This is the way the world ends: Not with a bang but a whimper. – T. S. Eliot

Well, this is it. The game isn’t bringing in enough money on a month-to-month basis to pay my bills. I’m also tens of thousands dollars in debt and I’ve burned through most of my savings. The game never came close to generating enough revenue to pay back my investment costs – despite my investment costs being super cheap: approximately $20,000/year to survive while I created the software. Sales peaked within the first two months of release, and have been declining ever since with occasional jumps due to a sale. November 2010 (the most recent month that I have numbers for) was the worst sales month on record – bringing in a scant $370 for the entire month. (Multiply that by 12 and it works out to only $4,400/year.) I don’t have any faith that I can or will ever recoup that development cost, and it’s better to cut myself loose rather than let myself be dragged down trying to beat a dead horse.

While I’m not happy about it, it’s a good thing to surrender to the inevitable. The past year has been tough. I intermittently suffered from too much stress, anxiety, and occasional depression caused by my financial problems. Because of this, on a few occasions, it was difficult to get anything done. Other times, I would defiantly work seven days a week.

What to say about Empires of Steel? Sales didn’t go nearly as well as we were hoping. The game took five and a half years of full time work by one person. It’s extremely rare to have a game created by a single person anymore. Assuming I worked 40 hours a week (I probably worked more than this, but I don’t track my hours), this adds up to 11,000 hours of work. When I had first talked to Battlefront, they had suggested that we might have revenue around $100,000. This would’ve averaged to around $9/hour, not very good from an hourly-pay standpoint. This is a bargain rate for a software programmer, and cheap for almost any work, considering that minimum wage is $7.25. But, it would be (just barely) enough to live on. After a year of sales, I haven’t earned close to that amount. I’ll post the actual numbers later, but I think it’s already obvious that I’ve earned less than half of minimum wage for my last 5+ years of work. Maybe I’m a cautionary tale for the game business.

I have to admit that it’s also been difficult seeing games like Minecraft, Angry Birds, and Plants vs Zombies catapult to fame and fortune while I crashed and burned. Like I’ve said before: it’s very feast or famine in the indie game business. Even the businesses that are big successes this year might be bankrupt five years from now — as illustrated by Introversion Software, who were the media’s favorite indie developer back in 2005 and 2006, only to lay off most of their employees and nearly go bankrupt in 2010.

Post Mortem

Thoughts on what went right and what went wrong with the game

* Part of me wonders if the game business isn’t conducive to being a lone developer. Certainly, single-developer games are extremely rare anymore. Back in the early 1980s, it wasn’t at all uncommon for single developers to make games. But multiple developers can accomplish more, and that raises the bar of what’s expected from games. In most cases I think the profit-work curve favors groups of developers over single developers. In other words, for many game genres, it’s difficult for one developer to put in enough man hours to move out of the “insufficient work” section and onto the top of the curve.

Obviously, this isn’t always true – since there have been some successful single-developer projects (Minecraft, or games on smart phones) – but it’s a matter of being able to successfully compete in the genre and accomplish what a game is supposed to do in that genre. One-developer games have to tackle small-projects that can be adequately reached without a ton of man-hours. These small games have to leave me thinking, “I’m not sure what else I could add to the game to really make it a much better game”, showing that they have largely fulfilled their niche. They also tend to have some innovative, creative gameplay that makes them quite a bit different from other games, resulting in less direct competition. In contrast, nation-building games, role-playing games, and first-person shooters have a problem in that there’s always something that can be added to the game – usually, this means better graphics or more game depth. In those cases, they favor large teams because a lot of work is needed to add those features, and any developer not adding those features get unfavorably compared to those larger projects.

In general, you can think of the game industry as a kind of ecology. The indie game developers are the mice and we can’t compete with the lions. But, that’s okay if we find our own ecological niche. Mice go after crumbs. Lions take down gazelle. We co-exist because we’re not going after the same food.

I guess the lesson is: know how much work it’s going to take to adequately compete in a genre. There are some genres that are simply off-limits, and I sometimes see small-time amateur developers talk about some work they’re doing in this or that genre and I just can’t help but realize that there’s no way they can possibly compete in that field. (Case in point: a week ago, I heard some developer talking about a hobby project he had to develop an ambitious massively-multiplayer game.) It should also be taken into account that we (especially amateur game developers) have inflated opinions of our own capabilities.

* I think the game was released a little early and was priced too high. The original plan was to release the game for $25. Somehow, the price kept edging up. Sometime later, we were talking about a $35 price. Sometimes later, my publisher was suggesting a $45 price. I thought it should be priced lower, but was a little flattered that it could be priced at $45. Even though I still thought $35 was a better price, I decided to go with my publishers accumulated experience and accept a $45 price tag because I figured, based on their experience in the game industry, they must know pricing better than me. Besides, he argued, we could always lower the price later if that’s what we wanted to do, but we can’t raise it after the fact. I now disagree with this view because it’s important to get things right at release, while we still have a lot of media attention.

The higher price and early release of the game caused a number of not-great reviews. Most of them were mixed between good and bad, giving a middling or slightly positive review of the game. In some ways, I think the game was ready for release, but I also knew I’d be improving the game significantly over the coming months. At the same time, I didn’t want to say, “Hey, I’m still adding to the game – it’s still a work in progress” because I was afraid people would read that as “it’s not ready, don’t buy it” which would muddy the release sales. Most of the reviews you’ll find on the internet are from early versions of the game, now more than a year old. I feel like those reviews have dogged sales of the game, putting off people who considered buying it. I also don’t think those reviews do justice to the game anymore. Not only are they out-dated, harping on problems that have been long fixed, but they are also harping on the original $45 price, which is more than twice the current price. I was well aware that this could be a problem – I remember the example of “Masters of Orion 3″, which was barely playable at release. I heard that it improved in the coming months, but by that time, they had lost all the momentum provided by the release buzz. Heck, I bought Masters of Orion 3, and I haven’t even gotten the patches to see if the game has improved since release.

I think part of the problem here revolves around the long-memory of the internet and the fact that the game industry revolves around “game releases” – as if the game is complete at released, and never a work in progress. Hence, a game can be judged by it’s reviews at release. This is true for most games. Only the online roleplaying games really buck this trend. I think the way to truly shed the bad reviews that put-off the potential buyers is to release a whole new version.

Even worse, when I was filling out the application for Steam, they wanted links to reviews of the game. Steam includes a “metacritic” score alongside ever game they sell. As a buyer, I find this helpful for figuring out the quality of a game. At this point, most of those reviews I’d be passing to Steam will be old, outdated reviews which will be distilled down to a single metacritic score. There’s no space for some “wait, wait! Don’t take the metacritic score too seriously!” disclaimer on the Steam webpage. Again, the year-old reviews will be dogging the game.

Lesson: Come into the game’s release with some force. If the game isn’t hitting home runs and getting As with both game quality and price, you’ll will miss a critical window when the media is paying attention, and your bad or middling reviews will dog you.

* There’s a variety of things done right and wrong in the design of the game. I probably could’ve made the game more flashy, with better explosions and combat animations to draw in new gamers, and give it more visceral appeal. I think the AI should’ve definitely been better at release. I fixed a lot of problems with the AI after release, but there’s still reviews (done weeks after the game was released) knocking it for having an AI that’s too passive. I think the customizability of the game, with maps, scenarios, and rules along with the sharing system was good. I think the combat system should’ve been more straightforward.

