Different people will use the concept in different ways.

For us at the P2P Foundation it means business models that do not restrict the results of the innovation to the rest of humanity, i.e open business models cannot be based on restrictive forms of intellectual property.

Definition

Description

1.

From the [1]dedicated wiki of Sam Rose:

(go here for the CamelCase references in the quote: http://socialsynergyweb.net/cgi-bin/wiki/OpenBusinessModel)

"An Open Business Model is:

transparent for business exchanges and production of products or services, making transparent some or all of it’s processes

majority-oriented as a commitment for the majority of involved people

sustainable by caring for a sustainable local and global system

wellbeing-oriented, giving the health and wellbeing of people the highest preference

flexible, opening up space for people to grow, communicate, build trust and relationships

flat, taking measures to DevolvePower over decision making in different ways

wealth-sharing, offering ShareRevenue

location-independent, encouraging DistributiveProduction

An OpenBusinessModel tends to create some degree of an OpenValueNetwork of exchanges among the users and producers. Knowledge and information exchanges are curated and grown in a KnowledgeCommons. ValueExchanges are transparent when possible. IntellectualProperty is by default not hoarded, nor made scarce, but released under a license that allows for different types of re-use. The goal is to generate “positive externalities”

The OpenBusinessModel is an acknowledgement that money is not the only exchange that takes place in business. It’s employment is also a recognition in practice that money, value, compensation and control need not flow in a one-way direction from user (“customer”) to producer.

OpenBusinessModels give people foundations for becoming SelfSufficient?, by employing BuildingBlocksForIndependents. These are tools, concepts, ideas that are open, and commons-based.

The OpenBusinessModel can be for-profit or not-for-profit. It can be Cooperative -or Corporation-Based. The legal organization is not as important as the opening of all channels of communication, the affordance of authorship, and the sharing and of information and know-how in a KnowledgeCommons." (http://socialsynergyweb.net/cgi-bin/wiki/OpenBusinessModel)

2.

From the Wikipedia [2]:

"Open business is in general the concept of doing business in a transparent way by intimately integrating an ecosystem of stake holders and abiding by a model of transparency. Often, small minorities harness the business benefits away at the cost of other stakeholders and `the market´. Open Business structures seek to rectify this. They activate personal productivity like no other organization can by simply redirecting the returns to those that produced them, and by their nature, the individuals themselves play a central role.

A more strict definition is inspired by free software movement, open standards, open source and open content, which implies that an open business, is a business whose business model is run on open standards, "free software"and "open source" software and open content principles, and focuses on creating `open´ products and services. This approach would guarantee that the business is run for the benefit of all, and not just for one group or stakeholders, whether shareheolders, personnel, government etc. Also the strict application of open principles will guarantee that bankruptcy of a specific open business, will not result in the loss of the fruits of its knowledge." (http://en.wikipedia.org/wiki/Open_business)

Case Studies and Examples

From the Open Business Guide at http://wiki.icommons.org/index.php/The_OpenBusiness_Guide

"HSRC Press primarily publishes the output of the Human Sciences Research Council. It has adopted an open access publishing model. HSRC adopted the model because the primary goal in publishing the research materials as opposed to seeking financial reward through the turnover from book sales.

Instead, the goal of HSRC to attract further research funding and contracts, and crucial avenues of dissemination, which can increase the overall size and influence of the HSRC organisation.

Printed books are offered via the website, and can be read on-screen, downloaded for printing or ordered on the website as a POD publication through an e-commerce engine (and supplied on a cost-recovery basis). Having adopted this model revenue has increased by 300%!

Mute is an example of participatory publishing and a networked economic model. It has a number of interesting new services, including print on demand (POD) and Networked Distribution, developed on top of the Open Source web tools Drupal CMS and CiviCRM (constituent relationship management). The Mute site has been designed to address the difficulties facing a small publishing cultural group, the most persistent of which remain reaching your audience and covering your production costs; a problem which Mute addresses using POD. POD is a high quality, low cost form of digital book printing, through which one or 1000s of copies can be printed. In conjunction with a network of self-selecting agents, the NGO web campaigning tool CiviCRM will be used to manage all aspects of distribution (including orders, deliveries and payments) over the net.

Here's an extensive list of companies giving away their IP in the context of a business model, at http://www.openrightsgroup.org/creativebusiness/index.php/Research_Areas

Linup Front uses POD to ensure that only the most recent training materials reach their audience. Once purchased in POD form or as a PDF the files are free for distribution. This free distribution is used as advertising for Linup Front, who users can turn to when their copy becomes out of date.

Magnatune has significantly helped in the sale and distribution of hundreds of artists, whose music would otherwise be heard and purchased with far less frequency, by providing free sampling methods and genre specificity options. Added music consumption in this fashion, in conjunction with low distribution costs, allows for found sales and an effective revenue sharing regime between Magnatune and artists.

