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Copyright,2000-2003
1
Open Source Software and Open Content
As Models for eBusiness
Roger ClarkeXamax Consultancy, Canberra
Visiting Professor, CSIS, University of Hong Kong
http://www.anu.edu.au/people/Roger.Clarke/ ...... /EC/OMB030925 {.html, .ppt}
ECOM-ICOM Expert AddressUniversity of Hong Kong, 25 September 2003
Copyright,2000-2003
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Alternative Economicsof Scarcity, and of Abundance
• The basis of value is Relative Scarcity• More Supply = More Competition = Lower Prices• Conventional / Rationalist / Neo-Classical Economics
OR• The basis of value is Critical Mass• The more there are, the greater the value of each• Economics of Networks, part of Information
Economics
Iron Ore cf. Fax MachinesVinyl carrying Analogue Music cf. Digital Music
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Conventional, Rationalist, Neo-Classical Economics
Naive Assumptions About Innovation
• Innovation is important to progress• Investment in innovation will not occur
unless investors anticipate returns on that investment
• Imitators contribute little• Imitators are ‘free riders’ on the
innovator’s creativity and investment• There are few natural protections for
innovators against imitators
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Info Flows Within the Innovative Organisation
Articulation
TacitKnowledge
CodifiedKnowledgere Artefact
and Process
Artefact
CodifiedKnowledgere Artefact and Its Use
Manufacturingand
DocumentationProcesses
The Innovative Organisation
Artefacts
CodifiedKnowledgere Artefacts
and Their Use
‘PriorArt’
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Info Flows Within the Innovative Sector
TheInnovative
Organisation
Competitors
Suppliers AdoptingOrganisations
Artefact andCodified
Knowledgere Artefact and Its Use
CodifiedKnowledge
re Component
Componentand Feedback Feedback
Plus Consultants, Educational Institutions, Labour Mobility
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Information EconomicsRealistic Perception of
Innovation
• Innovation is mostly cumulative, seldom ‘big bang’• Innovation is heavily dependent on contributions
by users, adopters, suppliers, and competitors• Imitators who ‘value-add’ contribute a great deal• There are many natural protections for innovators,
especially the investment and lead-time involved in:• the development of tacit knowledge• its conversion into codified knowledge• development and marketing of competitive products
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Open Source & Content eBusiness ModelsAgenda
1. Alternative Economics ofNetworks, and of Innovation
2. Open Source Software3. Copyright4. Open Content5. Reciprocity in Markets6. Alternative Business Models
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Closed, ‘Lock in’ Software
• Licences are available only under highly restrictive terms
• The objective of the copyright owner is to maximise revenue, by imposing constraints on both competitors and customers
• Such software is generally very expensive
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Open Source Software
• Licences are available under liberal terms• The rationale is to enable cumulative fixing
and enhancement, by exposing the source-code to the view of many people
• The ‘Free Software’ movement, since 1982• ‘free as in speech, not free as in beer’
• Unix, Apache, Linux, OpenOffice, etc. • The ‘Open Source Initiative’, since 1998
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Open Source Software – Licence Terms
• Ready Availability of:• a licence• executable code and source-code
• Licence Permissions to:• run the executable• reproduce both executable and source• re-distribute both executable and source• adapt the source• distribute adapted executables and source• distribute within larger software packages
• Licence Constraints to:• ensure that redistribution is no less liberal• prevent subversion of the objectives
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The Bundle of Exclusive Rightsthat Copyright Provides
Of Long Standing
• reproduction• publication• adaptation• performance
More Recent• broadcast• moral rights
US/WIPO/Au Post-Internet• communication to the
public , dissemination by wire or wireless means, incl.