* I’d like to find ways to avoid the complicated code. The pathfinding system was complicated and suffered from occasional glitches (this eats up code-fixing time and decreases the user experience). The combat system was surprisingly complicated because it handled a lot of different cases. The AI (artificial intelligence) was tremendously complicated. I rewrote the AI, the pathfinding system, and combat system multiple times to solve problems I was having with it. The AI also takes up large portions of the source code. I would’ve done better with the AI if I had some previous experience writing AI (this was actually my first project involving any AI). So, there’s a variety of potential lessons here (take your pick): (A) you should have some previous experience writing AI or allow yourself lots of extra time to learn how to do it, (B) try to stick to game rules that can be easily programmed with an AI – for example, it’s easy to write a very good AI to play something simple like tic-tac-toe. Also, the AI in old nintendo games – e.g. Super Mario Bros or Zelda – was very simple, the same is true of smartphone games, (C) avoid writing games with AI (stick with human-vs-human games or games with no intelligent enemies – like sudoku or tetris). Of course, this can cramp the types of games you can create. Looking back, it seems rather audacious that my attitude was “I’ve never programmed an AI before, but I’ll figure out how to make a competent AI for this strategy game”. I don’t regret it. I’m just saying that it exists on somewhere between self-assured and foolhardy.

* As far as the really successful indie games, there’s a certain self-reinforcing momentum that gets built to make them financially successful. The vast majority of indie games never achieve this, but a few do. Here’s what I mean: a game is created. If it gets good reviews, more websites start mentioning it. Sales are good. It financially successful enough that more game-distributors pick it up. For example, Steam won’t pickup Empires of Steel, but they pickup a lot of other games. This blunts our sales while further expanding the sales of other indie games. The game is financially successful enough that it makes sense to port it to other platforms. For example Plants vs Zombies was successful on the PC, then it was ported to the iPhone where it sold 300,000 copies in a single day (at $3 each) – again, reinforcing their financial success. They get into the top 10 or top 50 iPhone apps, which gets them more visibility, increasing sales even further. It’s a situation where most people lose, but the winner’s success gets turned into a cycle of more and more success. Just the other day, I saw three different references to Minecraft – one in PC Gamer magazine, one in on Penny-Arcade, and another reference on some other website. It was all free advertizing, and it was spinning Minecraft into an unbelievable success. By my estimates, the creator of Minecraft has earned $1,000-$2,000 an hour for his work.

* I really wish the multiplayer system worked better without requiring people mess with their router. There were some ways to do this – provided that I setup a dedicated server. I didn’t have a dedicated server and it would’ve been expensive to pay for one. A dedicated server wouldn’t solve all the problems, but it probably would’ve helped. (Admittedly, I probably would’ve had more security problems. People are always trying to hack into internet servers, so they have to be built very carefully.) Internet routers (those are the modems used by players) are just a pain to deal with. They’re all different makes and models and manufacturers setting them up however they want. So, methods to get computers to talk to each other might work fine 90% of the time, but then the other 10% will have problems — problems you can’t adequately diagnose or fix because you don’t have the same hardware that they do.

Things I’d do differently:

- On one hand, I think it was really useful to get feedback from users to make the game better. On the other hand, the majority of game reviews were based on the game as it was initially launched. The question is: how do you get feedback from users to improve the game, while holding off the reviews until after the game has been improved? Perhaps a longer beta or a beta with more people. I suppose it would be possible to do a “beta” version that users could buy (thus, they could provide feedback while helping fund the development), and then reviews might be more circumspect about their opinion or hold-off until the game comes out of beta. Essentially, that’s what minecraft did – start selling copies of the game while it was still in open beta.

- More fine-grained information on sales. There were times when I wanted to know whether my action (e.g. posting forums or releasing a new video) had any effect on sales or downloads. I couldn’t get any of that information from my publisher. Sales were only given to me on a monthly basis, which made it next to impossible to figure out whether a particular action had any effect.

- I don’t know that I should attempt large nation-building games. Perhaps they’re just off-limits to small developers at this point, unless the game can be simplified and well-defined while still being small and fun. If I make any games in the future, part of me thinks I should stick to smartphone games or something, because there’s no massive teams of programmers to compete against.

- The growing number of defiant pirates on the internet makes me think that I should avoid creating client-applications in general. This makes me concerned about where things will be in, say, five years. On the other hand, I’ve heard a lot of conflicting information about the decline of the PC market. While it’s clear that the console game market is growing much faster than the PC game market, I’m not sure if the PC market is shrinking. Part of the reason it’s so hard to get data is because of the shifts in the PC market. Sales of PC games in stores have been hitting a steep decline for five to ten years, but online sales are going up. Even better, game developers get about twice as much money from the sale of one digital download than from a game sold in stores because stores take such a large cut. There’s also been a shift towards in-game purchases and subscription services (like World of Warcraft), which are difficult to track but they’re still part of the PC game-market revenue. I don’t know what my conclusion is about this, but it might be safer to lean towards games that use more server code. Either that, or move towards consoles (which are harder to pirate) or smart phones (which generally have such cheap apps that most people don’t bother with piracy). Whatever the case, I feel like I should be ready to abandon ship with the PC market or find stronger ways to deal with pirates. (I don’t blame EOS’ poor sales in piracy, by the way. I’m just saying that it’s potentially an issue going into the future.)

What Next:

- I’m going to continue running the game server so players can play multiplayer games and upload/download maps, scenarios, and rules. I’ll also be putting out some occasional updates, but they’ll be less frequent and will focus more on bug fixes rather than improvements.

- Will I make more games? I’ve always enjoyed making games, but the revenue numbers seem to indicate that this is pretty much just a very expensive, time-consuming hobby. If I do take another swing at games, I’ll take a very different approach. I’ll do smaller games where I risk a lot less time and money. Maybe games for smart-phones or something. Either that, or find some compelling game ideas for the PC that can be done in less than a year. Angry Birds was done in less than a year (although it was more than one developer). Minecraft spent 1.5 years in development (one developer). Plants vs Zombies was two years (I think) using three people plus one musician. But, matching the success of those games is unlikely, so maybe I shouldn’t bother with the game industry anymore.

- Shortly before Empires of Steel was released, I had started thinking about what I was going to work on next. I had hoped to do a space game, and had gathered lots and lots of concept art. (If you want to see some of the concept artwork I’ve been looking at, visit conceptships.blogspot.com and conceptrobots.blogspot.com) Based on my financial state and the fact that space-games are largely taken-over by the big companies, I’m doubtful that I can compete in this field. So, it’s rather unlikely I’ll ever create this game. Come to think of it, this should be under “what I thought might be next, but it won’t happen” category rather than the “what’s next” category.

Some of my concepts for the game involved some new types of warfare: genetically-engineered biological warfare, more interesting planetary warfare and invasions; political propaganda and culture – which would allow players to mold their population in various directions that have various positive and negative aspects. For example, turning your empire into a fascist, xenophobic, nationalist structure might make your population more industrious and willing to go to war, but also inspire more planetary revolts, spies willing to work for your enemies, and reduce technological breakthroughs and creativity (example: Hitler helped shut-down nuclear research, labelling it “jew science”; although, at the same time, the Germans made good tanks, the first assault rifle, and the first jet aircraft). Because he believed in his own superior “strategic intuition”, he forced his generals to make mistakes against their better judgment. Other gameplay aspects might involve revolutionaries (misguided or enlightened) from your own population working against your empire. Maybe your enemies (alien races) are helping to arm and support them in various ways. There might be ways to discredit them or hunt down these revolutionaries and reformers. If you are caught in too many lies or manipulations, then your population trusts you less, which causes various problems in trying to rule them.

Admittedly, part of the reason I wanted to focus on the politics is because I want people to understand the types of manipulations that governments and corporations can use on the common people to manipulate them for their own ends. I think those are enlightening concepts that are applicable to the real-world, but I don’t know yet if it would make for good gameplay. I wanted to add artificially-intelligent advisers that could help guide new players in their decisions. I also wanted an interesting technology system which changes each time you play, and different empires would have different options. For example, the idea of nuclear-weapons wasn’t an option until Einstein formulated a theory of mass-energy equivalence. In gameplay terms, maybe certain technologies would not be an option unless some scientist happened to formulate a theory about it. And, maybe empires pursue dead-end technologies and bad theories (for example: Lysenkoism). I also wanted to portray a universe that was vast, empty, and beautiful. I don’t think most space games do a good job of portraying that. With any luck, I could find a way to add some science and education in there, but again, I’m not sure if I can do that while providing compelling gameplay.

