Latest revision as of 06:29, 16 June 2010

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.

Advertise yourself

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.

Advertise other things

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."

@@ Line 4: / Line 4: @@
 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.
-=Definition=
+==Sell physical complements==
-Our own proposed definition is the following:
+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.
-- An open business is based on open forms of content and does not rely on IP protection
+==Sell information complements==
-- An open business has a partnership-based (non-manipulative) relation with its customers, the community of producers of the open content, and co-nurtures the Commons from which it lives
+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.
-- The open business is run collaboratively, in a non-authoritarian fashion and uses transparent processes
+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.
-See here for a more detailed look at the definition of an [[Open Organization]]
+==Subscriptions==
-=Discussion of Open Business characteristics=
+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.
-Definition by Openbusiness.cc
-http://www.openbusiness.cc/2006/06/05/what-is-an-openbusiness-part-ii/
+==Offer a personalised version==
-A recent thread on OpenBusiness.cc sought to identify characteristics which merit or disqualify a business from being 'open'. The following positive indicators summarise parts of the discussion. Among other dimensions the main concern appears to be:
+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.
-Should our definition of "Openness" include a normative dimension?
-If "Openness" is essentially a smart strategy to make profits whilst enabling users to share content, yet does not allow them to make derivatives, is this a boundary which should apply?
+==Advertise yourself==
-It may be important to remember what Richard Stallman, the father of free software, notes in this regard: "While free software by any other name would give you the same freedom, it makes a big difference which name we use: different words convey different ideas". He is right and opposed the term Open Source software, because he wanted to make a normative point. Free software is associated with the freedom to tinker, adapt and build upon, not with giving away product for gratis. In this sense "Free business" might have been the better term for describing a trend, which leads to more open business practises. But we do not seek a definitive definition for what Open Business is, rather we are seeking to find common characteristics of what an OpenBusiness is, as delineated from traditional business structures, norms and conventions.
+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.
-'''Practices 'libre' / 'copyleft' notions of IP'''
+==Advertise other things==
-Typically this dimension implies a business that uses Creative Commons licenses to distribute their digital works or a comparable spirit in its firm's dealings, particularly in its licensing practices. It's a matter of contributing to the commons or public domain by avoiding private appropriation. There are many conceptions of what it means to be 'libre', electing not to restrict distribution of your digital works being a low standard, whilst many argue derivations must be permitted.
+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.
-To which aspects of a business can these notions be applied? The concept of 'code' now extends from its original software context to the materials and resources underlying a creative project. For example in a musical context, code entails multi-track recordings, 'parts' or samples, perhaps even details of the specific artists and recordings which influenced a product. How the notion of code can be extended in this regard is an especially interesting topic on which contributions and examples are needed.
-In this regard, a further distinction deserves more thought. Whilst it is fairly simple to designate outputs as open, it is also possible to pursue open notions to your production processes or inputs. For example, a business might focus on works resulting from collaboration or decentralised production, or it might encourage derivations from CC-licensed works.
+==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.
-'''Sharing content and services i.e. giving something away gratis'''
-By giving something away for free, a business can develop extensive networks, communities and platforms which can then generate opportunities to create revenue. Precisely what a business has to share is a function of its particular business model. For example, record labels (e.g. Beatpick, Loca) can facilitate the sharing of their recordings whilst charging for higher quality versions, whilst web 2.0 services such as Flickr offer free platforms for sharing of pictures.
+==Selling content==
-There is however, given its capacity for generating revenue, a potentially cynical and profiteering aspect to this approach to sharing. For example, criticism has recently been levelled at MySpace for its submission to Rupert Murdoch, and subsequent revision of its conditions of usage.
+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.
-'''Progressive governance and organisational structures'''
+==Pure public provision==
-It may be possible to share the code underlying a business, meaning the intricacies of administering a sustainable business. This might involve writing and publishing a logistics guidebook, covering a range of simple and generic organisational practices, or perhaps even detailed examples on how to structure deals or agreements with media partners, suppliers and clients. Publishing and sharing this aspect of code is heretical in the culture of 'industry secrets', yet it is very appealing to those accustomed to the principles of free-software.
+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.
-Also, open can indicate that the business itself has been created cooperatively and owned collectively, as opposed to the more traditional private/public ownership structures. Workers are greatly incentivised by having a higher stake in a concern, in part from feelings of responsibility and opportunity, but also from the likelihood of higher remuneration. A business can be more open still if it is owned by its members / users, managed by its stakeholders and develops entirely transparent accounting procedures.
-"A business that does not use copyright or patents to privatise intellectual contributions, but leaves it in the public domain, while building a service model around it. An open business model uses and enriches the Commons, focusing on the monetisation of the services."
+==Prizes, awards and commissions==
-"I consider a company which depends on secrets to be less open than one which relies on patents, which is in turn less open than one that relies on neither."
+Patronage in the form of prizes and awards as well as specific commissions, should also be considered as a source of revenue.
-"'Open Businesses' create value for people and companies without slowing down economic or cultural flow with unnecessary fences. Rather than locking customers into a gated world, Open Businesses put the customer at the centre of their value proposition, collaborating with competitors to use standards to improve customer's actual experience."
+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)
-"Open Business is really a return to business or commerce fundamentals."
 =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 [http://p2pfoundation.net/index.php/Category:Business] and our directory of P2P Companies [http://p2pfoundation.net/index.php/Category:Companies].
@@ Line 97: / Line 117: @@
 [[Category:Business]]
+[[Category:Open]]
+[[Category:Peerfunding]]
+[[Category:Business Models]]

Open Business: Difference between revisions