• ‘push’ (electronically transmit),e.g. email, FTP put
• ‘pull’ (make available online), for public access when they wish,e.g. web, FTP get
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Copyright Infringement• Infringement occurs when a 'substantial part' of a
work is ‘appropriated’ and:• neither a legal authority nor a licence exists; or• the terms of the authority or licence are
exceeded• ‘Appropriated’ means (mainly):
• reproduced (copied)• republished (made available to others)• adapted (into a new form)
• Infringements have been actionable under civil law• Some actions have very recently been criminalised
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Copyright Objects ‘Then’ (The Early 1990s)
• Tangible things (books, journal issues, photos, vinyl LPs, audio-tapes, microfilm, video-tapes, cassettes, diskettes, CD-ROMs, games-cartridges)
• A person bought, rented, borrowed or visited a tangible thing, or gained admission to a location where it was reproduced, performed or played
• The person had no need for a copyright licence• Replication was expensive, required infrastructure• Copies were accessible by one person at a time
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Copyright Objects in the Digital Era – 1/2
• convenient and inexpensive Creationdesktop publishing packages, PC-based graphic design tools, animation, digital music generators
• Digitisation of existing materialsscanners, OCR, digital cameras, digital audio-recording
• near-costless Replicationdisk-to-disk copying, screen-grabbers, CD-burners as a consumer appliance
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Copyright Objects in the Digital Era – 2/2
• very rapid Transmission, unmeasurably low costsmodem-to-modem transmission, CD-ROMs in the mail, emailed attachments, FTP-download, web-download
• inexpensive and widespread AccessPCs, PDAs, mobile phones, public kiosks, web-enabled TV in the workplace, the home, public kiosks, Internet cafes
• computer-based Analysis of datadata-matching, profiling, data-mining, pattern-recognition
• convenient Manipulation of data-objectsword-processors, sound and image processing tools
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Copyright ObjectsNow, and in the Future
• Digital Content• expressed in a Single Medium
e.g. page-formatted text, audio, image• expressed in Multiple Media• enhanced (hence layers of copyright)
• Software• Digital Content and Software Combined
e.g. ‘learning objects’ in the education sector
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What’s Different about Copyright Objects Now, and in the Future
• Digital not physical / Bits not atoms• Copying is intrinsic to transmission• Copying is performed by the consumer
=> Consumers suddenly need a copyright licence
• Copies for personal use are indistinguishablefrom copies for re-sale, and copies for adaptation
• Copyability and Adaptability are intrinsic=> Plagiarism is a virtue, not a vice
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Cyberculture Ethos
• Inter-Personal Communications• Internationalism• Egalitarianness• Openness• Participation• Mutual Service• Community• Freedoms• Gratis Services
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Reactions by the Major Publishing Houses
• Technological Protections for Digital Objects• Embedment in Marketspace Mechanisms
of Existing, Expanded and Imagined Rights• Lobbying for, and Enactment of, Laws that:
• Extend copyright laws• Criminalise hitherto civil law breaches• Enlist law enforcement agency support• Transfer enforcement costs to the State
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The Battle Lines
CLOSEDCONTENT
ULTRA-ORTHODOXSOCIALISM
ULTRA-ORTHODOXCAPITALISM
PUBLICDOMAINCONTENT
COPYRIGHT
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But There’s a Middle Ground
CLOSEDCONTENT
ULTRA-ORTHODOXSOCIALISM
ULTRA-ORTHODOXCAPITALISM
PUBLICDOMAINCONTENT
COPYRIGHTCOPYLEFT
OPENCONTENT
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Open Content Licensing Choices• Ownership
• Exclusivity• Sub-Licensing
• Integrity Protection• Entirety• Copyright Notice
• Reproduction Control• Permission• Use(s) / User(s)
• Republishing Control• Permission• Use(s) / User(s)• Format(s)/Media• Incorporation• Tech. Protections
• Adaptation Control• Permission• Review• Distinguishability• Copyright Vesting
• Usage• Territory • Purposes• Person-Types• Fields of Endeavour
• Liability Management• Warranties• Indemnities
• Pricing• One-Time Fees• Repetitive Fees
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Roger’s Public Licence for His Content
• © Xamax Consultancy Pty Ltd, <year> ==>• To use for profit, gain approval from Xamax. May
be subject to payment, plus conditions• May be reproduced and distributed gratis,
subject to the following conditions: • re-publish in its entirety• reference to this copyright notice• appropriate attribution• authorship not to be misrepresented• ownership not to be misrepresented
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Roger’s Public Licence for His Content
• OwnershipX ExclusivityX Sub-Licensing
• Integrity Protection√ Entirety√ Copyright Notice
• Reproduction Control√ Permission√ Not-For-Profit Only
• Republishing Control√ Permission√ Not-For-Profit Only√ Any Format/Media√ Incorporation— Tech. Protections
• Adaptation ControlX Permission— Review— Distinguishability— Copyright Vesting
• Usage√ Any Territory, Purposes, Person-
Types, Fields of Endeavour
• Liability ManagementX WarrantiesX Indemnities
• PricingX One-Time FeeX Repetitive Fees
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Tools for Open Content• Ted Nelson’’s Xanadu ‘Transclusion’ (1965)
• quote w/- copying, & with µpayments• Ted Nelson’s ‘Transcopyright’ (1997)
• have a statutory right to re-publish by pointing, and pay (cents) for it
• Open Content• Project Gutenberg – promo.net/pg/• Open References - dmoz.org, wikipedia.org• opencontent.org, creativecommons.org• Public Licences
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More Tools for Open Content Peer-to-Peer (P2P) e-Sharing /
e-Trading
• MP3
• Napster
• Gnutella, KaZaA, et al.