Slashdot: Considering a Fair Penalty For Illegal File-sharing

An anonymous reader writes with this excerpt, following up on yesterday’s announcement of the 1.5 million dollar verdict against Jammie Thomas:

“This week a federal jury handed down the verdict in the third file-sharing trial against a Minnesota mother of four who has been fighting against the charges brought by the RIAA since 2005. Understandably, a lot of people are outraged by this verdict and while reading through comments about the fine on some online forums, I saw some interesting opinions on how these fines should be assessed. The point that $62,500 per song is excessively high seems to be something that everyone can agree on, but what actually is fair seems to be a big point of contention.”(Link)

While I think this is a reasonable question, and think the penalties are absurdly large, Slashdot quickly descended into a chorus of “there should be no penalty; piracy should be legal” arguments with other people voting them up. It’s irritating and frightening to see technology sites decend into this kind of nonsense. It’s like being a store owner and seeing a majority of people arguing that they feel completely justified stealing everything they want from stores [insert thin justification here] – oblivious to the consequences to stores or society. Even worse, I sort of feel a kinship with tech-savy people, so it feels like a betrayal by people who should know better.

What I find most odd about the whole thing is how their judgment changes when some company benefits from piracy. Two days ago, there was a story on Slashdot about a cookbook that took a recipe from the internet. When this was discovered, the company responded with “everything on the internet is public domain; we did the original author a favor”. People weren’t too happy about a company earning money by taking a recipe from an individual and selling it. Yet, so many of the comments in the “Considering a Fair Penalty For Illegal File-sharing” article work equally well to argue for the company’s “right” to take and print up someone else’s recipe.

Some examples:

You are the fool that allows an idiotic fine like this to happen. Pirating music is not like stealing cars. I’ll repeat: pirating music is not like stealing cars. When I download a torrent, NO ONE LOSES ANYTHING. The publishing company doesnt end up with one less copy of the album on their hard drives, the artist doesnt lose the ability to play the song. I would never have paid for that album, and no one who downloads through me would pay for it either. No one loses anything. (Link)

Put into the context of taking someone’s copyrighted material and selling it (as the cookbook creator did):

You are the fool that allows an idiotic fine like this to happen. Pirating [recipes] is not like stealing cars. I’ll repeat: pirating [recipes] is not like stealing cars. When I put [someone else's recipe in my cookbook], NO ONE LOSES ANYTHING. The [cook] doesnt end up with one less copy of the [the recipe] on their hard drives, the [cook] doesnt lose the ability to [make the recipe]. I would never have paid for that [recipe], and no one who [reads my cookbook] through me would pay for it either. No one loses anything.

Slashdot:

Just because they downloaded does not mean that the product is worth paying for. Besides, this is completely irrelevant. Logically, pirates take nothing from anyone. The only argument that I’ve ever seen (and it’s a terrible one) is the “potential profit” argument. But, really, it’s impossible to steal money that only exists in the future of an alternate dimension where the artist/business made more money. Also, everyone in existence is ‘guilty’ of ‘stealing’ profit that others could, potentially, have had (you ‘deprive’ someone of potential profit merely by choosing not to buy a product). Our illogical capitalistic society is what needs fixing. (Link)

Put into the context of taking someone’s copyrighted material and selling it (as the cookbook creator did):

Just because [the cookbook creator used the recipe] does not mean that the [recipe] is worth paying for. Besides, this is completely irrelevant. Logically, pirates [like the cookbook creator] take nothing from anyone. The only argument that I’ve ever seen (and it’s a terrible one) is the “potential profit” argument. But, really, it’s impossible to steal money that only exists in the future of an alternate dimension where the artist/business made more money. Also, everyone in existence is ‘guilty’ of ‘stealing’ profit that others could, potentially, have had (you ‘deprive’ someone of potential profit merely by choosing not to buy a product). Our illogical capitalistic society is what needs fixing.

This would mean, of course, that the original creator of the recipe (or any writing, music, software, movie, etc) has no grounds to complain if some company takes their work and sells it.

Slashdot:

Has it occurred to you that you are proposing the destruction of the value of human labor on a massive scale?
Nonsense….
That’s what a labor market is like; you get paid for your actual labor, not the fruits thereof, or all the value that the fruits might yield.
If authors cannot sell many copies of their book (the fruit of labor) because people just copy the few that were sold, and then copy the copies, and so on, they’ll just change models or get a better job. Perhaps an author will demand payment up front — $10 per hour of writing, or something — and find that it works better, since no one yet knows how to copy him. (Link)

Put into the context of taking someone’s copyrighted material and selling it (as the cookbook creator did):

It’s perfectly okay for the cookbook publisher to take the recipe or any text written by any author, put it into a book and sell it. The original author should “get paid for your actual labor, not the fruits thereof, or all the value that the fruits might yield”.

How silly that a “lawyer”, of all people, can’t see through the illogicalness of his own statement.

Of course, this can be generalized to a lot more than cookbook recipes – the ultimate outcome being that companies can sell copies of music, books, music, whatever they want because “copying isn’t theft”, and “you can’t prove anyone would’ve bought it (at full price)”. At least there were a lot of comments in the cookbook article attacking slashdotters for their double-standard. Personally, I think the distinction between “free piracy” and “pirate and sell” is a bit of an arbitrary distinction, since most of the consequences are the same.

A story came out the other day about George Hotz – the infamous hacker who released a hack for the PS3 a few months ago. His hack only works for an old version of the PS3 system, and Sony moved quickly to invalidate the hack using updates. It was the first time anyone claimed to have hacked the PS3, but now he’s giving up on the PS3, saying it’s just too difficult.

I think this hints at the direction companies will take in the future to bulletproof their systems against piracy – having tight control over the hardware. No doubt, companies will get more and more skilled at this as time passes. People will complain that “it’s their hardware and they should be able to do whatever they want with it” – citing their desire to create “homebrew” or run Linux on their machine, but they’ll be blocked on a technical level (not a legal level) from doing this.

The EFF has promoted exactly this kind of argument by analogy to a car:

“It is my automobile at the end of the day,” von Lohmann said, a reference that iPhone users should be allowed to do what they want with their phones, just like car owners do.

Of course, there’s also a major problem with that kind of argument. First, the laws do not recognize people’s legal right in all cases to modify physical objects however they want – even if they own them. For example, you cannot legally convert a gun into an automatic weapon. Your car must also conform to pollution and noise standards. In other words, it doesn’t matter that you own the gun or the car – there are limits to what you’re allowed to do with it. There’s also issues with copyright that run afoul of the “I should be allowed to do whatever I want with my property”. While some people might argue that owning a book, music, or software means they should be allowed to do whatever they want with it – including filesharing, this argument quickly runs into a problem: most people (even filesharers) dislike the idea of commercial piracy (i.e. selling pirated material for money). For example, if a guy goes and creates a thousand copies of some new DVD and sells them on the street for a couple dollars each, he’s involved in commercial piracy. Logically, “I should be allowed to do whatever I want with the stuff I own” means allowing people to engage in commercial piracy since they own the original DVD.

The other method that console makers use is what Microsoft is doing: while the XBox 360 has been cracked, they control the servers where people can buy new games or get online to play multiplayer games with other people. Microsoft can lock people out of their servers for running cracked XBoxes – and that’s exactly what they did right before the launch of Modern Warfare 2. They locked a million XBox owners out of their servers. Even the EFF had to concede that Microsoft had the right to do so because they own the servers. While this second strategy is less effective than the PS3′s hardware lockout, it seems to be pretty effective, judging from Modern Warfare’s piracy gap on the XBox 360 vs the PC – the numbers I’ve seen show that 86% of the people playing Modern Warfare 2 on the XBox paid for it, while only 6% of the people playing it on the PC paid for it.

Anyway, it’s still pretty interesting that the PS3 has weathered the attacks from hackers as well as it has. It shows the potential of technical methods to block piracy – despite the refrain of pirates that someone will immediately crack all piracy prevention systems.

