Pragmatic Critique of the Peer Production License

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see: Peer Production License for background


1. Tiberius Brastaviceanu:

"Dear Michel Bauwens:

"I've been thinking about your commons license since idea since you presented it in Montreal in November of last year. Not only thinking, but thinking in context, as we are trying to solve our problems with Sensorica. I am still not convinced about it, because I don't see how it can offer a solution to our problems. I want to bring this out here, as a practitioner, and invite this community to reflect on this issue.

Today we had a meeting with a small company that is interested in one of our sensors, to integrate it into one of their products. Now, I totally agree with you that the p2p economy needs the classical economy to mature and grow. I see this as a metamorphosis process, where then new feeds on the decaying old. There is a lot of value stored in the old economy that we need to channel it into the new. The question is, what mechanisms should-we employ to allow that flow to happen?

Back to my story... We need to realize that classical companies are embedded within a web of relations.

It's not simple, and one small thing affects the others. At the meeting table we were trying to understand how we could structure our relationship. They can become members of the Sensorica network, they can be just partners with us without being part of the value accounting system, or we can simply become their suppliers. The consensus was that we needed more than just a transactional relationship, because we still need to do some R&D to make it happen. At the same time, this small company is looking for funding, is about to make a deal with another giant company. One of the representatives said (paraphrasing) I like open source, but I don't think that the large company would like to know that we are too close to an open enterprise like Sensorica, if we collaborate, because they will fear that the open CC license might contaminate the technology they are interested in and lose their control. I can just dismiss this and say that both, the giant company and these guys don't get it, because in the long run their model will lose. Fine, but in the short run this is still a recipe of successes. So already we see that the value produced as commons, in some cases, is not very attractive for classical entities,because they limit their access to funding and the probability to strike a deal with the giant that will make you reach overnight.

But let's suppose that despite these inconveniences the value is irresistible. Now... How do you mix an open license with other things that are closed, without putting a lot of pressure on the classical company? The open is very corrosive and control-minded entities (i.e. closed, competitive) are afraid to touch it. At least this is what I see in the hardware worked, around me, here in Montreal. If you know companies that aren't afraid of it, that know how to deal with it, send them our way PLEASE.

So what I am saying is that p2p license or not, as soon as it smells open it stinks to most of these companies, because in their closed minds open is risky, because someone else can copy them. Since there is a risk associated with incorporating then open into closed products, because it might contaminate it and force to open, or because might not be profitable for long, they are reluctant to commit to a license with royalties attached to it, towards the commons community. Someone from the same community can become a competitor of this company tomorrow...

This is just a case. It is not always like that, I suppose, but my example reflects some parts of reality.

So I proposed something vague: Sensorica keeps its stuff CC and we sign a contract with them, saying that if Sensorica spends its own resources to customize the sensor for them, we want to make sure that this risk is rewarded later, and that we get a cut of the revenue. In exchange, we try not to reproduce the same deal with another company, or go on the same market on our own. If one day they decide to get their sensors somewhere else, we allow ourselves to go in their market alone or with others. But NOTE that we can since our sensor is CC, someone else in the world can decide to apply it to the same thing. Even worse, only individual members of Sensorica can sign such a contract, as individuals, not Sensorica, because it is an open and informal network. So someone can join Sensorica later and do it.

There might be some perceived value for a company that operates in the mindset of control, to neutralize some important nodes within a network, to block a locus of know how to deploy resources in a direction detrimental to the company, so they can buy some piece of mind for a year or so, which is not bad, because a year in height tech means a lot.

So I guess, the core of my argument is that in order to have these deals done between the for-profit, operating on control, and the for benefit, operating on openness and sharing, we need to find this compromise between the openness and transparency embedded in open innovation and the need for control. That is the core issue, and if value is perceived on both sides in the context of an infinite game you don't need to police the commons. Everyone will act to benefit the relationship, if there is symbiosis built-in. This is what I am trying to get at. Getting defensive and asking a royalty to the for-profit would have been a mistake at the meeting table today, because they need us, but we need them too as a channel to drain resources from the old economy.