• CD-quality digital soundin files sized 1 MB/minute
• a central catalogue of a distributed database, to facilitate sharing of MP3 files
• a distributed catalogue of a distributed database, to facilitate sharing of (MP3?) files
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Categories of Value Exchange
Provision Without Compensationdonation'gift economy'
Direct, Immediate, Reciprocitysale (G/S v. cash)barter (G/S v G/S)'horse-trading'
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Categories of Value Exchange
Provision Without Compensationdonation'gift economy'
Indirect or Deferred Reciprocity'barn-raising' 'cooking pot' 'honey-pot'sharewareopen source softwareopen content
Direct, Immediate, Reciprocitysale (G/S v. cash)barter (G/S v G/S)'horse-trading'
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Categories of Value Exchange
Provision Without Compensationdonation'gift economy'
Indirect or Deferred Reciprocity'barn-raising' 'cooking pot' 'honey-pot'sharewareopen source softwareopen contentloanssubscriptionadvertisingsponsorship
Direct, Immediate, Reciprocitysale (G/S v. cash)barter (G/S v G/S)'horse-trading'
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Internet-Era Business Models
The Concept
Who Pays?
For What?
To Whom?
And Why?
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Alternative University Business Models
WHO PAYS? For What? To Whom? And Why?
• institutional sponsors / the State pays• candidates / 'user-pays'• education-related sponsors:
• the university’s sponsor /benefactors pay• the candidate’s sponsor / employer pays• the course’s sponsor / employers and/or
advertisers and/or IT providers pay• complementary activities
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Alternative E-Publishing Business Models
WHO PAYS? For What? To Whom? And Why?
• revenue from the Copyright Owner: • fee for publication ('vanity press')• fee for storage or access
• revenue from the Content-Accessor / 'user-pays': • fee for document-access ('pay-per-view')• subscription fee for access for a period of time • shareware
• revenue from a Third Party: • advertisers• sponsors
• revenue from a Complementary Activity
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Internet-Era Business ModelsLessons from Open Source and
ContentWHO PAYS? For What? To Whom? And
Why?• Customers, for the Good/Service
Distribution
• Providers
• Third Parties
• Customers, for Complementary Goods/ServicesConsultancy, Training, Installation, Customisation, Integration, Audit
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Internet-Era Business Models Lessons from Open Source and
Content Who Pays? FOR WHAT? To Whom? And
Why?
• Goods & Services• Value-Added
Goods & Services• Complementary
Goods & Services• Infrastructure• After-Sales Service
• Data• Information• Expertise / Knowledge
• An Idea in Good Standing• Timeliness• Quality
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Internet-Era Business Models Lessons from Open Source and
Content Who Pays? For What? TO WHOM? And Why?
Direct Intermediated• Retailer• Franchisee• Value-Adder• Bundler• Transaction
Aggregator
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Internet-Era Business Models Lessons from Open Source and
Content Who Pays? For What? To Whom? AND
WHY?
• Resource Control• Switching Costs
(capture, lock-in)• Perceived Value• Cost Advantage• Quality Advantage
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A ‘Business Models on the Web’ Taxonomy
Rappa (digitalenterprise.org/models/models.html)
• BrokerageMarketplace Exchange, Buy/Sell Fulfilment, Demand Collection, Auction Broker, Transaction Broker, Distributor, Search Agent, Virtual Marketplace
• AdvertisingPortal, Classifieds, User Registration, Query-based Paid Placement, Contextual Advertising, Content-Targeted Advertising, Intromercials, Ultramercials
• InfomediaryAdvertising Networks, Audience Measurement Services, Incentive Marketing, Metamediary
• MerchantVirtual, Catalogue, Click&Mortar, Bit Vendor
• Manufacturer (Direct)Purchase, Lease, Licence, Brand Integrated Content
• AffiliateBanner Exchange, Pay-per-click, Revenue Sharing
• CommunityOpen Source, Public Broadcasting, Knowledge Networks
• SubscriptionContent Services, Person-to-Person Networking Services, Trusst Services, Internet Services Providers
• UtilityMetered Usage, Metered Subscriptions
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Conclusion
• As we search for eBusiness modelswe must not be constrained by conventions that were the basis of old and big business
• Open source and open content are not naive, 'gift economies'
• They are harbingers of a new wave of business activity that transcends naive economic rationalistism
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Open Source Software and Open Content
As Models for eBusiness
Roger ClarkeXamax Consultancy, Canberra
Visiting Professor, CSIS, University of Hong Kong
http://www.anu.edu.au/people/Roger.Clarke/ ...... /EC/OMB030925 {.html, .ppt}
ECOM-ICOM Expert AddressUniversity of Hong Kong, 25 September 2003
Copyright,2000-2003
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Copyright,2000-2003
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References – Copyrighthttp://www.anu.edu.au/people/Roger.Clark
e/... Clarke R. & Dempsey G. (1999) 'Electronic Trading in Copyright Objects
and Its Implications for Universities', at .../EC/ETCU.htmlClarke R. & Nees S. (1999) 'Technological Protections for Digital
Copyright Objects', at .../II/TPDCO.htmlClarke R., Higgs P.L. & Dempsey G. (2000) 'Key Design Issues in
Marketspaces for Intellectual Property Rights', at .../EC/Bled2K.htmlClarke R. (2000) ‘File-Discovery and File-Sharing Technologies (aka Peer-to-
Peer or P2P): MP3, Napster and Friends’, at .../EC/FDST.htmlClarke R. (2002) ‘eBusiness and Copyright’ PowerPoint slide-set for
European Patents Office, June 2002, athttp://www.xamax.com.au/EC/EPO/eCopyright.ppt
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References – Open Source and Content
http://www.anu.edu.au/people/Roger.Clarke/...
