Filed under: Creative Commons, open business models, Uncategorized | Tags: Abundance, business models, Noun Project, Opendesk, Scarcity, Wikimedia
Originally published on Medium 15-Dec-2015. This is the second in a series of six Medium articles connected to the research underway by Creative Commons for its Kickstarter-funded book about open business models to be published summer 2016. This work has three parts. Part 1 explores how open businesses models are based more on abundance than scarcity. Part 2 continues that exploration with an eye to how abundance affects design and development of open business model strategies. And finally, in Part 3 we get down into specifics around how open business model organizations generate revenue to sustain and thrive.
Part 1: A dialogue between abundance and scarcity.
Imagining a post-scarcity world has long been the domain of science fiction writers and futurists. Replicators producing goods in great abundance. Societies where basic human needs are fulfilled cheaply or even freely. People freed from the need to work or earn money. The activities and lives of humans living in abundance. These are the realm of Star Trek or books like Culture and Down and Out in the Magic Kingdom.
These ideas have no relation to the here and now.
Or do they?
No, no, no, the here and now is governed by scarcity based economics. We all know about the shortage of water, food, energy, clothing, education, medicine, and other goods. Too much demand and not enough supply. Scarcity, that’s the here and now. That’s what drives the market. Supply and demand determining prices. And price determining who has access and who gets what goods.
But wait — aren’t digital goods different?
In the digital world the incremental cost of storing, copying, and distributing digital goods is next to zero. And Creative Commons licenses on digital goods make explicit permission to replicate, share, and reuse. This creates the possibility for abundance. And we certainly are seeing a growing abundance of works in the Commons. Over 1 billion according to the latest Creative Commons State of the Commons report.
No, no, no, to prevent abundance we’ll create artificial scarcity through “digital rights management”. We’ll put locks, passwords, and controls on digital goods to prevent them from being accessed, changed, or replicated. That way we can control digital goods the same way as physical resources and existing economic models and revenue streams are maintained.
Do we really need to hobble technology for economic gain? Do we really need to rely on artificial scarcity to prop up society and its scarcity-based economic model? What are the implications for the economy and society if we go with an abundance model?
Can we even imagine it?
Part 2: Abundance Based Design of Open Business Models
Jeremy Rifkin in his book The Zero Marginal Cost Society says, “The notion of organizing economic life around abundance and use and share value is so alien to the way we conceive of economic theory and practice that we are unable to envision it.” (bold added by me)
Rifkin introduced me to abundance, but Free Knowledge was the a-ha moment book where the limitations of scarcity-based economics were made evident. Ever since then I’ve been having thought experiment dialogues in my head like the one at the start of this post. Mental conversations between scarcity and abundance.
Trying to imagine abundance.
I’ve been noticing the vision and mission statements of the open businesses and organizations Sarah and I are speaking to are about abundance.
Wikimedia imagines “ a world in which every single human being can freely share in the sum of all knowledge.”
The Noun Project is “creating, sharing, and celebrating the world’s visual language.”
Thingiverse “is a thriving design community for discovering, making, and sharing 3D printable things. As the world’s largest 3D printing community, we believe that everyone should be encouraged to create and remix 3D things, no matter their technical expertise or previous experience. In the spirit of maintaining an open platform, all designs are encouraged to be licensed under a Creative Commons license, meaning that anyone can use or alter any design.”
I began thinking about open business models as being abundance-based. I began wondering …
What if, to generate your own open business model, you flip the traditional economic scarcity-based model on its head and focus on abundance? What if, as an open business, you focus on what is it you have that you can strategically make freely and openly available to everyone?
I began seeing maximizing abundance as a key open business model strategy.
I quickly saw how open businesses leverage the permissions Creative Commons licenses provide to put assets out in the world in a way that encourages use, participation, contribution, and enhancement. The Noun Project, Wikimedia, and Thingiverse all do that. They make digital assets abundant and invite everyone around the world to use, contribute to, and enhance that abundance.
I also began seeing how abundance isn’t just about maximizing availability of open digital assets but also about maximizing abundance of participation. Open business vision and mission statements couple an aim for abundance of resources with a recognition that getting there is a collective group activity. Abundance isn’t solely created by a single open business or organization. It is collectively created by a global network of people who affiliate themselves with the open business and collectively worked toward a shared goal.
Edward Boatman, co-founder of the Noun Project, may have created the original set of icons and symbols that got the Noun Project’s visual dictionary going but he didn’t conceive of a business where he’d author the entire world’s visual dictionary himself or bring on Noun Project employees to do so. Instead maximizing icon and symbol abundance is collectively being done by over 7,000 designers from all over the world contributing their work to the Noun Project.
In creating your own open business model think about how you will engage the world in adding to, improving, and expanding use of what you’re making freely and openly available to everyone. “Build a community around your content” as my colleague Sarah Pearson says.
Opendesk’s Open Making Manifesto includes a principle that says:
“Open Making can democratize not only the design and manufacturing of artefacts, but also the design of processes and organizations, which should also be documented, visualized and shared. Designing, sharing and manufacturing in a collaborative way can enable us to learn how to build global and local networks that are more sustainable thanks to the fact that anybody could improve them. Building a new economy is not an easy task, but it’s easier if we test it in a distributed way and share the results. Designing and making together can enable us to learn the social, political and economic dimensions of Design and Manufacturing.”
Sustainability is based on the ability for anybody to improve and share. And you can also see I’m not the only one who thinks this work is helping us learn new processes, new kinds of organizations, and yes even a new form of economics.
These ideas about abundance are all a bit raw for me still. I’m still thinking it through, but seeing open business models as being about maximizing abundance of digital assets and abundance of human participation has been really useful. It’s helped me frame how I think about open business models, generated a couple of strategies for creating your own open business model, and provided a lens through which to look at and analyze existing open businesses.
These aren’t the only ways open business models maximize abundance. I bet you have many ideas about this too. Welcome your comments. Here’s one more I’ve been thinking about in my latest thought experiments …
Abundance of value.
Scarcity based economics seeks only to maximize monetary value, abundance-based economics and open business models seek to maximize a more diverse set of values. The degree to which an open business can engage participation in what it does is dependent on the extent to which others buy in to the value the business seeks to achieve.
I think the reason Wikimedia has 26,884,090 registered editors (seehttps://en.wikipedia.org/wiki/Wikimedia_Foundation, as of 3-Dec-2015) is because that many people around the world agree with and want to participate in making possible the value Wikimedia seeks to create “a world in which every single human being can freely share in the sum of all knowledge.”
Open businesses generate value for others, not just themselves, and that value can take many forms — knowledge, culture, relationship, livelihood, well-being … Open businesses aren’t blind to money, but what drives them, what motivates them, the values they operate by and the value they seek to create is more diverse than just monetary value for themselves.
As an open business how will you maximize the abundance of value you create?
Part 3: Generating Open Business Model Revenue to Sustain and Thrive
All this abundance-based economics talk is well and good but you’re probably saying to yourself, today, right now, most of the world is operating on the basis of scarcity-based economics. How do abundance-based open businesses survive in such a world? Just how does the money part work in an open business model anyway? How can open businesses not only survive but thrive?
Lets set aside thought experiments and get down to the money.
It’s true, during this transition time while inventing a new abundance-based economic model open businesses must include monetary value in the mix of value they create.
Lets look at the money part of how the open businesses work. Lets look at a real examples from open organizations and businesses already mentioned in this post. Lets start with the simplest one first.
Wikimedia is a 501(c)(3) charitable organization. More than 4 million donors around the world donated $75 million USD to Wikimedia last year. Here’s a link to their 2014–15 Fundraising Report. This is yet another way Wikimedia makes it possible to participate. Donating money for their operation is an expression of support for the value they are creating.
It’s worth pointing out that the actual content Wikimedia has on its sites like Wikipedia are created by volunteers. Editors do not get paid (in general). Wikimedia aspires to be an unbiased, accurate and trusted resource which can be undermined when entries are created through paid advocacy — seehere for example.
The Noun Project has a very unique business model. It’s also one of the few examples where Creative Commons licenses are at the very core of the model. Co-founder Edward Boatman spoke wonderfully eloquently about it during our interview. Here’s my simplified version of how it works.
