grey market” (aka. anti-competitive) legislation. As a result, novel which sells in the US for $6.95 (about AUD$6.50) sells at retail here for $24.95 (about USD$28). Copyrights have been the tool they leverage to claim exclusive ownership of the distribution right, which supports a highly profitable business model for them, that being, reaming Australian consumers. Even e-books, purchased from overseas suppliers, are more expensive (often many times more expensive) than the same item purchased in the US/UK, as a result of publisher’s ability to destroy competition.

        You make an interesting point about the gaming industry, although I suspect this is more related to the age of that industry. These practices in the traditional industry are the work of decades of corrupt activities. BTW, the conditions in gaming houses aren’t especially different to those in the CGI industries supporting movie production, or visual effects shops.

        But even so, the same “anti-grey market” rules – enforced by copyright – result in unjustifiably high prices for software. At least this is getting some attention locally:

        http://www.edhusic.com/wp-content/uploads/2011/09/Price-Discrimination-ltr.pdf

        Traditionally, suppliers have justified this mark-up on the basis of the need to maintain distribution networks and subsidiaries in this small (in population) and large (in area) country, but that analysis fails even the most basic sniff test.

        Yes, they’re all protecting a business model. The business models differ in details, but it’s all about control and ability to exploit and destroy competition to avoid competing with it.

        Re: competition from the indies on the Internet.

        Around 2000-2001 (dot.com era), I worked for a large IT supplier where I spent a lot of time talking to retailers about building online storefronts. The big ones ALL said retail would never be displaced by an online store. “No one would ever buy a sofa from a web site” was one comment I remember.

        The owner of that same store is now desperately pleading the government here to introduce tariffs and protections for his business, which is being decimated by online retailers. The funny thing is that everything he said about why was absolutely true, yet turned out to be utterly irrelevant.

        This is a classical Innovator’s Dilemma situation (ref: Clayton M. Christiansen, “The Innovator’s Dilemma”).

        I wonder if thinking about Hollywood and the “competition from indies on the internet” makes sense if we look at it in those terms. I am sure Hollywood is.

        • Well that’s certainly scummy. When I said they were ethical, I was referring to the fact that they (supposedly) don’t try to cheat their authors out of royalties the way the film and music industries do. Although, again, I’m going by what Doctorow says, so maybe there’s a different perspective out there. Obviously that doesn’t stop them from jerking around their customers, though.

    • 9.2
      Grock

      I think a lot of the people wo react negatively to those figures should go a course in economics. Every big corporation does like this because thats the way economics works. Some of the figures that you don’t get is payment to co:producers who helped finance the movie, you know the people who takes big risks. As its more likely that a film flops than of it becoming a big hit.

    • 9.3
      Scary Devil Monastery

      What you describe is called “Hollywood Accounting” (and yes, the practice is established enough to have a name all it’s own). In essence it’s a fiscal shell game where the profits of a movie ends up getting shuffled into subsidiaries to the movie company as “cost”.

      http://www.techdirt.com/articles/20121018/01054720744/hollywood-accounting-how-19-million-movie-makes-150-million-still-isnt-profitable.shtml

      http://en.wikipedia.org/wiki/Hollywood_accounting

      That this is legal is exclusively because of the definition of “net revenue”.

      • 9.3.1
        [email protected]

        What you call Hollywood accounting is normal accounting, All big companies accounts this way. A large corporetation with hundreds of projects(films f.ex.) makes big profits by trying to run all its subsidaries with profit, but often a lot of them makes huge losses.
        What you and other pirates dont often talk about is how many good filmpeople make their living from these projects. And when I say filmpeople I mean those who actually makes the movies not bureaucrates and studio-owners..

        • As a filmmaker myself, I’m extremely concerned about all the good people in the film industry being able to make a living. That’s why I’ve been devoting my time to creating new business models which aren’t threatened by the Internet. I’m one of those independent artists that I think the copyright industry is afraid of, and I hope that I can pave the way to help everyone currently toiling away in Hollywood. We need an industry that makes its money from creativity, not from copyright.

  16. 10
    Colin

    While agreeing with all the comments about the uses of copyright to line corporate pockets, I believe the politicians are just as keen to censor the internet for their own reasons.
    They surely agree with Mussolini that a Fascist state should really be called a corporate state as Fascism combines the interests of corporations and governments.
    Put another way, politicians want their electorates kept under control so they can do things like murdering their citizens with no comeback from the law.
    The internet terrifies them because ordinary folk like you and I can, for now at least, speak uncomfortable truths about the way our countries are run.
    Just look at the dichotomy between the US State Department criticising Iran and China for internet censorship, and the US Department of Justice fronting a a blatantly criminal MAFIAA shutdown of Megaupload.
    From the politicians’ viewpoint, the fact that their corrupt friends in Big Content enrich themselves from unjust copyright legislation is a mere side effect of their efforts to steal our rights and freedoms.

  17. 11
    Sten

    “They’re afraid that for the price of a high-end laptop, you can buy a video camera that rivals $100,000 Hollywood cameras, in image quality if not resolution.”
    And what camera is that (that is made in Hollywood? )? I would like to buy one for that price that rivals http://www.arri.com/camera/digital_cameras/
    And where do I get lenses for it? lenses for the price of a laptop that rivals http://lenses.zeiss.com/camera-lenses/carl-zeiss-camera-lenses/cine_lenses.html

    • 11.1
      airbagmoments

      Shhh! You’re poisoning the purity of the no-copyright worldview!

