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Synthetic Overview of the Collaborative Economy: Chapter 6: Open Business Models

Synthetic Overview of the Collaborative Economy: Chapter 6: Open Business Models

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Published by P2P_Foundation
The report “Synthetic overview of the collaborative economy“, coproduced by Orange Labs and the P2P Foundation, provides a thorough mapping of the actors involved in this cooperative economy: for the first time, nearly all the dots of the emerging collaborative economy, and their inter-relation, are presented in a single overview.
The report “Synthetic overview of the collaborative economy“, coproduced by Orange Labs and the P2P Foundation, provides a thorough mapping of the actors involved in this cooperative economy: for the first time, nearly all the dots of the emerging collaborative economy, and their inter-relation, are presented in a single overview.

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Published by: P2P_Foundation on Oct 17, 2012
Copyright:Attribution Non-commercial

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02/04/2014

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Chapter Six:
OpenBusiness Models
252
 
I. Generalities On Open BusinessModels
In our interpretation,
open business models
are defined by their at least partial reliance on sharedinnovation commons characterized by non-exclusive forms of intellectual property.How can a business develop if the basic raw material in the value chain is free to copy and share?In open business models, the basic use value is created in a commons of contributors, even as thisform may be an actual enterpreneurial commons, i.e. a cooperation between firms, as is the case ofthe Linux Kernel for example.An important corollary of this will be that the commons itself operates outside of the marketplace, itis an abundantresource that can be potentially accessed by outsiders without payment, andtherefore it is not a ‘scarce’ or ‘rivalresource that is subject to the supply and demand dynamics thatare required for the operation of a market economy. We could summarize this by saying that, thecommons creates the value, the market captures the value”. Another way to express the same logic isthat “opening creates value, enclosing captures value”. Enclosure in this context means the strategiesused by business forms to create marketable scarcities in a commons environment. This issue is also acrucial one in the ‘sharing platformssuch as Facebook and Flickr. See the box below for aninteresting discussion on the benefits of open vs. closed platforms’.Creating exchange value around the commons is therefore not a straightforward proposition,although commercial firms have successfully built open business models around open commons.There are essentially three different ways to conceive of commercial strategies:1.The first and most obvious strategy is to create a market around secondary, derivative services.In this strategy, developers may be paid for their work in producing the commonknowledge/code/design, which is immediately useful for a client, even as the result will beshared with others; or, the firm will produce added value in the form of services, training,integration, guaranteed installation and ongoing assistance, etc.2.The second strategy is to use shared innovation commons for non-core and non-strategicactivities of the firm; in this scenario for example, open source software is not usedcommercially, i.e. not used to generate revenues directly, but is a means to cut infrastructuralinvestments in areas that are not the core proposition of the firm.3.A third strategy is to use legal hacksthat present a work-around the sharing aspects of theshared innovation licenses, through which hybrid proprietary strategy may be developed. Forexample, “open core” and “dual license” strategies are used in this context for open sourcesoftware.
253
 
Despite these difficulties, there is evidence that open business models are able to create viable businessstrategies and sectors, and even, that these new hybrid players are often displacing their ‘pure play’proprietaty competitors.One piece of evidence is the size of the economy that is based on open content, what a U.S. reportcalls the “Fair Use Economy”, which is calculated to have a size equal to one-sixth of U.S. GDP
. We will review how these dynamics play out in different sectors of the emerging collaborativeeconomy.

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