Icons and symbols on the Noun Project are Creative Commons CC BY licensed. Free membership entitles you to download and freely use those icons at no cost — as long as you give attribution and credit to the creator as specified by the terms of the Creative Commons license. To provide proper credit, you can use the embedded credit already in the icon you download, or you can copy the credit line they provide and add it to your citations, about page, or place in which you credit work you did not create.
In the Free Membership model, if you don’t want to give credit and attribution to the creator you can purchase the symbol or icon for $1.99. The Noun Project splits this revenue roughly 70% to creator and 30% to Noun Project.
When you purchase an icon you see a thumbnail image of the creator, their name, and a message saying: “You can use this icon for unlimited use on any project, forever. Your purchase directly supports the creator.”
If you don’t want to purchase a la carte through the Free Membership plan you can go with the premium NounPro unlimited plan where $9.99/month gets unlimited downloads and no requirement to attribute/credit the creator. Revenue from this is shared roughly 40% to creator and 60% to the Noun Project. Operating the premium NounPro plan requires the Noun Project to offer a lot of services, outside of the icon itself. This additional effort results in a higher revenue percentage going to the Noun Project.
The Noun Project also has an API option that lets you get a direct feed of Noun Project icons and symbols into a your application or service. They have a Playground and API Pro version. Royalty payments to creators are now calculated by adding revenue from the API project to revenue from premium NounPro subscriptions and dividing that total revenue by number of downloads. Numerator and denominator fluctuate on a monthly basis, which means royalty payments fluctuate too.
I really like the way the Noun Project values its creator community and shares revenue with them. However, when we spoke with Edward Boatman he told us that based on feedback from their creators the #1 reason they participate in the Noun Project is its mission. They really like the idea of putting their work out there and helping others. Money is the #3 reason. #2 is promoting their own personal brand. This is a good example of value abundance.
The model of free use as long as credit and attribution are given and requiring payment if users don’t want to give credit is a novel idea. All Creative Commons licenses require attribution be given to the creator so this model really draws on the way Creative Commons works. I’ll be very interested in seeing whether any other open businesses replicate this model for themselves.
Lets look at one last one — Opendesk.
Here’s how Opendesk describes what they do:
“Opendesk is a global platform for local making. You can use it to download, make and buy work space furniture.
Opendesk has a global network of makers and a collection of furniture by a range of international designers. Because that furniture is designed for digital fabrication, it can be downloaded as a digital file and made locally — on demand, anywhere in the world.
We call this “Open Making”:
- Designers get a global distribution channel
- Makers get profitable jobs and new customers
- You get designer products without the designer price tag, a more social, eco-friendly alternative to mass-production and an affordable way to buy custom made products”
I really like the way the Opendesk global platform is making furniture designs abundant. I’m especially intrigued by the way Opendesk converts a global digital abundance into a local produced physical good. I like the idea of being able to tell a story about workspace furniture where the design came from around the world but was made just around the corner.
Of all the open business model organizations I’ve spoken to so far Joni Steiner and Nick Ierodiaconou, co-founders of Opendesk have been the most open about commercial intent and our conversation around their business model ranged wide and deep about how to design one that works.
When they first started designing the Opendesk system, they had two goals, “We wanted anyone, anywhere in the world, to be able to download designs for local making and we wanted to reward designers financially when their designs were used commercially.”
In designing a business model to achieve those goals they gave a lot of thought to three angles – 1) social sharing potential, (2) support for license choice, (3) impact of license choice on business model.
In support of social sharing Opendesk actively advocates for open licensing. However, designers have choice. They can be proprietary or choose from the full suite of Creative Commons licenses deciding for themselves how open or closed they want to be.
For the most part designers love the idea of sharing content. They understand that you get positive feedback of attribution and what Nick and Joni called “reputational glow”. And Opendesk does an awesome job profiling the designers on the platform. I especially like seeing furniture designers, not often recognized for their work, be so highly profiled.
While designers are largely OK with personal sharing they do have a concern that someone will take the design and manufacture the furniture in bulk without the designer getting any benefits. This has led most Opendesk designers to choose Creative Commons Non-commercial licenses.
So users can download the design and make it themselves for non-commercial use — and there have been many many downloads. (There are always lots of questions about just what constitutes non-commercial. See Opendesk’s response here.)
Or, users can buy the product from Opendesk or a registered maker in Opendesk’s network. You might think of this as on-demand personal fabrication. The Opendesk maker network is currently focused on makers who do digital fabrication via a computer controlled CNC machining device that cuts shapes out of wooden sheets according to design file specifications on the computer.
Makers benefit from being part of OpenDesk’s network by getting paid work making furniture for local customers. Opendesk generates business for makers. Nick and Joni said “Finding a whole network and community of makers was pretty easy because we built a site where people could write in about their capabilities. Building the community by learning from the maker community is how we have moved forward.” Opendesk now has relationships with hundreds of makers in countries all around the world.
Makers are a critical part of the Opendesk business model. The model hangs off the maker quote. Here’s how its expressed on Opendesks own business model page:
“When customers buy an OpenDesk product directly from a registered maker they pay:
- the manufacturing cost as set by the maker
- a design fee for the designer
- a percentage fee to the OpenDesk platform”
They go on to openly share their model by detailing how Maker Quotes are created:
When a customer wants to buy an OpenDesk through our Marketplace model (or by just getting in touch directly with a maker), the maker is responsible for managing customer communication and providing a quote for the product.
The price quoted by the maker must include the design fee and the Opendesk platform percentage fee. Specifically, quotes should be constructed as follows:
- manufacturing cost: fabrication, finishing and any other costs as set by the maker (excluding any services like delivery or assembly)
- design fee: as 8% percent of the manufacturing cost
- platform fee: as 12% percent of the manufacturing cost
- sales tax: as applicable (depending on product and location)”
Like the Noun Project Opendesk shares revenue with their community of designers. According to Nick and Joni a typical designer fee is around 2.5% so Opendesk is being more generous, with 8%, and providing a higher value to the designer.
Moving forward Opendesk is looking to recast the whole idea of openness. To them the sharing economy has shown how you can disruptively scale an idea. Instead of building a business model around IP or design exclusivity Opendesk is starting with openness, sharing, and abundance. Their model focuses on value-added services and experiences for which a fee can be charged — similar to models used in the open source software world.
Even more fascinating is the way Opendesk is working openly to engage everyone in helping define how this model should work. OpenMaking is a public domain resource developing open standards in keeping with new and social forms of design and manufacturing, working with a community of thought leaders and practitioners to define this new movement and discuss how we will produce and consume in the 21st Century.
I’m only skimming the surface of the broad and deep conversation we had but this gives you the gist of Opendesk’s business model.
It’s clear that openness and revenue generation aren’t mutually excludable. There are many ways to earn revenue based on abundance — these three examples show what’s possible with some creative thinking.
Open business models start with abundance, a spirit of generosity, an act of sharing.
Success and sustainability of open business models depends on the extent to which assets, participation, and value is made abundant.
Open business models generate value in many forms — one of which is financial.
This isn’t science fiction. Abundance is a generating a new kind of economy right now. Special thanks to the organizations profiled in this post for showing how this is possible. And to the many millions of people who share using Creative Commons, thank you for creating abundance.
End Notes and Participation Invitations:
As I engage in this work. I’ve decided to do more than just write about it. I’ve decided to directly experience it, to experiment with it. To not just observe and analyze but to actively participate in it. Try it out myself. Even invest in it. Here’s a few of the ways I’m doing that with invitations for you to join me.
This is the time of year when the Wikimedia Foundation runs its fund raising campaign. I donated. I received an e-mail in response which says in part: ‘Everyone is a potential Wikipedian. If you don’t find what you’re looking for on Wikipedia, you can start creating it yourself. The articles, words, pictures and data are created by a diverse community of people who volunteer to share their knowledge with the world.’ One thing I’m noticing in these open business models that make them different from the more closed traditional models is that they invite me to participate in making abundance. Want to join me? Make a donation too? Edit a Wikipedia entry on a topic of mutual interest? Leave me a note. (highlight any text in this article and click on the dialog bubble that appears in the black pop-up bar.)
Images in this post are all from the Noun Project. I’ve given attribution for each and technically, as per the Noun Project’s business model, am allowed to use them for free. However, I chose to pay for them too. Thought I’d experiment with the business model and give extra thanks to the creators. I encourage you to use Noun Project images yourself. I’m also interested in using Noun Project images in the book we are writing. What Noun Project images do you recommend we consider using? Leave me a note with your suggestions.
