Open Business

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Open business = a business that operates around the principles that are similar to those of the free software and open source movements, i.e. with 'free' and 'open' content.


There is also a website and weblog of the same name, monitoring developments in this area. See below.


Definition

Open Business Models are models that do not rely on privatising intellectual property and hence do not impede the uptake of innovations by the rest of humanity.


Open Business Models and Strategies

From the OpenBusiness Guide 1.0 at http://wiki.icommons.org/index.php/The_OpenBusiness_Guide


Make the original cheaper than a copy

How can you make an original that is cheaper than a copy in an environment where content can be copied and distributed at practically zero cost? The answer lies in minimising transaction costs.

A good example of this is eMusic, which charges as little as 12p per song downloaded to mitigate against the risk of wasting time downloading poor quality music, as well as facing litigation from rights owners, by using illicit peer to peer filesharing clients. You might save money downloading music from such sites, but as Steve Jobs remarked at the launch of the iTunes store, “you’re working for under minimum wage.”

In the print industry, the print form of a novel is still much more convenient in many contexts than is the digital form. There are a range of environments, from the bath to the bus, where consumers would prefer their novel in book form, and will pay for the privilege.


Sell physical complements

Bands who develop a fan base by giving away their music online can rely on this fan base to consume physical compliments to their music, by attending gigs or purchasing products such as T-shirts, caps and badges.


Sell information complements

In open source software products, such as Red Hat Linux, are given away, and then support contracts are sold on the strength of the free product. A type of “support contract” for music might be specially packaged forms of the music, already generated by the artists during the production stages, where the different recording tracks have been separated out to allow users to remix the song.

In the same way, an academic, consultant or journalist distributing their writing free online could successfully charge for specific consultancy work based on the popularity or reach of their work. Developing ones reputation for free is a good strategy to create derivative revenue streams.


Subscriptions

The disadvantages of hiding content behind subscription barriers have already been discussed. However, this does not preclude the content producers from allowing access to special features associated with the content to paying subscribers. Slashdot, for example, gives subscribers access to their posts half an hour before they are posted to all readers, enabling subscribers to be first in line to comment on a particular post. Increasingly adaptations to old revenue models can be found where more is available for free, but revenue comes from parallel revenue streams, which are only available to paying customers. The difference being they increasingly are not paying for what used to be the main product, but for ancillary higher value services.


Offer a personalised version

Personalising content, using customer relations management software such as that employed at Amazon, can help users navigate your content by reminding them what they have and haven’t seen, as well as recommending they look at something based on what other users with similar profiles have enjoyed looking at.


As discussed, gaining exposure on the network is increased by giving away your content for free. This is a key strategy for artists seeking their audience.


Though this seems to be the answer for nearly every web 2.0 entrepreneur it works for many. Once your content has enough attention focussed on it, you are in a position to sell advertising space. Advertising revenues are increasingly being diverted from print media towards the online sphere, and this trend can only continue. Plus, with Google Small Ads, there is a wider market for content producers to source advertising revenue. It will be interesting to watch what innovative forms 'selling attention' will take.


Monitoring

Collecting societies traditionally collect royalties for their members, and are moving into the online sphere. For example, Last FM, whilst offering recommendations and short previews of music, also offers personal radio stations, which play users music according to their music profile. Last FM pays the MCPS-PRS fees like any other radio station, and revenue from this is in turn distributed to rightsholders.


Selling content

If you are releasing your content online using a Creative Commons licence, then you still maintain the right to profit from your own work. And developing a fan base through freeing your content to a network of fans will make you a more attractive proposition to record labels and publishing houses.


Pure public provision

Public funding, either as seed funding or start-up funding might play a significant role in some online ventures, and funding from your own public, through mechanisms such as Paypal, could provide significant revenues.


Prizes, awards and commissions

Patronage in the form of prizes and awards as well as specific commissions, should also be considered as a source of revenue.

Where the first round of commercial web development focused on online services and e-commerce, the new Web focuses on sociality. People are at the core of the new Web -- contributing content, ordering it, and making connections amongst each other. Web 2.0 companies are merely 'containers' for their social activity: mediators, facilitators and meeting places. Such companies add value to users’ data by aggregating it, analysing it, funnelling the value of users’ collective intelligence back to the user." (http://wiki.icommons.org/index.php/The_OpenBusiness_Guide)


More Information

Case studies are listed in the Open Business Guide at http://wiki.icommons.org/index.php/The_OpenBusiness_Guide; and here at http://www.openrightsgroup.org/creativebusiness/index.php/Research_Areas

See the related items on Open Music Business Models and Open Film Business Models

Please check our directory of P2P Business Concepts [1] and our directory of P2P Companies [2].

Some related Delicious Tags to monitor developments:


The Open Business site and weblog

URL = http://openbusiness.cc/


Information on the Open Business site

"Creative Commons England/Wales board-member Christian Ahlert has just launched OpenBusiness. This is the result of an intensive research project into "open" business-models that don't rely on overbroad copyright/patent/trademark rights or are based on free/open source software and open content under Creative Commons licenses. It consists of case-studies aimed at entrepreneurs and funders who are trying to get their heads around what the characteristics of a successful open business are." (from cory doctorow at boing boing)

"The two main aims of the openBusiness project are to build an online resource of innovative business models and to publish this resource in hardcopy as The openBusiness Guide. This website has been designed to gather business models from around the world.

Editorial Process: Using this website, openBusiness is gathering business models and collating community comments and suggestions to create a comprehensive resource that supports both new and existing open business ideas. Before becoming a part of The Guide, an idea is first published as a model. This starts with a member of the OB community submitting a model, which is immediately published onto the site. Once a model is published the process of peer review begins. All members of the openBusiness site are invited to comment on the models. The discussion that members generate will produce ideas, strategies and revisions which will assist the author to further develop or fine-tune their own business. After this process of peer review the model will be transferred into The openBusiness Guide. The Guide is a wiki, meaning that every user is able to contribute to the guide and correct mistakes or omissions. The collection of models on the website will serve as the main source for content in The openBusiness Guide."