1. Copyright 2000-2004 1 eBusiness Models for Content The Closed v. Open Approaches Roger Clarke Xamax Consultancy, Canberra Visiting Prof/Fellow, Unis. of U.N.S.W., Hong Kong, A.N.U. http://www.anu.edu.au/people/Roger.Clarke/...... /EC/eBusContent {.html,.ppt} ECOM-ICOM Expert Address University of Hong Kong, 9 September 2004

2. Copyright 2000-2004 2 eContent Business Models The Agenda 1.Business Models 2.Content 3.Closed Approaches 4.Open Approaches 5.The Tension of Old v. New

3. Copyright 2000-2004 3 Varying Interpretations of ‘Business Model’ Narrower in Scope A model of business processes, in one organisation, or across organisations (Papakiriakopoulos et al. 2001) The Value-Creating Business System behind the Business Processes (Petrovic et al.) The Method by which a company generates revenue (Rappa 2001-03) Broader in Scope The Architecture of an Organisation’s Products, Services, Actors, Info Flows (Timmers) The link between Strategy and Business Processes (Osterwalder & Pigneur 2002) Business Rules, Trading Mechanism, Trading Protocols (McGann & Lyytinen 2002)

4. Copyright 2000-2004 4 The Interpretation Adopted in this Analysis An eBusiness Model is an Answer to the Question: Who Pays? For What? To Whom? And Why?

5. Copyright 2000-2004 5 A ‘Business Models on the Web’ Taxonomy Rappa (digitalenterprise.org/models/models.html) Brokerage Marketplace Exchange, Buy/Sell Fulfilment, Demand Collection, Auction Broker, Transaction Broker, Distributor, Search Agent, Virtual Marketplace Advertising Portal, Classifieds, User Registration, Query-based Paid Placement, Contextual Advertising, Content-Targeted Advertising, Intromercials, Ultramercials Infomediary Advertising Networks, Audience Measurement Services, Incentive Marketing, Metamediary Merchant Virtual, Catalogue, Click&Mortar, Bit Vendor Manufacturer (Direct) Purchase, Lease, Licence, Brand Integrated Content Affiliate Banner Exchange, Pay-per-click, Revenue Sharing Community Open Source, Public Broadcasting, Knowledge Networks Subscription Content Services, Person-to-Person Networking Services, Trusst Services, Internet Services Providers Utility Metered Usage, Metered Subscriptions

6. Copyright 2000-2004 6 2.Content Works other than Software Text, Image, Sound, Video, Multi-Media For education, enjoyment and profit Works including Software Games, Learning Objects, Infotainment,...

7. Copyright 2000-2004 7 3.Closed Approaches Exploit the Monopoly through High Prices Leverage the Monopoly Extend the Brand Cross-Promote Sustain the Monopoly Very Constrained Licensing Technological Protections Enhanced Copyright Laws

8. Copyright 2000-2004 8 The Bible Shapiro & Varian – ‘Information Rules’, 1999 One-Way Loyalty – consumer to marketer Lock-in through Switching Costs, to achieve monopoly space that can be exploited Ch. 4 pp. 83-102: ‘Rights Management’ give away (a little of) your content, and then charge for convenient access, repeat access, other-party access, enhanced versions, searchability/navigation, timely access, archival access, extended content, updated content, cross-linked content but recognise when to let the market grow and when to exercise the lock-in

9. Copyright 2000-2004 9 Technological Protections for I.P. Objects Passive Technologies – 1 of 2 Object-Protection, at various stages: under the owner's control in transit under the licensee’s control By means of: Encryption Device-Specific Encoding / Crippling e.g. DVDs are region-specific, and film- publishers have state-enabled means of controlling sales of media and media-players

10. Copyright 2000-2004 10 Technological Protections for I.P. Objects Passive Technologies – 2 of 2 Means of Tracing Rogue Copies: 'Watermarking' technology (to uniquely identify the work) 'Fingerprinting' technology (to uniquely identify the particular copy)

11. Copyright 2000-2004 11 Technological Protections for I.P. Objects Active Technologies – 1 of 2 Notification to the licensee of their rights at the time that the object is accessed Device and Licensee: Identification Identity Authentication Disablement / Destruction of the object: in the event of licence expiry or breach if played on a ‘non-approved’ device