I’m interested in getting an Opendesk Edie table and I was excited to see Opendesk has a fabrication partner called Makerlabs in Vancouver. However, ordering notifies me the Edie table is fabricated in quantities of 2 — and I only want 1 (costs about $330 CAD for one). I asked Joni and Nick at Opendesk “Is there some way to team up with someone else in Vancouver to make such a purchase with each of us getting 1 table?” They replied, “We aren’t at the scale yet to have frequent enough orders all around the world to combine them — but when we do we will look to bring in a ‘group-making’ feature where we can team up smaller orders — I think this will be really powerful in serving smaller orders and items, but it’s not something we have up and running quite yet.” They also super helpfully linked me up to Kirsty at Makerlabs in Vancouver to help take me through the quoting / ordering / getting made locally in Vancouver process. Thought I’d see if there is anyone else locally in Vancouver interested in an Edie table who wants to join forces with me and place an order? Leave me a note.
Filed under: Creative Commons, Digital Economy, Innovation | Tags: books, building blocks, business models, data, digital economy, free, images, music, open models, private sector, public sector, software, video
All I want for Christmas is for the world to be more open.
But I know from my interactions all around the world that most people struggle to understand what open is and its implications.
New open models require a rethinking of traditional models whether they be education models, business models, models of government, models of research, models of publishing, music, or the arts.
And of course new models can be scary. They threaten the status quo, they challenge pre-conceived notions on how things work, and generate fear of the unknown.
So I’ve put on my Santa hat and here, on Christmas Eve day, I’m working on what I think of as a gift for the world – new models for a new year. This is a gift we unwrap together with an open mind. Lets get started.
New open models are significantly different. Understanding them is a gradual process, a progression through a series of steps or stages that look something like this:
- Awareness – open models are a new concept most people haven’t even heard of. With new models for a new year I aim to make new open models visible. By making you conscious of them I hope you begin to consider them as options, choices you make in how you do your work and how you live your life.
- Responding to and overcoming the fear reaction. Almost everyone initially expresses a great deal of fear over new open models. With new models for a new year I aim to alleviate those fears.
- Looking at examples. One of the best ways to understand new open models is to look at real examples. Hearing the stories and use cases of those who have successfully adopted new open models creates a sense of possibility, soothes the fears, and inspires.
- Trying it out. Once a certain level of comfort has been achieved you’ll begin to see how you can make use of open models personally. As a gift I hope you’ll play with new models for a new year, dip your toe in and try using something that is open.
- Going open yourself. Once you’ve sampled someone else’s open work and experienced the benefits I hope you begin thinking about making your own work open – perhaps initially in a small way but gradually more and more.
- Adopting open as a cornerstone of practice. Once you get to this stage you’re in all the way and usually become an advocate of new open mdodels who won’t go back.
- Spreading open. If you adopt an open model in one area (lets say Open Educational Resources) you’ll become interested in other areas of openness (lets say open policy, or open data, or open access). You’ll start to see the synergistic benefits of adopting more and more open models. The cumulative benefits of multiple forms of openness are greater than each individually.
I aim to get you to stages 5, 6, and 7. But to get to that gift the wrappings associated with the earlier stages must first be removed. We all unwrap gifts in different ways. I’m going to start in the middle with stage 3 and use examples to work through the earlier stages and to lead to the more advanced stages.
Here are some wonderful examples of people using new models of openness.
New models work for both the public and private sector. Both the public and the private sectors can realize social and economic benefits through open models that cannot be attained in any other way. This is an important part of the gift so lets unwrap both the public and private sector aspects of new open models.
New Open Models in the Public Sector
The benefits of openness are often more readily understood in the public sector. The basic tenet of open models in the public sector is that public funds should result in public goods. The public should get what it paid for. I can see you all nodding. Yes, you say money I pay in taxes should result in goods and services I have access to. Yet, the truth is under current models this is not typically the case.
Lets take research. This diagram shows the current funding cycle for research.
As you can see the public pays for research and then pays again to get access to the results of that research. This limits dissemination, economic efficiency, and social impact.
New open models change that process in subtle but important ways that ensure the public does get access to what it pays for as shown in this diagram.
As you can see new open models maximize dissemination, economic efficiency, and social impact.
Governments everywhere are starting to get the picture not only for research but for many other aspects of public sector work. 2013 public sector use of new open models includes:
- US Department of State Open Book Project
- US Fair Access to Science Technology Research Act (FASTR)
- White House Directive supporting public access to publicly-funded research
- UK Open Access Policy
- US Department of Labor Trade Adjustment Assistance Community College and Career Training Grant Program
- Launch of the Digital Public Library of America
- US State level public access policies
- Canada’s Tri-Agency Open Access Policy
- US Executive Order in support of open data
- India’s Launch of a National Repository of Open Education Resources
- European Commission’s Launch of an Opening Up Education Initiative
- Polands Digital School e-textbooks program
- UNESCO’s Launch of an Open Access Repository
- Wales Open Education Declaration of Intent
These are all fantastic in their own right and the Open Government Partnership maps out many more ways governments are pursuing new open models.
In the new year I expect to see new open models spread from single to multiple use cases within these early adopters and more public sector organizations to follow suit. For me the real potential of new open models exists in the combinatorial effect of combining open models. This is “stage 7 spreading open” I describe in my progression at the start of this post. When public sector organizations adopt openness as a new operating principle across all their activities the combined impact will be even greater. Let me give an example.
One of the projects I’m involved with through my work at Creative Commons is the Global Food Safety Partnership (GFSP). This is a World Bank public-private initiative dedicated to improving the safety of food in middle-income and developing countries.
Imagine your public sector organization has responsibilities for food safety. At a very practical level one of the things you’ll need is a training program for food inspectors. Here’s my take on how you could combine multiple means of openness into a whole new approach to putting that training program together.
Step 1: Open License Existing Resources: As a publicly funded agency over the years funds will have been invested in a wide range of standards, competency frameworks of skills and knowledge inspectors require, training manuals, curricula and other resources. As with the research example we saw earlier typically these resources are held all rights reserved with no public access. These legacy resources can all be shared openly by digitizing them and licensing them with a Creative Commons license. This one activity alone, which essentially costs zero additional dollars, leverages and makes available for reuse a large body of existing resources and begins to fulfill your obligation to give the public what it paid for.
Step 2: Adopt an Open Policy: As a publicly funded agency adopt an open policy associated with all future funding grants you award. In this open policy require deliverables from funding awards be openly licensed and made available digitally to the public. (There are lots of existing model policies you could use to create your own open policy including: US Department of Labor’s TAACCCT grant policy and the California Community Colleges Board of Governors Chancellors Office policy)
Step 3: Open License by Default: Adopt a Creative Commons CC BY license as default. This license makes all content (such as curricula developed by developers, marketing and student recruitment resources, etc.) shareable with the public that paid for it. Commercial use of the resource is allowed. The resources can be reused, revised, remixed and redistributed allowing all interested parties to utilize it. Resource use requires attribution be given to the developer.
Step 4: Require Open Educational Resources: Base long term strategy for scaling and sustaining the food inspectors program on Open Educational Resources (OER). This enhances speed of updates, distribution, localization, and translation. It also significantly reduces costs for design, development, delivery, and participation.
Step 5: Use Open Design & Open File Formats: Require developers of the food inspectors training program to make use of existing OER as much as possible when designing and developing training programs. Emphasize the importance of developing all resources and OER as digital resources using open file formats to ensure they are editable and modifiable.
Step 6: Build Open Development Networks: Facilitate matchmaking between those looking for OER and those that have OER. Food inspection is a global need. Build a network of developers who all collectively work on shared food inspection OER they have a mutual need for and coordinate development of new resources across the network.
Step 7: Design for Open Pedagogy: Adopt teaching and learning methods that leverage the open nature of the learning resources and the open web (both resources and social networks). This includes connecting trainees to people and resources on the open web and having students actively modify and improve training materials.
Step 8: Open Delivery: Open up delivery to wide range of service providers who qualify in part based on their expertise in the above and a proven ability to use educational technology.