I generally like TED videos, although it seems like on the issue of intellectual property, they skew towards being against IP. In this video, Johanna Blakely talks about the relatively low amounts of intellectual property law in the fashion industry – there are trademarks, a few patents, and no copyrights. She goes on to argue that the rest of the world can learn from this – i.e. they should reduce or eliminate intellectual property laws because it will lead to innovation, like it does in the fashion industry. Of course, she’s got it all wrong.

I could go on about the numerous problems I see in her argument, but for the sake of brevity, I’ll point to just two:

The number one problem with her talk is this: she equates designers copying each other’s designs with copyright protection. In fact, what she’s talking about is more similar to patents, not copyrights. If I see an application that does “X”, and I think “I’m going to make a product just like that” — guess what? That’s totally legal. For example, if I see Quattro Pro, and think “I’ll make something called Microsoft Excel” – 100% legal. If I play a game called “Dune 2“, and think “I’ll make a game called Starcraft” – 100% legal. That’s the intellectual equivalent of a “fashion knockoff” – and it’s 100% legal in both the software industry and the fashion industry.

She supports that view in her own video when she says:

5:45-6:10
The counterfeit customer was not our customer.
…
Blakely: This is a very different demographic. And, you know a knock-off is never the same as an original high-end design. At least in terms of the materials; they’re always made of cheaper materials.

Yup. Which is exactly why the software industry isn’t that worried about someone making a ‘clone’ of their software product — because when someone copies a piece of software, they never do it quite right, it always has it’s own personality which is different, and often inferior to the original. On the other hand, copyright is used to stop exact duplicates. Exact duplicates do not exist in the fashion industry. There is no such thing as “I pirated a copy of Microsoft Office and Starcraft, but they are inferior versions of the official versions of Microsoft Office and Starcraft.” There is no such thing as “pirated bits are cheaper/inferior to authentic ones”.

So, her entire talk could really be summed up as “software patents shouldn’t exist because the fashion industry survives just fine with the existence of knock-offs”. Personally, I have no problem with that lesson.

A second major problem I wanted to point out is this misleading chart. At 12:35, she shows this chart comparing the sales of “low IP industries” (food, cars, fashion, furniture) and “high IP industries” (films, books, music).

He suggestion here is that lower IP protection results in more production and more revenue. That’s an interesting conclusion.

There’s a variety of interpretations someone could make from that chart.

Since everything in the left section is physical products, everything in the right section is digital products, maybe the lesson is that physical products bring in more revenue than digital ones. Maybe the lesson is that physical products don’t need much intellectual property protection because they’re always tethered to physical items. Or maybe the lesson is that people just don’t/won’t ever spend as much money on books, music, and movies as they spend on necessities like food, automobiles, clothing, and furniture – regardless of the intellectual property protection. I have a hard time believing that eliminating intellectual property protection would somehow cause spending on books, movies, and music to skyrocket 20 or 50 fold – so that they could rival the gross sales of the food and automobile industries. Yet, that seems to be exactly what Blakely is suggesting with this chart. Can you imagine spending as much on music as you spend on food each and every week?

Here’s another little fact: the software industry, which is not shown on her chart, had a worldwide revenue of $304 billion dollars in 2008. This would place it below food and automobiles, but higher than fashion and furniture. I wonder why she left it off her chart.

Update: Another problem I wanted to point out in this video is the fact that one fashion designer copies another designer, the general public is still paying the fashion industry. Now, maybe the second designer can complain about someone else getting paid for their own work, but the consumer is still paying money to the fashion industry (since both designers are part of the fashion industry). On the other hand, when piracy happens with digital media, it’s not creators copying from creators. Rather, it’s consumers getting the products for free — it means the consumer is not paying into the industry. This is another reason why the “high IP / low IP” chart is particularly wrong: because when the fashion industry has low IP protection, the consumer is still paying the fashion industry. In contrast, when digital media has low IP protection, it means the consumer is not paying money to the digital media industry. This suggests that the fashion industry would not be particularly harmed by low IP protection (as measured by the amount of revenue flowing into the industry), but revenue would decrease if digital media had no IP protection.

This article came up on Slashdot today.

“Claims by the MPAA that illegal downloads are killing the industry and causing billions in losses are once again being shredded. In 2009, the leading Hollywood studios made more films and generated more revenue than ever before, and for the first time in history the domestic box office grosses will surpass $10 billion. … [N]either the ever-increasing piracy rates nor the global recession could prevent Hollywood having its best year ever in 2009. With an estimated $10.6 billion in consumer spending at the US and Canadian box office, the movie industry will break the 2008 record by nearly a billion dollars.”

They reference a TorrentFreak article claiming that domestic box office numbers are higher than ever — and, therefore, movie piracy isn’t having any effect:

Claims by the MPAA that illegal downloads are killing the industry and causing billions in losses are once again being shredded. In 2009, the leading Hollywood studios made more films and generated more revenue than ever before, and for the first time in history the domestic box office grosses will surpass $10 billion.

Those despicable Hollywood liars. Additionally, these kinds of stories seem to be an annual occurrence (What piracy crisis? MPAA touts record box office for 2007, What piracy? Movie biz sees record box office in 2008).

But, I don’t consider TorrentFreak to be a reliable source, and expect a big dose of spin coming from them. Too bad they didn’t provide any statistics so that we could see the trends. That’s okay. I will. Shown on the right are the total domestic (US and Canada) box office numbers, according to BoxOfficeMojo. The dollar amounts are in millions. (Hollywood Box Office, the original source for the $10.6 billion estimate has adjusted their estimate downward to $10.5 billion.)

Okay, you might see some trends here. There’s some pretty strong growth from 1980 until around 2002. Then, after 2002, the box office revenues hover between $9 billion and $10 billion a year.

Let’s take a look at those numbers in chart form. Strong growth up until around 2002, then some leveling off. But, the movie industry is still growing, right?

Well, if you consider that inflation is around 4%, you start to wonder if the movie industry is keeping up with inflation. What happens if we take a look at these same numbers and adjust for inflation using the Inflation Calculator?

This chart shows the inflation adjustment in the third column and the Inflation-Adjusted (2008) domestic Box Office numbers in column four. Once you take the inflation adjustments into account, you can see that 2009 wasn’t the best year ever. The best year ever for the movie industry was 2002. If box office revenue reaches $10.5 billion this year, after adjusting for inflation, it will be the fifth highest year, behind years 2001-2004. Here’s a chart of these numbers:

Once inflation is taken into account, the 2009 box office numbers are about 9% lower (or $0.8 billion) than 2002 numbers. (Hm, that’s a few years after music industry revenues also peaked*.) On average, movie box office revenue increased by $177 million/year between 1980 and 2002. Then, on average between 2002 and 2009, it has declined by $114 million/year. Yes, this could be a short term dip in revenue (like the slump in the early 1990s), but had revenue grown at the same rate between 2002-2009 as it had between 1980-2002, revenues would be $2.0 billion (20%) higher in 2009.

If we wanted to go one step further, we could also point out that the US and Canadian populations have grown from 227 million and 24.5 million in 1980 to 305.5 million and 33.9 million in 2009, an increase of 35%. Based on that, we can see that the movie industry’s growth in the past 30 years has been based on population growth. Per-capita spending has fluctuated a bit, and has declined by 14% since 2002.

Per-capita inflation-adjusted domestic box office:

It’s not a horrible downturn, and it is similar to the decline seen in the early 1990s, but it’s also not an argument that piracy isn’t hurting the movie industry, nor is it “shredding” the claims that movie piracy is “causing billions in losses”.

I should also point out another interesting bit of spin. The Ars Technica article linked at the top says: What piracy? Movie biz sees record box office in 2008. Looking at that headline, it looks all wonderful for the movie business, doesn’t it? But, once you look at the inflation-adjusted numbers, you can see that 2008 numbers ($9.63 billion) were the worst numbers since 2000, and per-capita spending was the worst since 1997. Funny the tricks you can play when you don’t adjust for inflation.

