The Business of “Open”

November 2009

SANGKI HAN, Ph.D.

ProfessorGraduate School of Culture Technology

KAIST

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Commons-based Peer Production

• Yochai Benkler @ Harvard Law School and Berkman Center for Internet & Society

• A socio-economic system of production that is emerging in the digitally networked environment

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Peer Production and Sharing

GNU

Since 2005, over 5000 individual developers from nearly 500 different companies have contributed to the kernel.

Linux

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Who Writes Linux?

page 10

Linux Kernel Development

WHO IS SPONSORING THE WORK

The Linux kernel is a resource which is used by a large variety of companies. Many of those companies never participate in the development of the kernel; they are content with the software as it is and do not feel the need to help drive its development in any particular direction. But, as can be seen in the table above, an increasing number of companies are working toward the improvement of the kernel.

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-)"&<"213&0-24&?$)&./"2)&%$)'6

[Linux Foundation, Aug. 2009]

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Business Model for Peer Production

• Licensing and Professional Service

- GPL for GNU and Free Software

✓As of August 2007, the GPL accounted for nearly 65% of the 43,442 free software projects listed on Freshmeat

✓Dual Licensing / Distribution & Service Model/ The Ecosystem Strategy / Dual Product Model / The Web-Based Ad Model

• Donation

• Selling manuals, t-shirts, stickers, mugs, etc.

[ ]

2008/2009 ANNUAL PLANThis year’s Annual Plan includes increased spending on technical infrastructure to keep pace with Wikipe-

dia’s growing audience, the establishment of the Wikimedia Foundation’s first fundraising team, and the

hiring of additional software developers and staff with responsibility for public outreach and partnerships.

The Annual Plan anticipates increased revenues, due to the establishment of the dedicated fundraising

team. All figures in thousands of dollars.

Board $130K [1]

Office of the

Executive Director $472K [2]

Technology $2,705K [3]Finance & Admin. $1,619K [4]

Programs $595K [5]

Legal $357K [6]

Wikimania $96K [7]

[[2008/2009 Budget]]

Total $5,974,000

In-Kind Revenue $500K [5]

Major Gifts and Grants $3,000K* [1]Community Gifts $3,000K [2]

Earned Income $811K [3]

Other Revenue $24K [4]

[[2008/2009 Projected Revenue]]

Total $7,335,000

[1] Includes board meeting expenses, D&O insurance. [2] Includes salaries for

Executive Director and Deputy Director; some fundraising and travel expenses; consul-

tants and contractors; staff and volunteer development. [3] Includes salaries for techni-

cal staff, servers, bandwidth and contractor expenses. [4] Includes salaries for finance/

admin staff, audit fees, fundraising expenses, office rent, office supplies, bank fees, etc. [5] Includes salaries for program staff, public outreach expenses, communications expenses. [6] Includes salary for General Counsel, and external counsel and consultant fees, filing fees, etc. [7] Includes travel for board, advisory board and staff.

[1] Donations of more than 10K *Includes 1M from Sloan Foundation. [2] Donations

less than 10K. [3] Income from live feed deals, trademark deals, etc.

[4] Includes income from sponsorships, interest, and foreign exchange gains. [5] In-kind donations.

{ }

[source: Wikimedia Foundation]

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Mass Innovation

By Tony Hall from Flickr under

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Open Ecosystem

• Connectivity

• Collaboration

• Access

• Transparency

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Open Platform

• A software system which has published external programming interfaces (API) that allow using the software to function in other ways than the original programmer intended, without requiring modification of the source code

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Open Standard vs. Open Source

7What Makes an ICT Ecosystem Open?

Open Standards vs. Open Source

Attribute Open Standards Open Source

Nature Set of specifications Software code

Openness of interface By definition By design

Interoperability Enabled Cannot be assumed

Licensing Various types Various types (GPL, BSD, etc)

Development model Collaborative Collaborative

Service Orientation

[Source: Roadmap for Open ICT Ecosystems by Berkman Center]

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Facebook Platform

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The Power of FB Connect

• High traffic services like Disqus, Digg, and WordPress began using Facebook Connect

• 15,000 sites since December 2008

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Success in Ecosystem: Twitter

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Over 11,000 registered Twitter application by July 2009

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Freeeconomic by Chris Anderson

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Webmail Windfall

Chart: Steven Leckart; Chart design: Nicholas Felton @ WIRED

Since each page of webmail comes with ads, more users means more revenue.

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How Can a CD Be Free?

Chart: Steven Leckart; Chart design: Nicholas Felton @WIRED; Sources: Daily Mail, O2 Arena

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Free Business Models• Freemium

- Coined by Fred Wilson

- Flickr

• Advertising

• Cross-subsidies

- Cell phones, ‘free lunch’

• Zero marginal cost

- Online music -- Some artists give away their music online as a way of marketing concerts, merchandise, licensing, and other paid fare

• Labor exchange

- Rating stories on Digg, voting on Yahoo Answers, or using Google's 411 service

• Gift Economy

- Altruism

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From: “Free! Why $0.00 Is the Future of Business” by Chris Anderson @ WIRED

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thank you and meet me atFacebook: stevehanTwitter: steve3034me2day: steve3001

socialcomputing.tistory.com

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