Step 9: Open Repository: Create a repository on the web, open to all, where openly licensed resources associated with the food inspectors training program are kept. Establish repository librarian like role for managing the collection of resources, ensuring they are appropriately tagged with meta-data (use Learning Resource Meta-data Initiative LRMI), and for curating collections of resources for multi-purpose use.
Step 10: Open Marketing and Recruitment: Develop (and openly license) marketing resources that recruit participants based on the unique value add (including cost/time savings and quality) associated with a food inspector training program that uses open models.
Step 11: Open Analytics: Openly publish a set of analytics/data that define program success. (Analytics could be associated with learning, completion, costs, networks, …) Openly license (using CC0) and transparently report out analytics/data on an ongoing basis.
Step 12: Open Access: Publish any research results that come out of studies done on the food inspectors program and the analytics using Open Access (OA). Provide free, immediate, permanent online access to the full text of research articles for anyone, webwide. This can be done using open access research journals (the golden road of OA) or through archiving articles in open repositories or on the open web (the green road of OA).
Step 13: Open Community: Build an open community around the training including students, developers, suppliers, graduates, … Engage open community in contributing to improvement of the training program, and formation of local, regional, national, and international partnerships.
I know this is a very specific example. But I hope it conveys something of the spreading open thinking that can come to bear on traditional practices. Combining open policy, open educational resources, open access and all the other forms of openness described above increases the overall impact and benefits associated with the approach. Limiting adoption of openness to just one small area also limits impact.
Perhaps by now you’re going OK, I see how new open models can be useful in the public sector but I’m in the private sector how do open models work for me? How can I use open models and still make a living?
New Open Models in the Private Sector
New models for a new year is one of those gifts with multiple presents inside. This is a gift that just keeps on giving. We’ve unwrapped new open models in the public sector, lets look at examples in the private sector. I’ve grouped these examples by industry sector. At the end of each example I’ve provided, in italics, a mini description of how they earn revenue.
The Noun Project: The Noun Project is a platform empowering the community to build a global visual language of icons and symbols that everyone can understand. Icons are designed and contributed by designers from around the world. All icons are licensed using Creative Commons and free to use as long as attribution is given to the creator. Pricing and money comes in to play if you want to use the icons without giving attribution.
Flickr: Flickr is one of the largest photo management and sharing platforms in the world. Flickr lets you store, sort, search and share photos online. Flickr provides Creative Commons license options right from within the platform. Many Flickr users have chosen to offer their work under a Creative Commons license, and you can browse, search and download their photos under each type of license. At http://www.flickr.com/creativecommons you can see the more than 280 million Creative Commons licensed photos users have contributed. Use of Flickr is free but each user is given a maximum limit of 1 terabyte of storage. If you want more than that you have to pay. If you want your photo collection to be ad free you have to pay for a Ad-free subscription account. Flickr also provides printing services for a fee.
Pixabay: On Pixabay you may find and share images free of copyrights. All pictures are published under Creative Commons public domain deed CC0. Sponsored images are shown to finance Pixabay and to provide a choice of professional photos. Sponsored images cost money.
Jonathan Worth, a professional photographer explains how open benefits photographers; http://www.telegraph.co.uk/technology/news/8623680/How-the-Power-of-Open-can-benefit-photographers.html
Jamendo: Jamendo offers more than 350,000 free music tracks licensed under Creative Commons, all available for streaming and unlimited download without ads. It allows the public to discover thousands of artists of all genres who have chosen to distribute their music independently outside the traditional system of collecting societies. Jamendo artists can choose to join the Jamendo PRO service that allows them to sell commercial licenses of their music for professional uses, such as music synchronization for audio-visual productions or broadcasting in public spaces. You can search for music on Jamendo using the CC Search tool or directly on the Jamendo web site.
ccMixter: ccMixter is a community music site featuring remixes licensed under Creative Commons where you can listen to, sample, mash-up, or interact with music in whatever way you want. One out of six uploads to ccMixter are used in a YouTube video, Flickr moving image, podcast, compilation album and thousands of other places all over the web. ccMixter is ad free and free to creators and listeners. Funding is generated through sales of memberships to artists clubs giving you an inside access and experience with the artist including access to things like Digital-LPs, CD-quality downloads, private blogs and other unique things you can’t get anywhere else.
SoundCloud is a social sound platform for people to create and share music and sounds. Recording and uploading sounds to SoundCloud lets people easily share them privately with their friends or publicly to blogs, sites and social networks. Many SoundCloud songs and sounds are licensed with Creative Commons. Use the url http://soundcloud.com/creativecommons to see SoundCloud sounds and songs licensed with Creative Commons. Certain features of the Platform are only available to registered users who subscribe for a “Pro” or “Pro Unlimited” account. These paid accounts provide extensive stats such as count plays, likes, comments, downloads, who’s playing your sounds and where they are.
MuseScore: MuseScore: provides free and open source software that allows musicians to quickly create sheet music. They also provide a space where you can share your sheet music and comment on others. MuseScore lets people share music under all rights reserved or openly license their music using Creative Commons licenses. For a fee you can get a “pro” account where you have unlimited storage, detailed stats on how popular your scores are, and no ads.
Jonathan Coulton: a professional musician who uses open business models. See The New Music Biz: Cracking the Code to Online Success video explaining how he does this.
Books & Manuals
Boundless: Boundless is building an innovative learning platform by curating the world’s best open educational resources in 20+ subjects and delivering interactive learning tools to college students. Students at thousands of colleges are ditching expensive textbooks and discovering Boundless Learning Technologies that go way beyond traditional books. Boundless textbooks are available for free download as a .pdf. Boundless makes money from advertising embedded in the free, online education materials on their web site. Paid premium access gives you access to the book in their learning platform across multiple channels, including mobile, website, and iBooks.
Pratham Books: Pratham Books has been a front-runner in adopting a Creative Commons licensing framework and in the last 5 years has released over 400 stories and hundreds of illustrations under a Creative Commons CC BY or CC BY-SA license. Their vision is to put ‘a book in every child’s hand’. It makes money by selling hard copy print versions. Because the books are licensed with CC licenses other organizations and individuals have converted their books to audio, Braille, and DAISY giving visually impaired access to the books and saving Pratham the cost of doing so themselves.
Autodesk: In July 2013 Autodesk announced that its Media & Entertainment (M&E) support and learning content for its 2014 product line is now live and available under Creative Commons (CC) licensing; that equates to 20,000 pages of documentation, 70 videos and 140 downloadable 3D asset files. Autodesk also plans to publish product help materials, its Knowledge Base and Discussion Forums, as well as past and future training content from Autodesk University under the Creative Commons model. This is all part of Autodesk’s ongoing support of students’ pursuit of careers in science, technology, engineering and math (STEM) fields. Autodesk’s goal is to ensure the next generation of designers, engineers and digital artists have great training and free access to the same software that professionals use every day. Autodesk makes its money from its software.
Cory Doctorow: Cory Doctorow is a science fiction author with a vast amount of work under his name. Cory, as a very early adopter of Creative Commons, has been producing Creative Commons licensed works since 2003 with the publication of the first CC licensed novel Down and Out in the Magic Kingdom. See Cory’s views on openness in Giving it Away chapter in Selected Essays on Technology, Creativity, Copyright and the Future of the Future
YouTube: YouTube has built into its platform the option of posting a video to YouTube using a Creative Commons license. As of July 2012 the YouTube Creative Commons video library contained over 4 million videos from organizations such as C-SPAN, PublicResource.org, Voice of America, and Al Jazeera. From the YouTube home page if you type in your search term followed by a comma and then “creativecommons” the videos returned are CC licensed. http://www.youtube.com/creativecommons lets you see the most viewed and most reused Creative Commons licensed videos. Not only can you can mark your videos with a Creative Commons license when uploading them to YouTube you can also incorporate the millions of Creative Commons-licensed videos on YouTube when creating your own videos using the YouTube Video Editor. Within the YouTube Video Editor you can click on the CC tab to find content available under a Creative Commons license. YouTube and its users make money through advertising.