* Graph of the music industry downturn since 1999:

This picture blew-up on the internet over the past few days. Supposedly, it’s an ad by Ralph Lauren. It was picked-up by Photoshop Disasters, and then displayed on BoingBoing. It actually looks like an ad about anorexia, or maybe a parody of the fashion industry and their promotion of unrealistic body images.

After the image was displayed on BoingBoing, Ralph Lauren sent them a DMCA notice telling them to take it down. Photoshop Disasters complied, but BoingBoing balked at the legal notice, said it fell within “fair use” laws (which allow the use of copyrighted material for critique), and created a post to mock them. (I have to say, it’s rather odd when a company tries to stop people from seeing an image they created as an advertisement.) While BoingBoing was heralded as heros for bravely standing up against Ralph Lauren’s attempted to suppress the image, the reality is that their ISP is based in Canada, which means it’s exempt from the DMCA (they have past experience with this). Because Canada doesn’t recognize the DMCA, it means BoingBoing isn’t bravely doing anything except grandstanding to drum up internet traffic.

I also have to admit that I’m not entirely convinced that it’s a real ad, as opposed to a fake created with photoshop by some random person and using a real Ralph Lauren image as a starting-point. It would be an interesting twist in the story if the Filippa Hamilton “ad” was actually the work of some random photoshop artist, and RL wanted it removed because it was unfairly attributed to them. It looks so bad, that it’s hard to believe that Ralph Lauren would use it. Also notable is the fact that Ralph Lauren used other images of the same model that don’t look ridiculous:

But, the story doesn’t end there. BoingBoing also has a long history of censoring people. Sure, they might like to act like crusaders against big-corporate censorship, but if they’re going to get on their soapbox, their flaws should be held up to criticism as well.

Just a year ago, BoingBoing was caught in a scandal where they “unpublished” a bunch of stories and comments by a blogger known as “Violet Blue”. A google search [Google: BoingBoing Violet Blue] shows just how badly the whole thing blew-up in their faces. No one knows quite why Violet Blue was “unpublished” – one idea is that she tried to trademark her name to prevent a porn star from using it; another is that the “unpublishing” was the fallout of a romantic relationship gone bad. And yes, they used the word “unpublished”. Not only does the word sound Orwellian, but unpublishing is exactly what happened in the fictional 1984 world:

A major theme of Nineteen Eighty-Four is censorship, which is displayed especially in the Ministry of Truth, where photographs are doctored and public archives rewritten to rid them of “unpersons”… An excellent example of this is when Winston is charged with the task of eliminating reference to an unperson in a newspaper article. (Wikipedia: 1984)

Perhaps BoingBoing uses the word “unbirthed” when they describe the murder of someone they don’t like. At the same time, I’m sure they hated the fact that George Bush used the euphemism “collateral damage” for civilian deaths, and complained that euphemisms are used to mask reality.

Then, there’s the comments section of their website. Now, it’s reasonable to have moderators for websites, but it’s clear that they use “moderation” as a way to shut down people who disagree with them. So much for free and open debate. You can disagree with them if you want – it will just have to happen elsewhere on the internet, away from the eyes of anyone reading their stories. And with that, their comments section are transformed into a cheerleading sections. I think they know that their views can’t withstand actual scrutiny, so they have to “spank” people with comment deletion, disemvowelling, and banning accounts. Here’s an one example of their censorship: a while back they posted an entry advertising an “I pirate music T-shirt”. They advocate piracy, which is obviously a controversial position, and there’s plenty of good arguments a person could raise criticizing that position. In the comments, the moderator admits to deleting eight of the first nine comments! After that, people start to get irritable about the deletions:

Right… you admit to rapid-fire deleting a ton of comments, and then suggest we have to prove the worth of our comments to you?

[To the Moderator] your post is pretty revisionist. There were a number of posts that disagreed with the shirt’s message — saying nothing of the price — that were deleted as well.

Ok, so what gives now? I had a politely worded argument about why I thought my comments were valid, and it’s been deleted with no response.

After several days, once most everyone had left the thread, they finally allow a comment articulating an argument against piracy. Who knows how many others were deleted in an attempt to prevent their readers from hearing those ideas. And there’s hundreds of people all over the internet complaining about getting censored by BoingBoing. Exhibit A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V

Someone even went to the trouble of registering bngbng.net as a comment on their disemvowelling. I can certainly understand the irritation of spending some time writing a long comment (polite ones, even) only to have it silenced by moderators. It’s like having a big piece of duct tape slapped across your mouth. Of course, I realize there’s a difference between forcing someone to take something off their site and removing comments from your own site, but the motive behind it is still disturbing. That motive, of course, is not to save hard-disk space. It’s to reinforce groupthink of ideas they agree with. (What? You disagree with us? Nobody else is on your side; just look at the comments.)

In the end, BoingBoing is grandstanding about corporate censorship, but aren’t willing to allow open discussion on their own site – allowing only neutral or favorable comments so that they produce a facsimile of public consensus. Sounds pretty hypocritical to me. Clearly, we need better free speech advocates.

Update (January 26, 2010):
It looks like BoingBoing has cut-down on their censorship of comments. Recently, Cory posted something about O’Reilly’s eBook sales going up after removing DRM (“BoingBoing: O’Reilly drops ebook DRM, sees 104% increase in sales”). Commenters were quick to point out that Cory’s three data points were spread out at one-year intervals, and eBook sales across the entire industry (DRMed or not) have shown very strong growth over the past year. In fact, O’Reilly’s growth was actually smaller than the industry as a whole. Those stats show industry-wide eBook sales growing from around $12 million in 2008 to around $40 million in 2009, which is approximately 230% growth. It was a pretty ugly smackdown of Cory’s interpretation of the facts, but BoingBoing didn’t appear to delete the comments. Comments like:

The increase in sales is just as easily attributable to an increase in the popularity of e-book readers. It’s nice they dropped the DRM, but there’s not enough there to claim that it had much to do with the increase in sales. If you compare this graph with a graph of e-book sales overall (http://www.idpf.org/doc_library/industrystats.htm), there’s not much difference between them. This post, while encouraging, is a little dishonest.

Was it DRM that caused the increase in sales or, was it the increased consumption of ebook readers especially, mobile phone ebook readers? I did not see the connection between sales increase and DRM. Perhaps, the data are being interpreted though rose coloured spectacles?

I just no longer trust Cory’s claims on these issues any more than I trust Fox News on its take on politics. Not that I like DRM.

Wow, the past few days Slashdot has been putting up quite a few pro-piracy articles. I think it’s been one a day for the past few days. It’s generally dismal to read some of the comments there.

First, there was “Slashdot: The Pirates Will Always Win, Says UK ISP” / The Guardian: The pirates will always win, says Carphone’s Dunstone

Slashdot summary:

“The head of UK ISP TalkTalk, Charles Dunstone, has made the comment ahead of the communications minister’s Digital Britain report that illegal downloading cannot be stopped. He said ‘If you try speed humps or disconnections for peer-to-peer, people will simply either disguise their traffic or share the content another way. It is a game of Tom and Jerry and you will never catch the mouse. The mouse always wins in this battle and we need to be careful that politicians do not get talked into putting legislation in place that, in the end, ends up looking stupid.’ Instead he advocates allowing users ‘to get content easily and cheaply.’”