      • 11.1.1
        Scary Devil Monastery

        Said purity still stands intact. Any decent camcorder today offers image quality in excess of what the human eye can discern already.

        After that you can try to run your movie at 40 fps and 200 times what the eye can follow and you get absolutely nothing more in viewer experience.

        • Gogo Toplo

          Scary Devil , NO! Any decent camcorder can’t offer image qualit y in excess of what the human eye can discern. Its weird that so many Internet-nerds know so little about technology.

          And about filling the internet with valifd content.

    • 11.2
      Scary Devil Monastery

      “Image Quality” being the key word here. A hollywood camera may be able to take pictures in microscopic detail, but the human eye is in fact unable to discern increasing quality beyond that offered by any decent camcorder.

      Not surprising given that the cornea has to use the brain to process, shade, invert the blurry and partially greyed-out image offered by the retina.

      Spending 100k on a camera may offer you a trophy. But unless you spend your time repeatedly enlarging small parts of the screen to full size, it offers absolutely nothing in viewing experience.

      • 11.2.1
        Gogo Toplo

        Scary what are you talking about? Everyone who isn¨t blind can see the difference in quality between a Pro camera and a decent camcorder. The pro camera always has much more natural colors and faster imagehandling and less artifacts and noise etc.

        • Yasea

          There is a difference with the real pro stuff and the household stuff of course but the difference is getting smaller and smaller each year.

          http://www.engadget.com/2010/04/13/canon-5d-mark-ii-used-to-shoot-entire-house-season-finale-direc/

          Now you have the high-end range camera’s doing the job of a professional camera.

        • Erik

          @ Yasea

          I totally agree with you. A high end consumer camera today may very well be “good enough” for certain professional productions and will of course cut some of the costs significantly.

          Scary has a point too. Of course a Pro cam has benefits over a consumer cam but is the extra Image Quality gained always worth the huge extra cost for a professional production? Not necessarily in my opinion.

  18. 12
    Ano Nymous

    I think this can’t be adequately explained with the copyright industry.

    Some powerful entities, maybe banks or some kind of more or less world-wide government conspiracy, are doing everything they can to eradicate privacy, freedom of speech and a bunch of other rights and liberties.

    Sure, the copyright industry is doing its share too, (no pun intended) but I don’t think that they could do it alone, without the help of other, even bigger entities.

    Even the US elections were manipulated, there is proof of that. I don’t think the copyright industry could pull that off.

    • 12.1
      Scary Devil Monastery

      You could paraphrase Chomsky here. There are no conspiracies, just mutual interests.

      Imagine how many interests are vested in shutting people up about subjects they in particular don’t like aired? Wikileaks anyone?

      Or for that matter, Woodward and Bernstein?

      I think the term is “bandwagon”. If anything the screaming loud hordes of pro-copyright fanatics from Hollywood are simply offering a convenient patsy for the same kind of people who’d been fighting tooth and claw for thirty years to get free speech and mass communication curtailed, ever since radio became common.

      Anything from religious right fundies to left wing nuts in other words. The one thing they both want is the instrument to shut the other side down.

  19. 13
    Jacob Davis

    I’ve started a petition on petitions.whitehouse.gov to get copyright
    terms in the United States shortened. Here is a copy of the petition:

    > WE PETITION THE OBAMA ADMINISTRATION TO:
    > Shorten excessive copyright terms.
    >
    > Current copyright terms are much longer than necessary for promoting
    > progress. Excessive copyright terms limit the usefulness of the works
    > they cover without leading to the creation of more works.
    >
    > I ask the government to limit copyright terms to a maximum of 10 years
    > with no exceptions. Compared to current copyright terms 10 years may
    > sound very short, but 10 years is a long time; it may still be too
    > long. I also ask that currently active copyright terms all end within
    > 10 years.
    >
    > It is not society’s duty to reward authors and artists for their
    > creativity or hard work. Copyright should only exist as an incentive.
    > The excessive monopoly terms must end.

    It can be found at
    .

    If you are a U.S. citizen, please consider signing the petition.

  20. 14

    I think that what the author has a correct take on )either willingly or un-( is the way that conspiracy itself can be unintentional… reading “The Wisdom of Crowds!” by Newyorker columnist Surowiecki rite now, and this makes a whole lotta sense in that contxt. Its difficult, but its definitely possible, and it might be a permeating thread.

    Btw, otsin vabatahlikke tõlkijaid selle raamatu eesti keelde panemiseks!

  21. 15

    The 13th century walls that surround the city,
    exploring the winding streets and maze of narrow streets.
    A severe storm has been blamed for up to three small kernels.

    The medical services in Morocco are surprisingly not few and far
    between. This just doesn’t happen, which is generating a force all of
    its colour. It has not put detailed numbers to its plans, but it’s
    still possible.

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Zacqary is an activist in the New York Pirate Party, where his official title is "Cat Herder." He is an open source game developer, and the Chief Executive Plankhead of Plankhead, a free culture arts collective. Despite believing that money is a superfluous social construct, he has a Gittip profile.

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