BUSINESS MODELS FOR OPEN EDUCATIONAL RESOURCES AND RESEARCHING WEB 2.0

Kim Issroff

Structure

Definitions Open Source software business models OER business models My questions

Definition of a business model A business model is a framework for creating

economic, social, and/or other forms of value. The term business model is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

In the most basic sense, a business model is the method of doing business by which a company can sustain itself -- that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain.

My tiny thoughts

Make it all free and subsidise it from other parts of the business

Make it all free and pay for it out of grants from charities or the government

Make it all free and get revenue from advertising

Give free access to the resources but charge for assessments

Chang, Mills & Newhouse (2007) This paper presents several case studies to demonstrate how

open source software can achieve long-term sustainability by adopting the relevant business models. The objectives of this paper are to study the different models, processes, and legal/licence requirements that have been successful for such transformations. We classify the business models used in the open source area into five types: (a) Support Contracts; (b) Split Licensing; (c) Community; (d) Valued-added closed source; (e) Macro R&D Infrastructure. Each model’s strengths and weaknesses are discussed. The five business models detailed in this paper are the most common and arguably the most successful methods of generating revenues from open source software. Those in the e-Science community are encouraged to consider these methods for longer term sustainability.

Stephen Downes Models for Sustainable Open Educational Resources The concept of 'open' entails, it seems,

at a minimum, no cost to the consumer or user of the resource.

…even though a resource may be free for the consumer, it does not follow that the resource is free, in the sense that it nonetheless costs something in funding or services to create and distribute a resource.

Funding models, technical models, content models, staffing models

Stephen Downes’ funding models Endowment Model - on this model, the project obtains base

funding. A fund administrator manages this base funding and the project is sustained from interest earned on that fund.

Membership Model - on this model, a coalition of interested organizations is invited to contribute a certain sum, either as seed only or as an annual contribution or subscription; this fund generates operating revenues for the OEM service.

Donations Model - on this model, a project deemed worthy of support by the wider community requests, and receives, donations. Donations are in turn managed by a non-profit foundation, which may apply them to operating expenses or, if amounts are sufficient, seek to establish an endowment.

Conversion Model - as summarized by Sterne and Herring (2005) "In the Conversion model, you give something away for free and then convert the consumer of the freebie to a paying customer." This approach, they argue, is needed because "there is a natural limit to the amount of resources the Donation model can bring to an open source project, probably about $5 million per year.

Continued … Contributor-Pay Model - adopted by the Public Library of Science, the

`PLoS Open Access Model: One Time Author-Side Payments' (Doyle, 2005) consists of a mechanism whereby contributors pay for the cost of maintaining the contribution, and where the provider thereafter makes the contribution available for free.

Sponsorship Model - this model underlies a form of open access that is available in most homes: free radio and television. The sponsorship model can range from intrusive commercial messages, such as are found on commercial television networks, to more subtle `sponsorship' message, as are found in public broadcasting.

Institutional Model - a variation, perhaps, on the sponsorship model is the case in which an institution will assume the responsibility itself for an OER initiative.

Governmental Model - similar to the institutional model, the governmental model represents direct funding for OER projects by government agencies, including the United Nations.

Partnerships and Exchanges - though perhaps not thought of as a funding or financing model, partnerships and exchanges nonetheless play an important role, or potential role, in the development of OER networks. Partnerships depend not so much on exchanges of funding as on exchanges of resources, where the output of the exchange is an OER.

Clarke, 2007

Business Model: 'Who Pays? For What? To Whom? And Why?’

“Corporations that have achieved monopoly power over content have sought to sustain and extend their power, and to represent alternative approaches as unworldly and their own as something other than corporate welfare. This paper has argued that, far from being a socialist plot, the notions of open content and a content commons provide a realistic basis for business. Rather than encouraging corporations to squat fatly on wealth, the open approach stimulates more activity and further rounds of innovation and wealth generation.”

Clark continued

“This paper undertook an examination of business models appropriate to the new context. This demonstrates that the fear that de-propertisation will undermine business is unfounded. There are many ways in which for-profit organisations can operate successfully, both contributing to and leveraging off the content commons. Open source and open content are not naïve 'gift economies'. They are describable by economic models, and are harbingers of a new wave of business activity that leaves naïve economic rationalism in its sidewash.”

Implications for Researchers in Web 2.0 What are the design implications of these different

financial models? How does the financial model that resources are built

on impact on the ways in which people interact and engage with resources?

Will technological developments change these financial models?

What are the differences between models of open source software and of OER?

What happens when we get to OER saturation point? Is a financial model the appropriate way to think

about Open Educational Resources? Can we quantify the social values of our resources rather than the economic value?

References

Chang, V., Mills, H. and Newhouse, S. (2007) From Open Source to long-term sustainability: Review of Business Models and Case studies. In: All Hands Meeting 2007, OMII-UK Workshop, 10 September - 13 September, 2007, Nottigham, UK.

Clarke, R. "Business Models to Support Content Commons", (2007) 4:1 SCRIPTed 59 @: < http://www.law.ed.ac.uk/ahrc/script-ed/vol4-1/clarke.asp >

Downes, S. (2007) Models for Sustainable Open Educational Resources in Interdisciplinary Journal of Knowledge and Learning Objects, 3, 29-44.