First of all – he’s right in saying that it’s impossible at the ISP level to stop pirates for any length of time. As far as I can tell from the article, that’s what Dunstone’s argument was. Unfortunately, most people have generalized this correct observation into the incorrect claim (in the Slashdot summary) that “illegal downloading cannot be stopped”. Even the Guardian gets their headline wrong (“The pirates will always win, says Carphone’s Dunstone”), which again misrepresents what Dunstone said. I agree with Dunstone that legal downloading services are part of the fight against piracy – although, most of those are already in place. ITunes, Netflix Download service, Amazon Video-on-demand, etc are already there. Additionally, with sufficient legal pressure – we could also drive piracy down. The most obvious method is to go after filesharing hubs – like Pirate Bay. That’s a different method of attack than sifting internet traffic for illegal filesharing. What would happen then, is that piracy is marginalized. People don’t want to jump from one website to another every few months – so most people will just stop trying to skirt the law, and do it the legal way. Only the die-hard pirates will stick with it. The fact of the matter is that you don’t have to stop 100% of piracy. This isn’t a war that has one of two outcomes: you “win” or you “lose”. A world with 95% or 100% piracy is a very different world than one with 10% or 20% piracy. In both cases, piracy exists, but in the first case, creativity gets smothered.

What’s odd is the number of people who buy-in to the false dichotomy. They wouldn’t buy-in to similar dichotomies like: “shoplifting cannot be stopped” or “littering cannot be stopped”. We can do the same thing to piracy that we do to shoplifting or littering: minimize it so that its damage is minimized.

I read an article by Clay Shirky recently that seemed to imply that piracy cannot be eliminated because, if they have to, pirates will resort to the “sneakernet” – i.e. manually sending a hard-drive from one location to the other for duplication. The whole thing takes place without the internet involved. I couldn’t help but think, “well, duh – if pirates have to resort to those kinds of actions to pirate stuff, then piracy rates will be extremely low because it’s just too inconvenient for a large majority of people. That means it won’t be very threatening”.

Slashdot, of course, leaves out the fact that Charles Dunstone doesn’t call for the elimination of copyright or surrender to pirates, but, rather:

Charles Dunstone said, the solution is education about the benefits of respecting copyright coupled with services that allow consumers “to get content easily and cheaply”.

Obviously, his comment about “getting content easily and cheaply” means legal download services – like iTunes.

Then, Ben Goldacre’s article in the Guardian got posted: (Slashdot: Lies, Damned Lies, and the UK Copyright Industry, “Illegal downloads and dodgy figures”, BadScience: Home taping didn’t kill music). I generally like Ben Goldacre. He’s probably most famous for combating the anti-vaccination groups. Most of his article dealt with unrealistic numbers of lost sales due to piracy. I think it’s perfectly fine to raise issues about bad numbers. Unfortunately, he makes some jabs at the whole copyright system, implying that piracy isn’t a bad thing. He seem to buy-in to the questionable results of the Norwegian “pirate” study. And the title of his article is rather odd (“Home taping didn’t kill music”) since his article has nothing to do with home taping. The problem, of course with the “Home taping didn’t kill music” argument is that home-taping is really inconvenient. It’s like the “sneakernet”. Internet piracy gives you free copies of digital media (read: perfect copying) and everything is there (often hours after its release). Home-taping on the other hand, gives you a degraded copy, you have to get a physical copy to duplicate in the first place, and you have to borrow that copy from someone else who has it. This means you probably can’t get what you want because your friend doesn’t have it either, and if he does have it, you feel like a leech when you ask to borrow lots of music.

Then comes the article saying that the Pirate Party has won a seat in the EU Parliament. (Link to my article examining the Pirate Party’s arguments) At least it’s only one seat out of 736. They’re hoping to make the most of it though, by being a one-issue party. They’re also hoping that other political parties chase votes by taking up their cause. It’s rather sad. The Pirate Party / Pirate Bay always remind me of the “killing the golden goose” story. They’re sharpening up their knives without understanding the economic issues going on with digital media. For a real treat, and to raise your blood pressure, just read some of the Slashdot comments. I feel frequently insulted by slashdot comments whenever the issue of piracy comes up. A few favorites:

All works intellectual creativity of should be given away free. We should only have to pay for retail services, and stuff that China and the rest of the world manufactures… not for what America does best. (Source)

Copyright is the antithesis of free speech. (Source)

Everyone who applies copyright restrictions, deep inside, knows doing so is wrong and screws all humanity over.

If you don’t want something copied, don’t release it. (Source)

Sigh. I never would’ve guess that working hard to make great software and earn a living would’ve provoked these kinds of reactions, just because I won’t give away years of work.

I always like to know what other people think, even if I disagree with them, so I recently watched a video by Pirate Party founder Rick Falkvinge titled “Copyright Regime vs. Civil Liberties”. The Pirate Party is dedicated to copyright and patent “reform”, and by “reform”, they mean that they advocate elimination of almost all copyright, patent, and intellectual property laws. The only vestige of copyright that they support is to prevent commercial selling of copyrighted material for 5-10 years, and works would have to be attributed to their authors. Under the Pirate Party, filesharing would be legal, and all patents would be eliminated. They also support trademarks, because trademarks help society distinguish one creator from another.

Here’s the video, and (below) I’ve detailed what’s wrong with it:

Falkvinge’ main argument is this:

5:33-8:05
Copyright is at it’s heart a commercial monopoly. When it was created, it was created to distribute books to bookstores by horse and cart. And, the key thing there is that if you found an infraction of copyright, you can find a copied book in a bookstore, you can see an unauthorized concert (not paying license money). The key thing here is that you found them in public places – with the naked eye. Today, however, copyright has crept into my private communications. It is illegal for me to send a piece of music in email to you guys. It is illegal if we are in a chat channel, to drop a video clip there. And if copyright is to be enforced in this new environment, then that means all private communications must be monitored for copyright infractions. That means out goes the postal secret. That means law enforcement and corporate interest groups must monitor every 1 and 0 that leaves my computer. That includes looking at letters to my lawyer and doctor and wife. I’m frankly not prepared to give them that right… So, our poor lady justice has a problem: on one side of the scale, you have one income source for one entertainment industry – essentially a luxury consumption in our society. On the other side of the scale, you have two foundations of our democracy. Hmmmm.

Over the few minutes, Falkvinge goes into the consequences of monitoring all internet communications: whistleblowers no longer have protection, damage to freedom of the press, how this influences people to self-censorship, how your identity is formed by private communications with other people, etc.

11:00-11:30
So, the copyright industry would like you to believe that it is about somehow about right to profits. That the filesharing debate it is about percentages, about graphs on a piece of paper. It is not. It is about vital civil liberties that need to be eroded or abolished in order to maintain their old crumbling monopolies. And this is the message that we’ve started to get out in Sweden.

The whole situation sounds awful – like something out of 1984. Here’s the problem: Falkvinge’ argument is completely wrong. Everything Falkvinge says is correct if our goal is to stop every single instance of copyright infringement. However, the legal system has always recognized limits on law enforcement’s ability to pursue crimes. We can quickly see how flawed Falkvinge’ argument is if we simply insert a different crime in place of “copyright infringement” and repeat his argument. For example:

“And if [laws against child pornography] are to be enforced in this new environment, then that means all private communications must be monitored for [child pornography].”
“And if [laws against libel and slander] are to be enforced in this new environment, then that means all private communications must be monitored for [libel and slander].”
“And if [laws against false medical claims] are to be enforced in this new environment, then that means all private communications must be monitored for [false medical claims].”

If you believe that Falkvinge’ argument is valid for copyright, then you must advocate the elimination of lots of other laws. Further, if law enforcement’s goal is to eliminate all instances of any particular crime, without regard for people’s rights, then we might as well throw out all laws. Laws against burglary should be abolished because the only way to eliminate burglary is to put video cameras everywhere – and we can’t have that, therefore, we must abolish burglary laws. Laws against drugs should be abolished because the only way to eliminate the drug trade is to monitor everyone’s actions at every time, completely control all trade, and insert a device inside everyone’s body to monitor drug-levels at every moment. We can’t allow that, therefore, we must abolish drug laws.

So, the whole argument is just plain wrong. It’s true that copyright can be infringed through email-to-email communication, but, let’s face the facts here: that’s not how the vast majority of it happens, and second, even if 100% of copyright infringement happened through email, that’s not an argument that copyright laws should be abolished – it’s simply an argument that we will not be able to enforce copyright laws in particular cases. Falkvinge’ argument is that copyright cannot be enforced on private communications, therefore the laws should be abolished. Abolishing copyright means we can no longer prosecute public violations of copyright. In short: he’s arguing that we shouldn’t be able to prosecute public violations of copyright because sometimes copyright is privately violated.