Vimeo: Vimeo makes it easy to upload and share videos. You can share a video publicly or privately. Vimeo is also a community platform enabling you to pick filmmakers you want to subscribe to, receive updates from, and send messages to. Many Vimeo entrepreneurs and artists use Creative Commons licenses to gain exposure, widespread distribution, and secure a return on their creative investment. Vimeo has integrated Creative Commons license choices right into their platform. For a fee Vimeo provides users with ftp and dropbox integration, mobile/tablet/TV compatibility, customizable video player, html5 compatibility, etc. Vimeo On Demand supports users interested in renting or selling their videos. Vimeo’s Tip Jar lets fans to show their appreciation for videos with small cash payments to the creator.
For more on filmmakers use of new open models see: CC Filmmakers and Festivals Change the Rules
IBM. See A history of IBM’s open-source involvement and strategy for a description of their thinking.
Red Hat: Red Hat provides a portfolio of products and services in support of enterprise adoption of Linux open source software. Red Hat provides solutions to more than 90% of the Fortune 500 companies. Open source software makes vendor lock-in a thing of the past. Linux is free open source software. Red Hat makes its money providing support, consulting, and training services for that software.
Android: Android is open source software and Google releases the source code under the Apache License. According to Wikipedia as of November 2013, Android’s share of the global smartphone market, led by Samsung products, has reached 80%. The open source nature of Android lets third party’s rapidly produce apps. As of May 2013, 48 billion apps have been installed from the Google Play store, and as of September 3, 2013, 1 billion Android devices have been activated. The software is free and open, the phones, tablets and other devices using the software cost money – as do many of the apps.
figshare: figshare is a platform that allows researchers to publish all of their data in a citable, searchable and sharable manner. All figures, media, poster, papers and multiple file uploads (filesets) are published under a CC-BY license. All datasets are published under CC0. figshare offers unlimited storage space for data that is made publicly available on the site, and 1GB of free storage space for users looking for a secure, private area to store their research. Users of the site maintain full control over the management of their research whilst benefiting from global access, version control and secure backups in the cloud. For a fee figshare provides users with larger private storage, larger file size limits, and collaborative spaces. figshare also does custom-branded spaces for institutions for a fee.
This is by no means a comprehensive list of all private sector corporate entities using new open models, merely a sampling. There are many more. But you can see that open models do not preclude revenue generation and earning a living. New open models can be very successful business strategies.
Fundamental Building Blocks of New Open Models
There is one more part to this gift that lies at the very core of new open models. The gift within the gift. Lets unwrap the fundamental building blocks on which new open models are built.
New open models are built on three fundamental building blocks – digital, free, and open. There are lots of models that use just one or two of these building blocks but the new emerging models I’m referencing use all three.
The bits and bytes of digital things are fundamentally different than the atoms of physical things. Technology advances are rapidly increasing bandwidth, storage, and computing processing speeds. Semiconductor chips roughly double the number of transistors they hold every eighteen months. The number of bytes that can be saved on a given area of hard disk doubles every year. The speed at which data can be transferred over a fiber-optic cable doubles every nine months. At the same time costs associated with processors, storage and bandwidth halves at the same rate. The digital building block uniquely provides faster, better, cheaper. At a practical level the costs to store, copy and distribute digital things like images, music, books and data begins to approach $0. The physical realm of atoms and the economics associated with it are based on scarcity. Digital enables abundance. Scarcity in the digital realm is almost always artificially created.
As the cost of digital approaches $0 it becomes possible to provide everyone digital resources for free. Furthermore if I have something that is digital and I give you a copy of it, I still have it. This is dramatically different than what happens in the world of physical things. The free building block involves shifting your strategy from conserving resources as scarce commodities to treating them like an abundant commodity. Free enables scale. With technology advances giving us more for less the free strategy spreads costs over a larger and larger base of users. Free is the best way to reach the biggest possible market and achieve mass adoption. If the marginal cost of distribution is free you might as well leverage and multipurpose your resources as much as possible by putting them out there in as many different ways as possible. Of course not everything is free as we’ve seen from the examples above. But the free building block is an essential component of new models. The more people use the free digital resource you provide the more you can build complementary services and products around it. Typically the provision of free to all is funded by complementary products and services that a subset of users pay for.
Open is different than free. When things are open you can modify them, use them in whole or in part, improve them, localize them, translate them, and customize them to fit your need and purpose. Just because something is digital and free doesn’t mean it is open. There are lots of free digital things that are closed prohibiting the freedoms and permissions inherent in open. Open adds additional value by permitting change and participation in the act of creation. Open uniquely leverages the network of users by making them active participants in improving and advancing a product or service. The open strategy involves giving up control. Open sees users not just as passive consumers but as active and creative producers – co-creators if you will. Open tends to level the playing field between professionals and amateurs. New open models are not so much based on a “I know what is best” command and control strategy as a collectively we know what is best egalitarian approach. Open invites everyone to actively engage and contribute their knowledge and expertise.
As we enter 2014 I’m excited about new models built on digital, free, and open. Its the combinatorial effect of the three that has such innovative potential. I see in that potential great hope for a better world.
Happy new models for a new year.
Filed under: Digital Economy, Open Educational Resources (OER) | Tags: advertising, business case, business models, direct and indirect sales, donations, economic driver, economics, innovation, market, memberships, open educational resources, openeducationwk, services, subscriptions
Written for Open Education Week March 5-10, 2012
Open Educational Resources (OER) are materials used to support education that may be freely accessed, reused, modified and shared by anyone. OER include full courses, course materials, modules, textbooks, research articles, videos, and other materials used to support education. OER creators own the intellectual property and copyrights of the OER they create. However, they license the OER and make it freely available to others.
Every time I present the OER work I do at BCcampus I face questions from the audience:
“Why would a creator who holds copyright and intellectual property license it for others to freely access, reuse and modify for their own purpose?”
“Why would a creator give something away for free when it has inherent potential to generate revenue and income?”
“How does a creator earn a living giving away their work for free?”
“Why would an institution that relies on grants and student fees make core assets freely available to others?”
“Given the dire financial times countries, governments, and public education providers find themselves in why would we adopt this practice of open?”
“What is the business model of open?”
To those questions another one was added when David Porter and I were in Ottawa presenting the work of BCcampus broadly including the benefits of Open Educational Resources to Canada’s federal government.
The question we got asked there that stuck out for me is:
“How does open not only save money but act as an economic driver?”
The UNESCO / Commonwealth of Learning project Fostering Governmental Support for Open Educational Resources Internationally led by Sir John Daniel of the Commonwealth of Learning and Stamenka Uvalic-Trumbic is hosting a series of regional policy forums on OER for governments between now and the World OER Congress in June 2012. The purpose of these policy forums is to raise governments’ awareness of OER and their support for them, as well as getting input to the Declaration on OER and Open Licensing that will be put to the June OER Congress.
Shortly after returning from Ottawa Cable Green of Creative Commons sent out a request for responses to a question coming out of these policy forums:
“What is the business case for OER?”
I like all these questions.
Open needs to make financial and economic sense.
All of us involved in OER work need to be able to answer these questions directly.
We need to be able to state in simple, straightforward terms the economics of open.
So that got me to thinking that I should tackle these questions.
Someone needs to make a stab at generating answers.
So here goes.
Cable Green’s request for input into what the business case for OER is generated a flurry of responses and recommended readings on international OER list servs. I’ve gathered those readings into a What is the business case for OER? Collection which I’ve pasted at the end of this blog post. In addition my colleague Scott Leslie began assembling evidence of the economic benefits of many different kinds of open including open access research publishing, open source software, open standards, open data, and OER. I spent some time going through all these resources seeking to extract short straightforward statements that answer the question, “What is the business case for OER?” Here’s what I came up with.
- increase access to education
- provide students with an opportunity to assess and plan their education choices
- showcase an institution’s intellectual outputs, promote it’s profile, and attract students
- convert students exploring options into fee paying enrollments
- accelerate learning by providing educational resources for just-in-time, direct, informal use by both students and self-directed learners
- add value to knowledge production
- reduce faculty preparation time
- generate cost savings – (this case has been particularly substantiated for open textbooks)
- enhance quality
- generate innovation through collaboration
The business case for OER includes both cost savings and revenue generation. Making something open is not always a means of direct revenue generation. It often is indirect – because something is open it leads to a revenue opportunity that wouldn’t have existed otherwise. Using OER as a means to market reputation and institutional prowess can convince students to enroll. While better quality learning resources may not directly generate revenue they can lead to faster learning, greater learner success, or reduce drop outs. By their very nature OER can lead to new ways of education through more cooperation, collaboration, and partnerships between institutions. OER make totally new forms of education possible and bring new players into the education market.