Clarke R. (2003) ‘Copyright: The Spectrum of Content Licensing’, July 2003, at .../EC/CCLic.html
Clarke R. (2003) ‘Open Source Licensing’, September 2003, at .../EC/OSLic.html
Clarke R. (2003) ‘Open Source and Open Content Offer Insights for e-Business’, Expert Address to the ECOM-ICOM Programme of the University of Hong Kong, 25 September 2003, at .../EC/OBM030925.html
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References – Copyright – 1 of 4
Barlow J.P. (1994) 'The Economy of Ideas: A Framework for patents and copyrights in the Digital Age', Wired 2.03 (March 1994), at http://www.wired.com/wired/archive/2.03/economy.ideas_pr.html
Barlow J.P. (2000) 'The Next Economy Of Ideas: Will copyright survive the Napster bomb? Nope, but creativity will' Wired 8.10 (October 2000), at http://www.wired.com/wired/archive/8.10/download_pr.html
Benner J. (2002) 'Public money, private code' Salon Jan. 4, 2002, at http://salon.com/tech/feature/2002/01/04/university_open_source/print.html
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References – Copyright – 2 of 4
Dyson E. (1995) 'Intellectual Value' Wired 3.07 (July 1995), at http://www.wired.com/wired/archive/3.07/dyson_pr.html
Greenleaf G.W. (1998) 'An Endnote on Regulating Cyberspace: Architecture vs Law?' UN.S.W. L. J. 21, 2 (November 1998), at http://www.austlii.edu.au/au/other/unswlj/thematic/1998/vol21no2/greenleaf.html
Greenleaf G.W. (1999) '"IP, phone home" - ECMS, ©-tech, and protecting privacy against surveillance by digital works' Proc. 21st Int'l Conf. Privacy and Personal Date Protection, 13-15 September 1999, Hong Kong SAR, China. at http://www2.austlii.edu.au/~graham/publications/ip_privacy/
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References – Copyright – 3 of 4
Kelly K. (1997) 'New Rules for the New Economy' Wired 5.09 (September 1997), at http://www.wired.com/wired/archive/5.09/newrules_pr.html
Lessig L. (1999) 'Code and Other Laws of Cyberspace' Basic Books, 1999
Lessig L. (2001) 'The Internet Under Siege' Foreign Policy (Nov-Dec 2001), at http://www.foreignpolicy.com/issue_novdec_2001/lessig.html
Lessig L. (2001) 'The Future of Ideas: The Fate of the Commons in a Connected World' Random House, 2001
Negroponte N. (1995) 'Being Digital' Hodder & Stoughton
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References – Copyright – 4 of 4
Samuelson P. (1996) 'The Copyright Grab' Wired 4.01 (January 1996), at http://www.wired.com/wired/archive/4.01/white.paper_pr.html
Samuelson P. (1999) 'Intellectual Property And The Digital Economy: Why The Anti-Circumvention Regulations Need To Be Revised' 14 Berkeley Tech. L. J. 519 (1999), at http://www.sims.berkeley.edu/~pam/papers/Samuelson_IP_dig_eco_htm.htm
Shapiro C. & Varian H.R. (1999) 'Information Rules: A Strategic Guide to the Network Economy' Harvard Business School Press, 1999
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References – Open Source and Content
Gabriel R.P. & Goldman R. (2002) 'Open Source: Beyond the Fairytales' August 2003, at http://opensource.mit.edu/papers/gabrielgoldman.pdf
Lerner J. & Tirole J. (2000) 'The Simple Economics of Open Source' National Bureau of Economic Research, Boston Mass., Working Paper 7600, at http://www.nber.org/papers/w7600
Newmarch J. (2000) 'Open Content Licences', June 2000, at http://jan.netcomp.monash.edu.au/opendoc/paper.html
Pal N. & Madanmohan T.R. (2001) 'Competing on Open Source: Strategies and Practise' January 2002, at http://opensource.mit.edu/papers/madanmohan.pdf
Raymond E.S. (1998) 'The Cathedral and the Bazaar' First Monday 3,3 (March 1998), at http://www.firstmonday.org/issues/issue3_3/raymond/