Alternatively, we could simply enforce copyright whenever someone sticks out their neck and violates copyright in public. In fact, this is where the vast majority of copyright infringement happens anyway. Combating piracy is a very open-ended problem; there are numerous possible ways to combat it. It is disingenuous of Falkvinge to pretend that the one and only way to combat copyright violations is through monitoring all internet communication.

I’ve actually seen this quite a few times from the anti-copyright crowd: this attempt to connection copyright elimination with “saving human culture” or “protecting our fundamental freedoms”. It gives them the opportunity to twist-around “not paying the creator for their work” into a saintly “I’m fighting for our freedom against greedy corporations”.

Besides, if Falkvinge’ argument was true, then there’s a major problem for him. The stance of the Pirate Party is that copyrights should last for 5-10 years, and they only restrict what you can buy and sell. This means, for example, that Walmart cannot print-up their own copies of books and sell them during that 5-10 year window. But, I can go online right now and purchase a pirated copy of software. I’ve seen the websites. So, the question is this: if I buy copyrighted material from some illegal vendor over the internet (maybe through email, maybe through a website), then that is “private communication”. By Falkvinge own argument, we HAVE to allow this type of activity because the only way to stop it is by monitoring all internet communication. Therefore, the 5-10 year restriction on selling copyrighted material is unenforceable, and should be abolished. The Pirate Party’s stance is internally inconsistent.

Now, the Pirate Party might argue that a website selling pirated material on the internet is “public”, but how is that any more public than filesharing websites?

So, the major argument of Falkvinge’ “Copyright Regime vs Civil Liberties” talk is 100% wrong.

7:00-7:40
And it gets worse. The copyright is now lobbying for ISPs to be liable for what their users do on the net. And there goes another very important principle called the “common carrier principle” which ways that the messenger is never responsible for the contents of the message. Imagine if the US postal service would be held liable for what you send in letters. This is what the copyright industry is lobbying for. And they’re taking advantage of the fact that politicians are clueless about what new technology means.

There is a grain of truth in Falkvinge’ argument here, but it’s not nearly as bad as he wants us to believe. He wants us to believe that the ISP can be held guilty for the crime committed over the internet connection. For example, it sounds like an ISP can be held responsible for a death-threat send via email by one of their users. This is not actually what “holding the ISP responsible” means. Falkvinge’ statement is actually vague on this issue – which makes people assume the worst. (You can read more about this issue here.)

It’s currently two years after he gave his talk, and it’s true that copyright groups have started working with ISPs to cut-off internet service to pirates. I have actually heard about people receiving warning letters from their ISPs about pirating material over the internet. In one case, an internet user received a letter about a specific movie they had pirated on a specific day. They didn’t cut off his service, but it’s possible that they would after the third infraction. There are already some parallels with the policy of cutting-off pirates. For example, ISPs are sometimes contacted about cutting off customers who send spam, or who are involved in port scanning (which is typically associated with computer hacking). I’m sure that, if there is a grain of truth in Falkvinge’ argument, it might be true that the copyright industry is lobbying to get the right to sue ISPs who ignore piracy by specific users even after the ISP has been repeatedly notified about those users. In that sense, the ISP would be liable for failing to act on specific complaints about infractions by specific users. Falkvinge could then twist that into ISPs are going “to be liable for what their users do on the net”, which is true or false depending on how you interpret it.

I completely agree that ISPs should not have to monitor their users, or be held responsible for first-time infractions of their users. However, if an ISP repeatedly ignores notifications about a particular user, then it’s reasonable that their liability should increase. There is similar to how copyrighted material is treated on the web. If the copyright holder finds their material on the internet, they can send a cease-and-desist letter. You can then remove the offending material with no consequences. However, if you ignore the letter, your liability increases. This is why YouTube doesn’t get sued into bankruptcy – they don’t have to police every video uploaded onto YouTube for copyright violations, but they can be held liable if they ignore cease-and-desist letters about specific videos. In effect, ignoring cease-and-desist letters is tantamount to providing safe-harbor for copyright violators. I suppose someone could (just as truthfully) make the statement that “YouTube is being held liable for the actions of its users” – which is also true or false, depending on how you interpret it. (This is what gets a lot of piracy websites into trouble: they ignore cease and desist letters.)

11:40-18:00
Falkvinge gives his history of copyright and why it exists. His basic narrative is that the Catholic Church “was one source of culture and knowledge”. It was a top-down, one-source to “the masses” type of communication. Then, the printing press came along. The English monarchy established a single group of printers who could print books for authors, but censor and burn books not wanted by the crown. Later, when England allowed more freedom of the press, they also allowed more people to print books. The printers then pushed to establish “copyright” so that they could control printing of works by authors. He claims that it was always about protecting the distributor’s profits, never about protecting the author. I think the main point he is trying to make here is to establish a pattern: the Catholic Church controlled everything (bad), but then the printing presses came along (more distributors=good). But, the monarchy locked down the printing presses with censorship and ‘authorized printers’ (bad). Eventually, freedom of the press was established and more printers were allowed (good), but the ‘old system’ didn’t like that. He seems to be trying to create the pattern in the listener’s mind of the ‘old system’ trying to control things, but the ‘new way’ was always better and more democratic. While his point was muddled, he seems to trying to argue that ‘filesharing’ is the new democratic distributor which is opposed to the ‘old system’ of copyright.

This isn’t so much an actual argument as it is an attempt to get the listener’s mind thinking along a particular pattern and then insert filesharing into the sequence to guide the listener to a predefined conclusion. This type of argument is just “patterning”, and while it might confuse people into believing your pet theory, it has some big logical flaws. It’s easy to setup a pattern and then fit your own pet theory into it. For example, you could argue that the “old system” has always resisted the “new system”, but the new system was always better. Monarchy resisted democracy, but democracy was better. The Ptolemaic astronomers resisted Galileo, but Galileo was right. Governments resisted free speech, but free speech was better. Then, once you’ve established a pattern to get the listener to think in a particular direction, throw in your pet theory that superficially fits the pattern: and capitalism (the old system) will resist communism (the new system), but communism is better. Of course, that’s nonsense. I mostly see “patterning” arguments used with pseudoscience. Some crackpot will say that the establishment resisted Galileo and laughed at Einstein, and then imply that he fits the same pattern. Of course, he conveniently ignores the fact that 99 out of 100 theories turn out to be completely wrong. In the end, “patterning” is just rhetoric – a way to convince people you’re right without actually putting forward reasoned arguments.

17:18-18:00
So, the key here is that copyright, while written into law that it’s supposed to be for the benefit of the author, never was. It was for the benefit of the distributors. It was lobbied by the old monopoly as a way for that monopoly to remain even after the authors has supposedly gotten it instead…

Falkvinge is trying to setup the idea that authors/creators (the people we like) don’t benefit from copyright but (faceless, greedy) distributors make loads of cash from copyright. I’m sure most authors and creators see this as nonsense, but Falkvinge can probably pull the wool over the public’s eyes on this one. Heck, it’s almost an argument that you should pirate because (according to him) buying only helps greedy distributors and never the author.

19:43-20:15
What we’re saying is that, okay, there might be some business models that require a time-limited monopoly. Like, I can imagine a $200 zillion dollar movie out of Hollywood might want some sort of time-limited monopoly in order to get all of that venture capital. But, that monopoly must really now stretch into my private communication. I’m sorry, but the buck stops there… Non-commercial usage must be let free.

This is his argument about why filesharing should be legal, but they’re going to allow a 5-year monopoly on commercial trade. (Nevermind the fact that filesharing will drop the bottom out of any commercial trade.)

