On the Contradiction between Openness and Profits

The following quote helps in understanding one of the contradictions of proprietary Web 2.0 platforms, and why they all use a mixture of open and closed elements.

The citation is from an article by Joel West in First Monday, “Seeking Open Infrastructures

“Simcoe (2006) observes that in standardization, firms face an inherent conflict between value creation and value capture. A completely open standard creates lots of value, none of which can be captured; a completely closed standard captures 100 percent of no value created. So a profit–maximizing firm must seek an intermediate point that partially accomplishes both goals.

Thus to pay the bills, there has to be value capture somewhere: everything has some level of openness and some level of proprietary–ness. Typically, standards that are open in one area are often not open in another.

You will find more information in our Standards section, where we are attempting to define the technical conditions for human emancipation.

References cited:

Tim Simcoe, 2006. “Open Standards and Intellectual Property Rights,” In: Henry Chesbrough, Wim Vanhaverbeke, and Joel West (editors). Open Innovation: Researching a New Paradigm. Oxford: Oxford University Press, pp. 161–183.

1 Comment On the Contradiction between Openness and Profits

  1. AvatarPatrick Anderson

    Business ‘bills’ are a Cost, so are BY DEFINITION not paid through Profit, since Owner_Profit = Consumer_Price – Owner_Costs. This is even more obvious for a Non-Profit corporation.

    But if you are thinking of the ‘bills’ of the individual (what can a Worker take home to feed his family), then you are talking about Wage, which is ALSO calculated as a Cost.

    So Profit never need be collected by Owners, but should only be treated as Consumer Growth by investing it as shares of Ownership in that same corporation for that very same Consumer. In this way the business becomes a public utility Owned by every Consumer in direct proportion to the amount each is willing to pay above Cost.

    The separate question of how a Worker can collect a Wage from Consumers willing to pay for new work is mostly a matter of contracting with those Consumers _before_ performing the work. The solution to how programmers can “make money” from Free Software is to discover what the Consumers want that is not already accomplished, and then to have those consumers somehow ‘commit’ to payment for delivery of those change before the Worker performs the act (or at least before he releases his private modifications).

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