I expect many of you may have additional short straightforward statements that answer the question, “What is the business case for OER?”. Welcome your statements as comments to this blog. I expect many more elements of the business case to emerge as the practice of open in education matures.
While the above statements provide a business case for OER they don’t completely answer questions associated with financial rewards to creators who share, or the business models of open, or how open acts as an economic driver. With the business case established lets move on to defining these other economic aspects of open.
The economics of open can be described from multiple perspectives. If I am a creator I describe it one way. If I’m a consumer I describe it another.
In education the way I describe the economics associated with open differs depending on whether I”m describing it from the perspective of a student, an instructor, a college, the education system of a region, or government of a nation.
The economics of open also differ depending on whether you are taking a public or private perspective. Education is both a public service and a for-profit activity around the world. In the public service context there is a very strong business case that publicly funded goods be made freely available to the public that funded them.
In the current OER higher education context “creators” are faculty and/or institutions. When you look at a question like “How does a creator earn a living giving away their work for free?”, in a public sector context the answer is partly that those in the public sector are already earning a living via salary derived from public taxpayer dollars. If they are already being paid by the public shouldn’t the educational work they are being paid to develop, whether it be research or educational resources, be freely available to the public?
After thinking a lot about which persona I should describe the economics of open for and which sector, public or private, I decided to discard these differentiations and focus in on how the economics of open generates benefits that accrue to all players regardless of who you are and regardless of whether it be for public service or for profit. My aspiration is for short direct answers that make sense to everyone.
To derive answers I started looking at things like open source software business models, the sharing economy, and how digitization and the Internet affect supply and demand. There is a lot to explore! I’ve taken it on as my challenge to show how the economics of open, as it plays out in other sectors, applies equally well to education. The language of business and economics is not always used in education. However, for the purpose of generating direct short answers that everyone understands I have chosen to use the language of business and economics in my answers.
Here then are my answers.
Open enables rapid market entry, market penetration, and market share.
We are all creators. Some take photos, some make music, some paint, some write. Most creators are interested in having others experience their work. However default copyright and IP laws tend to constrain access, dissemination and use. Openly licensing work reduces barriers to access and dissemination friction. Going open is a good way to make the market aware that you exist. When something is open it can be disseminated quickly and widely to people everywhere. You may have created a great work but if no one knows about it then its not generating you, or anyone else value.
A central reason for developing and distributing free open source software is that it enables fast entry into the market, rapid market penetration, and generates market share. When Google made the source code for Android open they wanted to make sure that there would always be an open platform available for carriers, OEMs, and developers to use to make their innovative ideas a reality. They also wanted to make sure that there was no central point of failure, so that no single industry player could restrict or control the innovations of any other. The single most important goal of the Android Open-Source Project (AOSP) is to make sure that the open-source Android software is implemented as widely and compatibly as possible, to everyone’s benefit.
Educational institutions who go open frequently report institutional impact in marketing terms.
Patrick McAndrew at the UK Open University in 2009 reported in his Learning from OpenLearn presentation that the the institutional impact from their OpenLearn initiative included:
– 3 million new “users”
– 232 countries
– 7700 “sign ups”
– 10 funded projects
– 30 collaborations
– established methods
– changed image
– won awards
– new plans
In October 2011 BBC News reported Open University’s record iTunesU downloads had reached 40 million and put the Open University alongside Stanford University for the most downloads.
In 2011 after ten years of open sharing MIT states it shared its OCW materials with an estimated 100 million individuals from over 200 countries worldwide. MIT’s goal for the next decade is to increase their reach to a billion minds.
The UK Open University, MIT, and Stanford all get that going open enables rapid market entry, market penetration, and market share. They’ve established first mover advantage in building up their market presence. For them going open is good business.
As the OER field moves forward I expect we’ll see data that shows increased enrollments where OER exists for courses and shows conversion benefits associated with students being able to try before they buy.
Open generates revenue through advertising, subscriptions, memberships, and donations.
When most people hear about open they find it hard to imagine how making something you own, open and free to others could possibly yield a financial benefit. Obviously you’re not going to generate direct revenue from a free resource. However, you can generate indirect revenue and there are lots of existing business models that already do so which education can emulate.
Google makes a search engine available to all Internet users for free. It makes its revenue from advertising.
Facebook provides a free social network platform that supports personal networks, friendships, and social movements. It makes its revenue from advertising.
Given the market valuations for Google and Facebook it’s clear that the business model of generating revenue from making something you own, open and free to others can generate large financial benefits from advertising. Both Google and Facebook have worked hard to make the advertising tolerable by personalizing and targeting it to match your interests and needs as closely as possible.
Advertising and education tend not to mix. There is a tacit understanding that education should be pure and not unduly influenced by something so crass as advertising. However, given the success of ventures like Google and Facebook I expect this will change. Already sites like Udemy have emerged. Udemy’s goal is to disrupt and democratize the world of education by enabling anyone to teach and learn online. They’ve built a platform that makes it easy for anyone to build an online course using video, PowerPoint, PDFs, audio, zip files and live elements. Students can take courses across a breadth of categories, including: business & entrepreneurship, academics, the arts, health & fitness, language, music, technology, games, and more. Most courses on Udemy are free, but some are paid. Paid courses typically range in price from $5 – $250. Udemy features advertising in their third column (aka Facebook) and takes a percentage of each course fee.
Its important to point out that sites like Google, Facebook and Udemy are not open in the full sense that I established at the beginning of this blog. Open in its fullest sense means education resources that are freely accessed, reused, modified and shared by anyone. While Udemy provides “free” access everything on the site is locked down by copyright and can not be reused or modified.
EdTech Frontier is built using WordPress open source software. Anyone can create a blog for free at WordPress.com. You get a whole array of free functionality – customizable design themes, ability to write posts, upload and embed photos and videos, stats dashboard, privacy options, complete hosting, … This free functionality is sufficient to get you going and may be all that you need. But for those who want more control you can subscribe to premium features. WordPress generates revenue from advertising so if you don’t want advertising you can remove ads from your blog for a low yearly subscription fee. Think about that for a minute – if its free you accept advertising, if you don’t want advertising you pay a fee. Additional subscriptions get you your own domain, extra storage, custom design, VideoPress, … The business model is very clear – basic for free, premium for a fee.
GoodSemester is an education platform that has adopted the same subscription model. GoodSemester is interesting in that it has been developed by students. They think that education deserves the collaborative power and ubiquity of the Internet, and they don’t understand how schools have gotten on for so long without some amazing tools we take for granted in other fields. GoodSemester is a course platform for students and teachers providing a means for developing and delivering online courses, notes, assignments, questions, discussions, groups and analytics. GoodSemester offers subscription plans for students and professors. While not exactly “free” GoodSemester is interesting for the way it has adopted business models from open source software entities like WordPress and applied them to education.
Memberhsips and Donations
Open initiatives like Wikipedia and Creative Commons are committed to the ideal of free and open with no restriction or influence from prospective advertisers. Accepting donations provides them with the independence they need to achieve their mission. Curriki the online community and wiki platform for teachers, learners, and education experts to share, reuse, and remix free quality K12 curricula uses both donations and memberships as a means of financing its work. Curriki membership is free to educators, but they ask a small annual membership fee from individuals who join Curriki representing for-profit entities. In exchange for a small annual membership fee, you can publish the Curriki logo on your Web site and let the world know you are a corporate member! Donations are welcome from anyone.
Open generates revenue through services.
Proprietary off-the-shelf software is funded through the sale of licenses to end users. Open-source software is given away for no charge. One of the main funding mechanisms for open source software is ancillary support services. Revenue is generated by value added resellers and integrators who specialize in supporting open. Consulting, selection of open source software, installation, configuration, integration, training, maintenance, customizing and tech support are examples of services used to generate revenue from open. The software is free but these fee-based services enable users to optimize use of the product and extract value from it. Its worth pointing out that proprietary off-the-shelf software often requires these support services too, so open source software typically provides a lower cost solution by not charging a license fee for the software itself.