20:55-21:40
We have as vision a society where every citizen has 24/7 access to all of humanity’s collected knowledge and culture anywhere. That is a huge leap-forward. It is not a bad thing that the copyright industry has to take a step back. This is a much larger leap ahead than when public libraries arrives 150 years ago. And it is now enabled by today’s technology.

Actually, society already has that access. What Falkvinge wants is free access, and free access at the expense of the creator who produced it. Our copyright system enables the continued creation of new work. Economists know there is no such thing as a free lunch, but Falkvinge hasn’t figured that out yet. And the comparison to libraries is faulty. Libraries support authors by buying books. He might have a point if libraries printed up their own copies of books (without paying the author), and also printed up free, permanent copies for anyone.

I also hate the “knowledge and culture” phrase that anti-copyright advocates use because they want to make “entertainment” sound lofty and legitimize making it free. Anyway, more and more information is freely available on the web. Dictionaries and encyclopedias, for example. More and more TV and movies are available online – with only a few advertisements. There is so much information available on the internet for free, more than anyone could ever read. We have more free “knowledge and culture” available at our fingertips than anyone at any other period of history. All of this actually makes it clear that the Pirate Party isn’t really interested in spreading knowledge. They want free access to all the movies, music, and software that they can get. It’s about free entertainment, about never having to pay for anything digital. (A quick look at the top downloads at piracy websites will quickly reveal that entertainment is the primary goal of pirates.)

He sums up the Pirate Party positions:

The only items where I really agree with his ideas are shortening copyright lengths (but not as extreme as lowering it to 5-years) and also reducing patents (to cut out all the frivolous, defensive patents, but not to eliminate all patents).

29:00-29:15
What’s important about this is that every single business model that makes money today will make money with these changes implemented. The only difference is that millions of people will not be criminals.

It’s hard to interpret exactly what he means by this statement. It could have two possible meanings:
(1) He’s claiming that the business models will bring in the same levels of revenue as they did under a copyright system, and therefore, creators will continue to create.
(2) He’s claiming that those business models will “make money” without copyright, but avoids saying that they make a lot less money. This obviously true – no businesses will bring in zero dollars in revenue, but it’s irrelevant since a company that makes 20% of its original revenue is probably a bankrupt company.

So, I’ll address the first interpretation, which is the only relevant question here. Because companies and creators have a variety of costs and variable profitability, Falkvinge essentially has to argue that people will continue to pay as much money to creators if copyright is eliminated. Presumably, he thinks that people will simply donate money – and they’ll donate just as much money to support creators as they currently spend to buy copyrighted material, or purchase copies (even though they already have the media). This sounds like complete nonsense. I’m sure that if you compared the amount of money donated to OpenOffice versus the amount of money paid to Microsoft for MS Office, you’d find a huge disparity. (And I say that not because I’m crying for big-companies or their potential loss, but simply to point-out that people do not donate nearly enough to match what they were paying for copyrighted material.) Similarly, wikipedia has never earned nearly as much money in donations as Encyclopedia companies were earning back in the 1980s. More specifically, wikipedia was trying to raise $6 million in donations in 2008. In comparison, the Encyclopedia Britannica brought-in $800 million in 1989. It’s great that there’s a free encyclopedia for everyone, but my point is simply that people are clearly not donating at levels that replace revenue compared to copyright systems.

Now, I know that people argue that pirates purchase a lot of digital after they pirate it. (I don’t actually believe that most pirates continue to buy at levels near their pre-piracy rates.) I also doubt that a good comparison can be made between the behavior of pirates and the behavior of the general public in a society without copyright over a long period of time. Sometimes, I think pirates purchase copies of material they pirate because they’re still in the habit of buying digital media from their pre-piracy days (thanks to copyright). I think that companies will see revenues fall to a small fraction of their current earnings if copyright is eliminated. That may not be a problem for the survival of a few extremely profitable products, but it will bankrupt almost everyone else.

I think the Pirate Party’s ideas are bad economics, and has quite a bit in common with other bad economic systems that got people excited, but were fundamentally flawed (like communism and the dot-com bubble). Unfortunately, “free entertainment” is a pretty good way to draw-in votes, especially among younger people – who are cash-strapped and very interested in entertainment.

Update: From an 19 October 2009 BBC article -

[Falkvinge] takes a long pause when asked whether he agrees with the principle that artists should be allowed to make a living from their creations, if they are popular enough.

“In economic terms, there is an enormous oversupply of people wanting to live off creativity,” he replies.

“So there isn’t enough demand to pay everybody. In such an occasion, market forces dictate that there will only be so many successful creators.”

First of all, he actually dodged the question. It reminds me of that adage politicians follow: don’t answer the question that was asked, answer the question that you wish they asked.

Second, the reality is that all economic systems require laws to function well. If you own a store, you need laws against shoplifting, embezzlement, and laws involved in contracts (so that, for example, you can require that your suppliers hold-up their end of the bargain). If the government suddenly decided that shoplifting was okay, you’d see stores taking drastic action to stop theft (e.g. guns) and lots of stores going bankrupt. The fact that they go bankrupt is not a symptom of “market forces dictating that there will only be so many successful [stores]“. That would misattribute the reason for the failure, and would be an attempt to dodge the blame for setting up a bad economic system.

The Pirate Party wants to change the economic system and make it much harder for creators to recoup the value that they have produced for society. Then, under this biased economic system, when creators fail, they point to “the market” as the reason that the creator failed. In reality, when a customer buys a product for $10, what they are saying is that “this product is worth more to me than the $10 I have in my pocket”. The Pirate Party, by eliminating copyright, would be opening the doors for everyone to get it all for free – which would eliminate ability to make a mutually-beneficial trade, just as legalizing shoplifting would eliminate the ability to make mutually-beneficial trade between the store and the customer. Customers get this valuable product for free, the creator goes bankrupt and stops producing for society. It’s not because “the market” decided that the creator wasn’t producing value for society, but rather, because the economic system was changed so that the value that the creator produced would no longer be repaid by society to the creator. So, what Falkvinge is doing here is revealing how badly he would bungle the economic system that encourages production, and how poorly he understands the economic and legal underpinnings of society.

In economic terms, eliminating copyright is a loss for society. It’s a “tragedy of the commons” situation. When everyone pursues their own self-interest (by pirating and not paying) it leads to a collapse of the economic system that enables creators to continue their work:

The tragedy of the commons refers to a dilemma described in an influential article first published in the journal Science in 1968. The article describes a situation in which multiple individuals, acting independently, and solely and rationally consulting their own self-interest, will ultimately destroy a shared limited resource even when it is clear that it is not in anyone’s long-term interest for this to happen.

PixelJunk 1-4 looks like an interesting little shooter. Apparently, they’re also looking for a name.

A group of people wants a survey of disease in a population. They calculate that it will cost $100,000 to do this survey properly. They sit down and think about whether their they need the results badly enough to pay $100,000. They decide that, even though the survey would be valuable, they can’t justify the cost. They begin to notice that lots of other groups want the same survey data. They decide that they will do they survey and then sell copies of the results for $5,000, to help pay the costs. Other groups like that idea a lot because they were considering doing the same survey for $100,000. Now, they can get it for $5,000, instead of $100,000. So, they do the survey, sell the results (reducing their own costs), other groups buy it if they think it’s worth the money (reducing their costs from $100,000 of doing the survey themselves to $5,000), and everyone wins.

Then, along comes one group of people saying that “information wants to be free”. Another group says that they “shouldn’t have to pay for it, because they aren’t taking anything away from anybody by getting a copy.” They say the “cost of duplication” is the only relevant cost, and they can use their own photocopier. Soon, everyone follows suit. Nobody pays. The whole system falls apart, leading everyone back to the original situation the next time: each group must pay $100,000 to do this survey themselves, or simply go without the results. The entire world ends up poorer as a result, because collaborative payment falls apart. What copyright does is enable collaborative action, by stopping people from giving away free copies. Piracy allows each group to anonymously opt-out of paying, ultimately undermining the whole system, making the world a much poorer place in the long-run.

We can think of copyright as enabling society to collaboratively fund creative development.