Sunday, December 13, 2009

Open Source Licenses and Business Models

Recently, I’ve been a bit disturbed by the quality of discussion on Open Source Hardware, and I want to do something about it. I want to up the ante :-) I’ve seen people who aren’t lawyers, and who aren’t experts in law, making comments about Open Source licenses, and I’ve seen a handful of people who don’t run businesses and don’t understand business models writing about Open Source business models. This is funny to me. I want to try things that are different, but I want to be thoughtful about them, because if Open Source Hardware is really going to become something new, and if it really stands for something different and creative, then it should be treated that way! I’m not trying to be discouraging, actually I think it’s great that people write and do Open Source Hardware. Instead, I want to address people like consultants and writers who make money by following trends rather than contributing to them – Open Source Hardware means something important to me, and I don’t want it to be trivialized by some newspaper editor looking to boost his struggling paper’s sales... oh well, I guess everyone needs a good rant from time to time :-)

So here’s what I’m going to do about it:

Over the next couple of months, I’m going to interview friends of mine that are lawyers, especially intellectual property and contract lawyers, and I’m going to talk to professors of law and business here in Boston. My goal will be to understand, really, what the issues are behind Open Source Hardware as far as intellectual property and legal strategy are concerned. On the business side, I’m going to try to categorize and model, analytically, the economic and business operating models that have sprung up for Open Source Hardware. That way, I’ll be able to compare and contrast Open Source Hardware business models with traditional ones, to understand what, if anything, is the same or different about them.

I did something like this last time, and it turned into the Open Source Hardware Bank project, which currently has over $90,000 "invested" in various Open Source hardware projects (a lot more than I ever expected!) And all but one of those projects came from the internet, from people reading about the Open Source Hardware Bank, and who liked that Justin and I were trying to think about really new models for financing a small set of Open Source hardware products, especially in the middle of the Great Depression 2.0.

I’m going to try to follow the Socratic process, and ask questions as I go. Like all my research projects, I'm going to start with a list of questions, and expand them and develop them over time. This is definitely not a definitive list, but a starting point. I want to address questions like:

Open Source Hardware Licenses

  • What is an Open Source Hardware license?
  • What licenses are people currently using, what are they trying to protect, what are they giving away?
  • What are the major components of an Open Source Hardware license?
  • How is it similar and different from Open Source Software, or from traditional hardware licenses?
  • What is the relationship between Open Source Hardware and intellectual property? Patents?
  • How would the District Court and Supreme Court rule if they found someone Infringing an Open Source Hardware license?
  • How would a legal team establish precedent for OSHW violations and protections?
  • What are the community and internet expectations for an Open Source Hardware license?
  • Which freedoms and liberties in usage of OSHW projects and products previously protected or covered by other forms of intellectual property protection, e.g. “trademark”, “copyright” law?
  • What are the major trends in intellectual property protection, and how do they apply to the sharing of tangible projects online?

Open Source Hardware Business Models

  • How are people making money in Open Source Hardware today?
  • What’s the market size for Open Source Hardware?
  • Who’s participating in Open Source Hardware?
  • What is the role for companies vs. individuals in the OSHW “market”?
  • What are the major OSHW platforms and how are they different?
  • When is a business’ products Open Source Hardware?
  • What is the relationship between today’s Open Source Hardware movement and the traditional electronics and semiconductor industry?
  • Where does Open Source Hardware profit come from, how is it generated, what mispricing is it taking advantage of?
  • Do traditional business strategy concepts apply to Open Source Hardware?
  • Innovation in business models is a term thrown around often, how do those concepts apply to hardware?
  • What are the major trends in hardware production business models? Especially in the internet age of advertising and link and connection-based payment models?
  • Does Open Source Hardware work best on or off the internet? Who are the companies or entities most threatened by Open Source Hardware? Who is most advantaged?

This is an Open Source research project, and I want to involve as many people as I can. I’m going to start with interviews, then do some analysis and research of my own, and finally publish everything in a report in the new year. If you want to be a part of the research project, just let me know at inthebitz at gmail…

Also, if you want to add questions to my list, just shoot me an email!

Here goes nothing :-)

3 comments:

Mike Gionfriddo said...

Love the thought here... something i always try to wrap my head around is the notion that a business needs to do one of 3 basic things to add value to a market... build it: better, cheaper or faster
In OSH a lot of people seem to be making things better yet there are some that make it cheaper... how do open source business recover r&d costs?

Steve Gough said...

Great project, I look forward to your results--I'm looking at open sourcing hardware for educational models my org designs and builds (emriver.com). Many academics see our products as overpriced because they have no idea what R&D and construction costs are. Frustrating because, though we are technically a for-profit, it's very much a labor of love for me.

Matt said...

@mike - exactly, there are lots of problems with fixed cost recovery, and current solutions try to spread those costs out over a group of people. i don't know if that's sustainable.

@steve - thanks, it's going pretty well so far... open source hardware seems like a break even for lots of people. one problem is with scale: it's so difficult for a small project to reach the scale levels it needs to break even, let alone make profit