Magnatune’s revenue sources are music (both for personal and commercial uses), music licencing, and artist merchandise. Magnatune employs a Creative Commons licencing regime that allows for online distribution of music. It bypasses traditional distribution chains, avoiding expensive costs. This allows for music revenues to be shared evenly by Magnatune and artists.

Jamendo is "a new model for artists to promote, publish, and be paid for their music. On Jamendo, the artists distribute their music under Creative Commons licences. In a nutshell, they allow you to download, remix and share their music freely. It’s a “Some rights reserved” agreement, perfectly suited for the new century. These new rules make jamendo able to use the new powerful means of digital distribution like Peer-to-Peer networks such as BitTorrent or eMule to legally distribute albums at near-zero cost."

Jamendo users can discover and share albums, but also review them or start a discussion on the forums. Albums are rated based on the visitors’ reviews. If they like an artist they can support him by making a donation.

Neuros Technology applies an Open Source approach to hardware and software development. “As engineers, most of us spent our academic careers in an environment where open peer review was just taken for granted as the most sensible way to advance science and technology. Once we transitioned to the business world, we were conditioned to accept that secrecy was a necessary evil,” says Neuros CEO Joe Born. “In fact, experience is showing us that peer review works great in the business world as well. The more information we release to the public, the more our community helps provide us with the ultimate strategic business advantage: better products”.

By releasing proposed specs and involving users in development of a product, Neuros gets feedback from the community’s most involved users and in exchange those users get visibility and an opportunity to influence the product’s development from the very beginning.

Steven Soderbergh has been an astonishing film director for years. Now he is innovating the way movies are made and distributed. His new movie ‘Bubble’ will be in the theatres, on DVD and going to the networks at the same time. And it has been produced entirely with unknown actors and entirely digital. The coolest idea is that he does not mind filesharing since production costs are so much lower - just 1.6 million US $ - and people will still bug the DVDs and go to movies as it is still, as he says, the No1 dating location. So making a profit is much easier, if you haven’t invested hundreds of millions. Well done. Seems like that the movie business is finally starting to change the way the do business - at least some of them.

While it is true that Cory Doctorow himself is not a business, he does have an innovative approach to selling hardcopies of his books and creating revenue for himself as an artist, so I think he is certainly worth mentioning here.

Doctorow releases his novels on a Creative Commons Licence on the internet for free download, sharing, and even remixing. This open approach has produced a whirlpool of activity around his name, making him a renowned science fiction writer with a huge following. His revenue comes from selling hardcopies of his books (nobody wants to read an entire novel from a computer screen) and speaking at conferences, debates and other events."

Surveys

From Box UK:

“a survey of business models used by the top Web apps, most of them variations of ad-supported Free and Freemium. In the chart below, the largest segment (ITA) is ad-supported, the second largest (ISV) is Freemium. After that is referral (ITR) and then the sale of virtual goods (IPV), such as the gifts in Facebook.

“We spent a few hours going through the Webware 100 Top Web Apps for 2008, analysing the business model(s) used by each. The chart below shows the results of this survey: 34% use Advertising, 12% a Variable Subscription model, and 8% each for Virtual Products (typically digital downloads), Related Products (typically a large software company offering a free product to attract you to their platform) and Pay-Per-Use.” (http://www.boxuk.com/blog/monetizing-your-web-app-business-models)

Podcasts

Open Congress on Creativity and the Public Domain

URL = http://www.tate.org.uk/onlineevents/archive/open_congress/

"The extraordinary development of Free and Open Source Software – software that anyone is free to use, modify and redistribute – has revitalized wider interest in collaborative creativity, the public domain and the ‘openness’ of public institutions.

Structured around three ecologies: Governance, Creativity and Knowledge, this innovative Congress explored, through its structure and content, how Open Source inspired methods may transform art and its institutions – by challenging conventional practices of authorship, ownership and distribution.

Due to many simultaneous sessions and a range of presentation contexts, Online Events were unable to stream all of the contributions live. A selection of presentations, workshops and discussions have been post-produced and are available as archives below. The level and quality of audio does vary between sessions, due to acoustics, amplification and electronic interference. Friday."

SPEAKERS

Christian Ahlert Open Business (Foyer - Governance) 50min Open business models and free content

More Information

For further examples of open business models visit http://www.openbusiness.cc/category/models.
For analysis, interviews and discussion of these models please go to http://www.openbusiness.cc/category/discussion.
Open Rights Group course on Creative Business in the Digital Era, research section, has a long list of examples of companies giving away IP, at http://www.openrightsgroup.org/creativebusiness/index.php/Research_Areas

Internal Links

Open Business Models

Contents