Linux, Apache, Drupal, MySQL, MediaWiki, the list goes on and on of open source software available for free but whose full utilization is best achieved through support services. Red Hat provides services for Linux. O’Reilly Media has built a business around providing books, magazines, research, and training for open source software. Pick your open source software product and inevitably there is a local or global business providing support services for it.
There are a growing number of open source software applications in education. Moodle, Sakai, and recently Pearson entered the fray with OpenClass. As might be expected there are revenue generating business models around each of these.
Moodle has the Moodle Service Network.
Here’s how Pearson promotes it’s product.
OpenClass has no hardware costs, licensing costs, or hosting costs. Why would we do that? Because “free” enables the widespread adoption of new learning approaches that encourage interaction within the classroom and around the world. OpenClass is unbelievably easy to set up. It works with what you’re already using. Get set up with just a few clicks and instantly import content from other learning management systems such as Blackboard, Angel, or Moodle. OpenClass is simple to install, simple to use, and simple to support. We’ve provided a robust KnowledgeBase, up-to-date support forums, and numerous demos and instructional videos to help you get the most out of OpenClass. Of course, we know that self-service isn’t the right solution for everyone — we also provide 24/7 email, phone, and chat support to instructors, students, and administrators. (emphasis added by me)
The OERu is a more fascinating model. As described on its home page:
The OER university is a virtual collaboration of like-minded institutions committed to creating flexible pathways for OER learners to gain formal academic credit. The OER university aims to provide free learning to all students worldwide using OER learning materials with pathways to gain credible qualifications from recognised education institutions. It is rooted in the community service and outreach mission to develop a parallel learning universe to augment and add value to traditional delivery systems in post-secondary education. Through the community service mission of participating institutions we will open pathways for OER learners to earn formal academic credit and pay reduced fees for assessment and credit.
In each of these examples open has a fee for services built around it. Eric Raymond, in his book The Cathedral and the Bazaar called this “Give Away the Recipe, Open A Restaurant.”
Almost all the early examples of Open Educational Resource initiatives – MIT OpenCourseWare, Connexions, Carnegie Mellon Open Learning Initiative, UK Open University’s Open Learn, and even the new initiatives like MITx are based on a model I think of as “Content for free, Teaching & Credentialing for a fee”. Explicit in all of these OER initiatives is that contact with faculty and the actual credential or degree that is awarded are not part of the offer. Those are services that cost.
The OERu is looking at a business model where some teaching/tutoring services are provided through academic volunteers international see A Framework for Academic Volunteers International: Dec 5-16, 2011. In the absence of teaching services and faculty contact students will turn to each other through initiatives like OpenStudy. I personally see a tremendous opportunity around bolstering education globally through OpenStudy student to student peer mentoring and support.
Teaching and credentialing are two areas of service that are undergoing change in the open market. Institutions like MIT and Stanford have brand value. A credential from those institutions has cachet. Indeed all institutions tend to think of themselves as having a prestigious brand. In the open market brand prestige and its value is undergoing change.
Udacity is co-founded by Sebastian Thrun one of the Stanford University professors who co-taught the massively open Artificial Intelligence course last year that attracted over 160,000 students from more than 190 countries. After teaching this course Thrun left Stanford to found Udacity believing that university-level education can be both high quality and low cost. Udacity aims to use the economics of the Internet, to connect some of the greatest teachers to hundreds of thousands of students in almost every country on Earth. Currently Udacity has investment funding and is offering its courses for free while it figures out its business model with several possibilities for revenue generation described in the article Massive Courses, Sans Stanford. Thrun is leveraging brand value out of his own name rather than Stanfords.
This idea that students will accept and appreciate a credential not from an institution but from a teacher has been done before in Massively Open Onlne Courses and is now emerging in the form of badges. The MITx initiative has put a new spin on this by devising a credential not exactly from MIT but associated with MIT. The extent to which these badges, letters and certificates of completion from an instructor or non-traditional institution have credibility and value in the market will be fascinating to see.
Open generates revenue through direct and indirect sales
In the economics of open there still are direct and indirect sales. Participants who receive free and open educational resources may still pay for teaching, assessment, and credentialing. The open textbooks being generated in the Washington States Open Course Library initiative aren’t completely free merely targeted to be less than $30 compared to $100-200. Open textbooks are often free in a .epub or .pdf format but cost for a physical print version. I think of this as “Digital for free, physical for a fee”. FlatWorld Knowledge, CK12 and others have all created an open business model around this new way of generating textbooks. The traditional print industry is scrambling to adapt. The economics of open still generates revenues but equally importantly generates cost savings. Take a look at the OpenStax Student Savings Calculator to see how big an impact this can have.
It has been fascinating to see Reuven Carlyle and Cable Green work together to establish the business case for open textbooks and create government policy that leverages the economics of open for Washington State. (Reuven Carlyle makes the business case here. Cable Green makes the business case here.) When you amplify cost savings at a state or national level the economics of open impact is huge.
Another variation on the digital for free, physical for a fee model, is software for free, hardware for a fee. In the rapid market entry section of this post I described why Google made the source code for Android open. Google’s end game was to generate revenue through direct sales, not of software but of hardware in the form of the Android phone itself. Lets see how well this tactic worked. As of February 2012 there were more than 400,000 apps available for Android, and the estimated number of applications downloaded from the Android Market as of December 2011 exceeded 10 billion. Android is one of the best-selling smartphone platform worldwide with over 300 million Android devices in use by February 2012. According to Google’s Andy Rubin, as of February 2012 there are over 850,000 Android devices activated every day. I’d say this strategy works pretty well. Eric Raymond, in his book The Cathedral and the Bazaar called this “widget frosting.” To date we’ve not seen hardware specifically designed and developed for the education market. But I see it coming and I bet it follows a similar model.
Another way of generating direct and indirect revenue from open is to build product add-on extensions and accessories. In the case of add-on extensions the base product is open and free, but additional more full-featured functionality costs money. Lots of apps work this way. You can download a basic app from Apple or Google but an “upgrade” is available for a fee that provides a more robust and full-featured version of that app. Product extensions can be modules, plug-ins or add-ons to an open source package. Indirect revenue can be achieved through accessories which provide users with an opportunity to customize something open in a way uniquely personal to them. The accessories market is huge. Ringtones, laptop covers, apparel, mugs, cards, the variety and range of accessories is endless.
It’s worth pointing out that in music, book, and photography markets some creators give their work away for free and simultaneously offer it for sale. Nine Inch Nails have a brand new 36 track instrumental collection called Ghosts I – IV. You can download the first 9 tracks for free. You can get all 36 track in a variety of digital formats for $5. You can get the tracks on two audio CDs for $10. You can get a a deluxe edition package which includes a blu-ray disc with the songs in high definition stereo and accompanying slideshow. You can get a $300 ultra-deluxe limited edition package (already sold out).
Giving away songs for free can generate more sales.
Cory Doctorow is an author who lets you download his books for free or buy them. He provides a great explanation on why he does this.
Open Generates Innovation
What makes open different is not so much what it derives economic returns from, but “how” it does so.
Open disaggregates supply chains into constituent parts and makes one or more of those parts open and free.
Here’s the OERu logic model:
Although it wasn’t designed for this you can see education supply chain parts revealed – textbooks, journals, curriculum, design & development, pedagogy, student support, ICT infrastructure, assessment, credentialing, … The OERu is looking at how open makes one or more of those parts free or substantially lower in cost.
Open diversifies and democratizes both the production and use of goods and services.
The innovation around open is not based on hoarding knowledge or building monopolies and locked-in proprietary models but instead on freeing knowledge, building collaborations, and finding flexible shared ways of generating economic benefits.
If I give you something and you give me back a new and improved version of that thing, we have engaged in mutual exchange. There has been no financial transaction but we both have mutually benefited. If we have a shared educational need, lets say we have common curricula across a range of courses. Using the economics of open we can divvy up the effort associated with creating that curricula and openly license the curricula for mutual use.
One of the ways the economics of open drives the economy is through reciprocity – by granting you rights I too gain.
Innovation is an economic driver. While the business case for open can be made within traditional frameworks its greatest impact is felt through new business models. When representatives in Canada’s federal government ask me how open acts as an economic driver I’m tempted to ask in reply, “How important the digital economy is to Canada?”
