Economic Models Around Free Educational Materials

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* Paper: Free Technology Academy: Towards Sustainable Production of Free Educational Materials. Authors: Wouter Tebbens (Free Knowledge Institute), David Megías (Open University of Catalonia), David Jacovkis (Free Knowledge Institute), Lex Bijlsma (Open University Netherlands)



Wouter Tebbens et al.:

Context: Free Software Business Models

"FLOSSmetrics [1], an EC funded research project about the economic models behind 451 Free Software projects, mapped these projects along three axis: control (software model), collaboration (development model) and revenue (business model). The software model axis runs from proprietary to Free Software. The development model axis runs from closed to open to participation, and is not directly related to the software model: there is proprietary software which encourages active participation in the development (like SAP), while some Free Software projects are developed by one developer without any external participation. The third axis contains the business models: the way software projects generate income.

Various business models are defined, which can be summarised into these main categories:

•fully Free Software, revenue is generated with training, custom development, consultancy, certification and other services

•business models based on proprietary add-ons, known as open core (like SugarCRM) or on publishing software both under a proprietary license and a free license, known as dual licensing (like MySQL)

•platform providers which generate revenue by aggregating applications into one coherent platform and certifying its quality (like some GNU/Linux distributors such as RedHat or Novell)

From the projects analysed and models described by the FLOSSmetrics research, we can conclude that service provision is the dominant way to generate revenues from software.


One interesting business model analysed in the FLOSSmetrics research is the R&D Cost sharing model. This is defined as cooperation between interested parties to achieve economic efficiency in the R&D of new software. It is observed that this model works best in a community when all participants have equal rights. Free licenses, open standards and open development practices can assure such a level playing field." (

Models Applied to Education

"In education, the analogue to fully free software would be 'fully free knowledge' - where knowledge is understood as explicit expressions of culture, technology, research. If we think of services in the educational domain, the most typical ones would be: tuition and guidance of learners in a course, assessment of learner's participation and assignments, certification of the acquired knowledge. The main ways of generating direct revenue with course books are as commissioned production of materials, and through a service to distribute printed copies, i.e. Print on Demand. Other forms of revenue can be generated by organising special events for specific target groups, like master classes for people in management positions.

In addition to the above, forms of "open core" exist in education. In MIT's OpenCourseWare, some parts of the courses are published under free licenses, while enrolment is required to access the full course contents. The model of "platform providers" can also be observed in some form in the open educational community. A university or network of universities offering a coherent educational programme could be seen as a platform provider, where the organisation invests in bringing a coherent programme with assured quality and certification and formal recognition of obtained results. This is very different from informal education, be it self learning or an informally organised course with no direct recognition and no guarantee to fit into a larger educational programme."


Regarding the R&D Cost sharing model

"Regarding the development of educational materials, we find a wide range of models, from open to closed development. Benkler analyses the differences between intra-firm, market based and peer production. He uses economic theory to show that, in certain cases, peer production can be more economically efficient than market-based or intra-firm production. Important reasons for that to occur are 1) the lack of transaction costs (no contracts need to be managed, there is almost no hierarchy), 2) motives other than monetary may induce people to participate in the production process, and 3) the results of the collaborative effort are available for all participants under equal conditions.

The following options for developing course materials are thus available:

•internal production (intra-firm or intra-university) •hire external experts (market based) •peer production (non-monetary, social production between peers)

The shared R&D costs-model can be a combination of these three forms of production through cooperation between partner organisations and peers."

The SER Model

"From the area of course design, a hybrid model is suggested by De Paula et al.

In the Courses as Seeds model, an initial course material is Seeded at the beginning of a course, which is Enhanced in the educational process and the enhanced version is Reseeded before or at the start of the next edition of the course. Therefore, this model is also known as the SER-model. It is conceived as a meta layer based in Fischer's Meta-design conceptual framework.

This model could build on any of the earlier mentioned economic production models and facilitate the maintenance of educational materials via a peer-to-peer process, eventually complemented by paid staff for editorial and quality assurance tasks."

The FTA as case study

Wouter Tebbens et al.:

"The production of OER must be sustainable both in the production and the economic points of view. The FTA project addresses, among other issues, both objectives by incorporating an OER development cycle and a set of services around these OER which generate revenues.

The FTA tackles the development cycle of educational materials by offering different production models:

a) the production of a course material by a single partner of the project (“inhouse”);

b) collecting feedback to update and improve future versions of the materials; and

c) the distributed production by a set of interested parties.

In any case, the materials considered as “official” within the project must be supervised and approved by a set of experts belonging to any of the HE institutions which constitute the FTA consortium or associate partners to guarantee their scientific and academic correctness.

From the economic point of view, the FTA generates revenues by offering a set of services around the produced OER. These services are mainly (though not exclusively) educational, since courses are delivered on-line using the FTA campus with expert tutor guidance, and diplomas are issued when students accomplish the learning objectives of each course. These diplomas are recognised by the official educational programmes offered by the HE institutions integrated in the FTA network. In addition, the FTA also offers a Print on Demand service which allows to obtain physical copies of the books at a reduced price. Obviously, both the production of materials and the services provided involve a set of costs. The FTA has worked on several scenarios including fixed and variable costs and how these can be covered by the generated revenues, which show that the economic sustainability of the process is possible under some realistic conditions, which include a target number of students and courses.

Hence, the FTA tries to solve the sustainability problem of OER production and sets up an example which may be replicated in fields different from Free Software and Open Standards by interested parties." (


  1. FLOSSmetrics project,
  2. Rogerio dePaula, Gerhard Fischer, Jonathan Ostwald, Courses as Seeds: Expectations and Realities, 2001