Where is this compromise, what does it look like? I am starting to believe that in the immediate future it is in the grey zone. This means that we need to use artifacts at the limit of being legal or (apparently) fair, knowing what the true intention is, because the system is not there for us (in our favor). In other words, I told these guys that nothing stops them from even filing for a patent that knowingly infringes on our CC license, and use it to get the funding and secure a deal with the giant company, while preserving our relation of collaboration, which is a repetitive game for a stream of innovation. As long as something is flowing towards the community no one is going to attack the small company. On the other side, the open community can continue to develop and apply the technology and the small company will not say anything, because it is waiting for another opportunity to repeat the scheme. This is how the open community can preserve its economic model, the small company can be satisfied because it can satisfy the giant's appetite for control (closeness), who in turn returns some revenue towards the first two. Note that this is not a long-term arrangement. If we belief in p2p we also believe that the economic strength of the giant will become weaker, as open networks become stronger. This is just for the transition...

The key concept I am trying to develop and apply now is this grey zone..."


"The main question here is: can traditional for-profit companies (based on control, profit maximization) transact with for-benefit entities (thriving on commons) in a way that is beneficial to both? This question is important, because the new economy (i.e. p2p economy) must access resources from the legacy economy, and a lot of assets are stored within these traditional economic entities in the form of material assets, means of production, distribution channels, brands, etc.

Stuff can be transferred through public institutions, which can extract from traditional companies and inject it into the new economy. Many people are trying to open wider these channels. This is essentially what happens when a for-benefit gets a grant or other kinds of free money from the government or from a foundation. New channels have been opened recently with crowdfunding, where the intermediary is the individual who is getting the money by working in a corporation. The same thing can be said for the time people spend on open projects. They can do it because the corporation takes care of their basic needs, by paying them a salary. Nonetheless, it is still a transfer of value from the old economy to the new. But can we find a way to transfer value directly from the classical corporation to the new entity? There is a barrier between the two. Their economic models are incompatible. Can we do something about it? I think so. The solution lies the grey zone I mentioned in my previous post. Why are the economic models so grossly incompatible? Classical corporations operate on defensive mechanisms. They are the turtles of the economic world. The new, commons-oriented and p2p entities operate on openness and sharing. They are the cheetahs of the economic world. The open game is a game of speed. In today's world, in which profit-maximizing, opportunistic, competitive enterprises cohabit with commons-based p2p enterprises there is actually forced competition between them, even if the second kind operates on collaborative principles. If you open your innovation (if you take away your protective shell) you better make sure that you innovate fast (that you run fast)! In other words, you need to be first to market with better products/solutions. Otherwise, the corporation will use its production and distribution capacity to take away potential revenue/benefits. The edge of the open enterprise is fast innovation. So in the actual economic environment there is competition between the animal fine-tuned for protection and the one which must make sure that it can turn sharing and openness into speed. Open technology, if not handled with a lot of care, can diminish the advantages of classical companies, it is incompatible with the old business model. New entities like Sensorica turn open innovation into an advantage, but the organizational structure must be greatly revised in order to dramatically increase the rate of innovation. So we NEED to be transparent, open, horizontal, operate at large scale, ... So open innovation goes hand in hand with the open network idea. I hope you can see now why open innovation can be toxic for classical corporations. Crowdsourcing is a way for them to increase their innovation speed, because let's not forget that they also compete among each others, the turtles cannibalize each others. But note that most crowdsourcing platforms respect IP, work with non-disclosure agreements and so on. I've always been against this type of crowdsourcing, which was designed to benefit the corporation by milking the crowd. If open innovation was compatible with the classical business model all crowdsourcing would be done in the open, and the crowd would collaborate more, producing better results, rather than compete for a candy, if the proposed solution is chosen by the company among all the others. My point is that no matter how important the innovation is, it's value is always lower in the eyes of the corporation. If it is irresistible the corporation is FORCED to do something non-ethical, which is to close it in some way, or to use it secretly somehow (happens a lot with open software). But they will be less inclined to use it as is, pay royalties for it, and let their competitors know that they are using open innovation in their new star product. My grey zone theory is about a multiplayer game, with one-time deals between some classical players on the periphery, where the resources come from, and an infinite game between the open enterprise and some other classical players. If the open enterprise goes into a one-time deal with a classical player its chances to get abused are very high. The infinite game between the open entity and the classical player is about insuring a fast and continuous stream of innovation. The classical player that plays this infinite game with the open enterprise masks the open character of the technology, and transfers it further to other entities until the chain reaches the pool of resources. So the classical player in proximity to the open enterprise cannot directly materialize the potential of the open technology in the classical way, but acts as a broker, transferring technology to other players, by removing it from its open context." (