While the business model of open can work with physical goods, its effect as an economic driver is compounded when digital goods are involved. The economics of physical goods is predicated on supply and demand. If I have a physical good and I give it to you, I no longer have it. However, if I have a digital good and I give it to you, I still have it. This fundamentally changes the economics of supply and demand.
In a traditional economy based on supply and demand, scarcity generates premium prices. Supply emphasizes mass produced solutions that are just good enough to attract a large segment of users without being optimized for anyone. The power of the marketplace lies more with suppliers than customers. In contrast, the open marketplace, especially the digital open marketplace, massively diversifies and expands supply. In the open marketplace we all become suppliers and power shifts toward customers.
The open market reduces supplier lock-in and offers lower costs, more choice, and personalization options.
In the open marketplace you can choose what best meets your needs, customize the solution to a much greater extent, and flexibly integrate pieces into more complete solutions.
One of the greatest innovations in the open economy is the formation of communities of developers and users who collectively work on and continually enhance creative work for mutual benefit. So when I see Washington state developing an open course library of their top 81 high enrollment courses and a series of <$30 open textbooks I think about how this could scale by working with other states and regions. I think about the formation of an open consortia of others who collectively use the same courses and improve them together. I think about coordinating and building out through collectively planning and distributed effort.
Almost all successful open initiatives have a vibrant and active community built up around them. An intriguing innovative aspect of this is that frequently the community that forms around open is global not regional.
Leveraging open as an economic driver involves developing and delivering open products and services in partnership with others around the world.
Open leads to collaborations and trading partners within a global context.
Open Makes Better Use of What We Already Have
As I’ve thought about and worked through the economics of open in this blog post its occurred to me that the biggest opportunity open brings to all of us is making better use of what we already have. We are all creators. What if we adopted a default of sharing instead of not sharing?
On January 24-26, 2012, one hundred thought leaders from all over the world were invited to come together in Austin to mark the tenth anniversary of the NMC Horizon Project. They engaged in discussions around ideas of where technology is going and how it is impacting learning and education worldwide. From those discussions megatrends emerged. A number of those trends directly relate to the economics of open including:
- Openness — concepts like open content, open data, and open resources, along with notions of transparency and easy access to data and information — is moving from a trend to a value for much of the world.
- The world of work is increasingly global and increasingly collaborative.
- The Internet is becoming a global mobile network — and already is at its edges.
- Legal notions of ownership and privacy lag behind the practices common in society.
- Business models across the education ecosystem are changing.
At BCcampus, where I work, we’re committed to being open in everything we do. We decided to proactively state that position and openly share the work we produce through a corporate statement on our “open agenda”. It starts out saying:
We are a publicly-funded organization serving British Columbia’s post-secondary sector. The goal of higher education is the creation, dissemination, and preservation of knowledge, and as such we have an essential responsibility to distribute the results of our work as widely as possible.
Our open agenda corporate statement goes on to describe our commitment to publishing all BCcampus reports, web content, and other media resources using Creative Commons licenses. We describe how our events will be open and use open communication practices. At BCcampus open is a default practice. We belief there is collective value in proactively publishing organizational statements regarding committment to open. We hope more organizations follow suit and welcome others to adopt or use ours as a starting point.
In Mark Zuckerberg’s masterplan for the ‘sharing economy’ the CEO of Facebook believes he is not changing human nature but enabling it. Zuck’s Law decrees that every year, we will share twice as much as we shared the year before, because we want to and because we now can.
I’m fascinated by the emergence of the sharing economy. As Fast Company notes in their article on The Sharing Economy:
Spawned by a confluence of the economic crisis, environmental concerns, and the maturation of the social web, an entirely new generation of businesses is popping up. They enable the sharing of cars, clothes, couches, apartments, tools, meals, and even skills. The basic characteristic of these you-name-it sharing marketplaces is that they extract value out of the stuff we already have. The central conceit of collaborative consumption is simple: Access to goods and skills is more important than ownership of them. Botsman divides this world into three neat buckets: first, product-service systems that facilitate the sharing or renting of a product (i.e., car sharing); second, redistribution markets, which enable the re-ownership of a product (i.e., Craigslist); and third, collaborative lifestyles in which assets and skills can be shared (i.e., coworking spaces). The benefits are hard to argue — lower costs, less waste, and the creation of global communities with neighborly values.
Making better use of what we already have generates economic benefit by increasing utilization.
Given the worldwide demand for education shouldn’t we be doing a better job of using what we already have? Don’t the principles we see at play in the sharing economy apply equally well to education? If we really want to address the world wide shortage of education an obvious first step is to open up the education resources that already exist within education institutions around the world.
The economics of open drives the economy through better utilization of what we already have.
Economic development is driven by skilled labour. Better use of existing educational resources increases access and skill development. The economics are simple.
The economics of open allows us to increase the skills and knowledge of all.
Too many of our educational resources sit on a shelf unused or behind password protected systems. Open makes better use of what we already have.
Open works don’t end, they expand and evolve on and on through others.
This post is for everyone who has been grappling with the business case for open.
My hope is that you’ve had a few aha moments and that some of your questions have been answered.
I expect many of you have additional insights and examples of the economics of open.
I invite you to share your insights and examples by leaving comments at the bottom of this post.
The more we can collectively expand and evolve a global understanding of the economics of open the better for all.
Paul Stacey March 4, 2012
References for What is the business case for OER? Collection (from OER list serv Feb 2012)
Case Study – January 2012 – Also published in other places in 2011
Catherine Anne Schmidt-Jones
An Open Educational Resource Supports a Diversity of Inquiry-Based Learning
For teachers and students as well as self-directed learners, one function of OERs is as a resource for just-in-time, inquiry-based learning. the present case supports the conclusion that direct, informal use by both students and self-directed learners is the main use of OERs. Education researchers, policy-makers, and OER developers may want to consider the best ways to understand and support this type of use and take steps to make it truly available to all learners.
Case Study March 2011
Santally Mohammed Issack
OERs in Context – Case Study of Innovation and Sustainability of Educational Practices at the University of Mauritius
Conclusion: the inclusion of OERs helped maintain a good quality level, sustain a viable economic model with reduction of tuition fees for learners, increase access and achieve the intended learning outcomes without any negative impact on the learners’ experience.
Nottingham University February 2011
Title: “It turns out that students do use OER and it does save time”
This was a very limited study of 51 students and several faculty using a single repurposed resource.
Case Studies approximately 2009
Ms Rebecca Ngalande, Kamuzu College of Nursing, University of Malawi, Malawi
1) The Use of Open Education Resources at the University of Malawi (UNIMA) — Kamuzu College of Nursing
2) OER Basic Competencies in Midwifery, University of Malawi
The major findings of the pilot project were that OER are significant in higher education as they benefit both Faculty and students in many ways like faculty preparation time is reduced, produced materials are of high quality and faculty learn and share from others. It shed new knowledge on methods for accessing academic information, creation and production of such materials; teaching and learning; publishing as well as sharing. Faculty felt they can become more confident when they know that their work is of high quality.
The Policies for OER Uptake did substantial literature search (LUOERL) of the learner experience of OER last summer for the UK Higher Education Academy as part of the overall JISC/HEA OER Programme in the UK. This work will be updated again in early 2013 for the EU project POERUP.
Over 250 papers were analysed for the LUOERL study. The report is linked from http://www.jisc.ac.uk/whatwedo/programmes/elearning/oer2/LearnerVoice.aspx
You can also directly check their online bibliographies (on Mendeley) – see in particular http://www.mendeley.com/groups/1074991/learner-use-of-oer/papers/
The Case for Creative Commons Textbooks (2005)
Two early papers that compare the cost of developing open textbooks with that of commercial textbooks.
Economics of Open Content
Audio from Fred Beshears lecture for PBS and NPR forum at WGBH on January 2006.
A Sustainable Business Model for Open Electronic Textbooks (April 13, 2007)
The slides from Fred Beshears presentation to a US House subcommittee looking into the price of textbooks.
The Case for Openness, an African Perspective
A short briefing paper for a meeting of the Southern African Regional Universities Association (SARUA) late last year when they held a meeting to develop scenarios for the future of African universities.
Dramatically Bringing Down the Cost of Education with OER – How Open Education Resources Unlock the Door to Free Learning by David Wiley, Cable Green, Louis Soares February 7, 2012
A range of OER Knowledge Cloud Resources.