Devising p2p business models as an open game

An article and exploration by Tiberius Brastaviceanu of the Sensorica Open Value Network:

“More and more value comes in the form of open products. We have grown accustomed with open communities creating open soft-and hardware. Most of these communities are based on gift economies, i.e. the creators of these open products are not rewarded in a tangible way for their contributions. The classic examples are GNU-Linux and Wikipedia. Recently, we’ve seen an emergence of different models that brake away from the gift economy, directly rewarding those who invest (time, financial capital, social capital, …) in open projects. Arduino is one example of a hybrid model between the open (value) network and classical business. SENSORICA is a more radical model (referred to as an open and decentralized value network) towards commons-based peer design and production. There is a multitude of other models in between, see examples from p2p foundation, and from openp2pdesign. This shift in the way we create solutions to our problems and distribute them is known as the transition from the present-old economy to the new economy, to a p2p economy. This is in fact the economic side of the multitude constructive revolution.

The open product emerges because the new digital technology makes possible large scale cooperative design and production, and because it renders these modes of design and production more effective and efficient. The open product is economically viable, it costs less to design, to produce, and to use/consume. It offers more value than the closed product.

One of the problems we need to solve during this transition is to define a strategy to play the open game. How can we make sure that those who invest in open products get rewarded for their contribution? How can we make sure that one can feed his family from participating in the design, production and distribution of open products. We often hear: “if your product is successful you’ll get copied”; “if you offer your recipe to everyone no one will buy your product, people will make it themselves”; etc.

Playing the open game is not just about releasing all the information and knowledge about the product.

Games require rules. A lot of efforts have been spent on drafting licenses for open products (see example from p2p foundation). But these licenses are, in some sense, as good as patents, i.e. as good as YOU can defend them.

The difference between the corporate culture and the open culture is an important factor that plays in favor of the creators of open products. Corporations are still very little interested in open products, because their model relies on control. They need a monopoly, they favor patents to secure their markets, and they go to great extent to defend their territory. Moreover, investors aren’t ready to take risks on open products, which forces entrepreneurs in need for funding to close their technologies. Most corporations still prefer to develop closed products, but here and there we see them testing the waters of openness. So there is a real risk that a large company makes use of an open product (developed by an open community) and leverages its market penetration to capture a large portion of the rewards normally/ethically destined for the developers of the initial open product.

[I suppose we all agree that we should reward creators and hard-working man and woman, who take risks to improve our lives. Some hard-core open-minded people claim that we should phase out money and run the entire world on a gift economy. I am all for alternative open and transparent currencies, but I believe that the previous proposition, running the world on a gift economy is nonsense. In my opinion, a pure gift economy can’t deal effectively with free riders and with vandals.]

Games are also bounded by natural constraints. This is what I bet on!

Can we design a strategy that takes into consideration natural constraints to play the open game in the favor of those who contribute to open products?

The concept I propose can be summarized as such: The network designing, producing and distributing open products MUST create a COMPLEX value proposition that cannot be easily replicated outside of the network.

Open value networks are very well positioned to do exactly that. The complex value proposition is… complex, and has many dimensions.

On the product side, the network must offer ethical and ecological solutions. The openness and the transparency of the network can be leveraged here, because nothing can be hidden, and people will have confidence. The product must be perpetual, i.e. not planned for obsolescence (see SENSORICA product design philosophy). Bugs cannot be hidden for long in open products. Perpetual products are appealing because they are ecological and offer back-compatibility, but they also engender a long-term relationship with the consumer, which is an economic advantage for the producer. Note that a perpetual product is a modular product that can be updated regularly, by changing different modules. A PC (personal computer) comes close to this definition. Furthermore, open products are lower-cost because they reuse and remix other open technologies.

The value network must generate network effects, i.e. must offer an ecosystem of modular, interoperable and complementary products. These products will all reinforce each other.

On the production side, the value network must allow the customer great freedom for customization of the product, by transferring some manufacturing processes to him. The emergence of 3D printing and CNC go in that direction. The value network should focus on and distribute ONLY what it does best, and let the consumer design and do the rest. I am thinking about IKEA-type products, which are modular, easy to assemble, allowing the customer to modify and 3D-print non-functional parts of the product (like the casing, handles, etc). This puts some constraints on design; it needs to get smarter. See telemanufacturing on SENSORICA.

On the service side, the network needs to put in place a transparent system, to allow the customer to follow the process and to intervene at critical moments. See the draft of SENSORICA service system.

On the innovation side, we believe that a value network is more creative than a hierarchy, and therefore it can offer a shorter product cycle, or a faster rate of product improvement. Moreover, the consumer is also invited to take part in the innovation and design process, which generates other positive effects, on different levels.

Open products that are modular can be easily updated, they are NOT programmed for obsolescence or made difficult to modify. This makes them incompatible with closed products (designed with control in mind). In other words, open and modular products cannot be simply copied by classical business organizations, which design on a very different philosophy.”

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