On 5 January, the Independent's website ran a photo uploaded to the Flickr image-sharing site by user Peter Zabulis. Zabulis flagged his photo of a snowed-over field as "all rights reserved," and he took exception to the Independent's use of the image without permission, and he wrote to them to tell them so.

Exception turned to outrage as a terse note from the Independent claimed that by posting the photo to Flickr, Zabulis had not asserted his copyright (whatever that means) and thus copyright had not been breached. The ensuing debate – including a public pillorying of the Independent for failing to grasp the nature of Flickr, copyright and photographer's rights – generated a lot of heat, but not much light (one bright spot: the Independent paid Zabulis and apologised to him).

Debates about copyright fall apart when they're pitched in terms of absolutes: "Copyright prohibits all copying", or "Non-commercial copying is always legal". Copyright started life as an industrial regulation that set out the rules governing the relationship between different actors in the supply-chain of the "creative industries" (originally just publishing, later music, film, software and many other industries).

Much of copyright was created by simply enshrining existing business practices into law – for better or for worse. Many artists have pointed out that copyright, even at its best, can present a playing field tilted in favour of the companies that shepherded its passage into law.

Theoretically, copyright also bound the activities of non-industrial actors – fans, audiences, readers, people who were whistling in the shower. But practically speaking, the average person would virtually never interact with copyright: first, because the personal means of interacting with copyrighted works (reading books, listening to records) did not involve making copies, and second, because when copies were made, they were invisible to the copyright industries' radar. No one was going to come by your office to look for photocopied Garfield cartoons stuck on your cubicle.

Which isn't to say that there weren't a myriad of rules, formal and informal, governing the use of creative works by individuals. Certain songs could be sung at the pub, but not in front of a nursery school.

Recounting the plot of last night's TV show to a mate was permissible, but spoiling the ending wasn't. Tracing a library book illustration for a science project was OK: cutting up the book was not. Pretending to have made up a ghost story that you read in a Poe collection was plagiarism, not culture.

Now, thanks to the internet (which runs by copying things, and which makes all those copies visible with a simple search) copyright has been stretched to cover both industrial and non-industrial uses of creative works, and what's more, the definition of industrial and non-industrial has become a lot fuzzier.

We're trying to retrofit the rules that governed multi-stage rocket ships (huge publishing conglomerates) to cover the activity of pedestrians (people who post quotes from books on their personal blogs). And the pedestrians aren't buying it: they hear that they need a law degree to safely quote from their favourite TV show and they assume that the system is irredeemably broken and not worth attending to at all.

It's an impossible situation. As an author, I depend on there being some rules of the road when I negotiate with my publishers, and it's in every commercial creator's interest to try to find a moderate, coherent copyright rule that avoid dumb absolutes in favour of nuance and fairness. I don't pretend that I have all the answers, but here's some of the principles that I think a good copyright system must embrace if is to succeed. Many of these principles are already in various nations' copyright rules as part of "fair dealing" or "fair use," but these user-rights in copyright are complex and difficult to navigate and vary from country to country.

As we on the internet create the norms that will be enshrined in future copyright, here's what I think we should keep in mind: "All rights reserved" doesn't cover commentary or reportage. If the Independent had been commenting on Zabulis's photo ("Witness the interplay of lights and darks" or "Area man sneaks into snowy field, takes photo for proof") then reproducing as much of Zabulis's photo as they needed to in order to report thoroughly on the subject should be fair game. Likewise, Zabulis was in the right to reproduce a screenshot from the Independent's website in order to show people how his image had been taken without permission.

Commercial and non-commercial are different. While there's a lot of grey area between "commercial" and "non-commercial", there are also some bright lines. Newspapers should have to pay photographers for stock images; kids working on school reports (and other non-commercial users) should be able to clip images and use them for without negotiating a rights agreement with a copyright holder.

Incidental use isn't infringement. If Zabulis's photo had included a blowing piece of trash bearing a copyrighted work (say, a copy of the Independent), he should still be allowed to sell and publish his photo without the Independent's permission. Incidental copying includes (for example), Google copying every page on the web in order to create an index of the words on those pages.

Some commercial copying is OK. For example, when a giant movie studio sits down to create a movie (whose copyright they will eventually defend with the atavistic savagery of a maddened grizzly), the designers for the film will create a series of "mood books" filled with clipped, scanned and copied text, images, even video clips, to help the design team agree on the look and feel of the movie. The studio doesn't and shouldn't need permission to make these uses, though they are commercial and involve copying. There are many other cases like this, from pasting articles into an email you send to your boss to photocopying an inspirational text and tacking it up in the break room. They share one common trait: they don't displace any revenue for the rightsholder.

When copyright cartels endanger a new medium, their copyrights should be converted into economic rights or thrown out. This principle is as old as sound recordings: when the sheet-music publishers refused to license their work for records, the state intervened and forced them to sell at a fixed rate. Today, many copyrights are relegated to economic rights: a performer has the right to be compensated for the playback of his CD in a shop, but not to stop the shop from playing the music. Copyright's purpose is to promote participation in culture: where refuseniks subvert that goal, their copyrights should be limited.

This is just a partial list, and it may strike you as radical. But before you dismiss it, consider this: most copyright systems are supposed to work this way in theory. But between corporate bullies who like to assert that "all rights reserved" means that no one is allowed to do anything without permission, and personal theories of what copyright means based on half-remembered lectures from the company lawyer, we treat copyright as absolute. And when we do, we turn a system with a real purpose (providing a framework for participants in creative businesses) into a caricature of itself, one that no one can respect.