12. Copyright 2000-2004 12 Technological Protections for I.P. Objects Active Technologies – 2 of 2 Enforcement Mechanisms, Client-Side (‘Spyware’): Prevention, e.g. preclude actions that breach the rendering or copying permissions Recording : of the exercise of permissions of (attempts to) breach the licence, e.g. making copies beyond the permitted limit Reporting of (attempts to) breach the licence

13. Copyright 2000-2004 13 Technological Protections for I.P. Objects Information Infrastructure Enhanced identification of: Devices (e.g. Big Brother Inside) Individuals (‘Identity Management’) Intrusions into client-behaviour Enhanced server controls over clients, e.g. software rental (ASP) cf. licensing Siphoning off of Internet bandwidth for VPNs A new protocol suite, sponsored by MS, the U.S. Govt, Murdoch and Disney (IPv6.6.6...)

14. Copyright 2000-2004 14 Copyright Expansionism Accidental Need for a Consumer to Have a Licence More rights in the copyright basket: control of use through rendering incl. display, print, play, ‘read’/render as speech control of transport, incl. transfer, lend control of derivative rights, incl. extract, embed control of ‘time-shifting’ and even backup Criminal Law and Public Enforcement Criminalisation of Circumvention Devices

15. Copyright 2000-2004 15 A More Constructive Closed Approach Identify customers’ price resistance-point (‘what the market will bear’) Set prices accordingly Discourage and prosecute breaches where the purpose is commercial Take no action over breaches by consumers (in particular time-shifting, format-change) A Case Study: Apple iTunes costs US$0.99 per track!!

16. Copyright 2000-2004 16 4.Open Content Licensing Open Source Principles Open Content in Essence Exemplars Principles

17. Copyright 2000-2004 17 Closed, ‘Lock in’ Software Copyright Licences with very restrictive terms re reproduction, adaptation, re-distribution Source-Code is commonly not provided The objective of the copyright owner is to maximise revenue, by imposing constraints on both competitors and customers Such software is generally very expensive

18. Copyright 2000-2004 18 Open Source Software = Liberal Licence Terms The rationale is to enable cumulative improvements and enhancement, by exposing the source-code to ‘more eyes’ The ‘ Free Software ’ movement, since 1982: Richard Stallman and Comrades – http://www.fsf.org/ ‘free as in speech, not free as in beer’ ‘copyleft’, so that derivatives are free too The ‘ Open Source Initiative ’, since 1998 Eric Raymond and Friends – http://www.opensource.org/

19. Copyright 2000-2004 19 Open Content = Liberal Licence Terms What It Is Content available under liberal licensing terms, and without technological protections Motivations to enable access e.g. shared Learning-and-Teaching Materials to encourage improvements and enhancement, by exposing the content to ‘more eyes’ e.g. Wikipedia

20. Copyright 2000-2004 20 Open Content Business Models Bases for Sustainability R eciprocity : direct and immediate indirect and/or deferred R eputation R evenue from Complementary Services

21. Copyright 2000-2004 21 Open Content Business Models Reciprocity Direct and Immediate Reciprocity conventional for-fee, but liberal licences free as in ‘open’ but not as in ‘gratis’ volume sales at low rates per access or copy Indirect and/or Deferred Reciprocity ‘shareware’ – use now, pay later, maybe community-members give as well as take feedback results in quality and security access to enhancements and extensions donations, sponsorship, advertising

22. Copyright 2000-2004 22 Open Content Business Models Reputation Reputation-Establishment Reputation-Building Reputation-Maintenance Collateral Papers Postings Blogs

23. Copyright 2000-2004 23 Open Content Business Models Revenue from Complementary Services Installation Customisation Education and Training Consultancy Network-building Search for Network Effects Viral Marketing ‘The After-Market’ Accessories Upgrades Enhancements Extensions Replacements

24. Copyright 2000-2004 24 Roger’s Public Licence for His Content http://www.anu.edu.au/people/Roger.Clarke/CNotice.html © Xamax Consultancy Pty Ltd, == > To use for profit, gain approval from Xamax. May be subject to payment, plus conditions May be reproduced and distributed gratis, subject to the following conditions : re-publish in its entirety reference to this copyright notice appropriate attribution authorship not to be misrepresented ownership not to be misrepresented

25. Copyright 2000-2004 25 Progress in Open Content Ted Nelson’s Xanadu ‘Transclusion’ (1965) quote w/- copying, & with µpayments Ted Nelson’s ‘Transcopyright’ (1997) re-publish by pointing, and pay (cents) for it Barlow (1994), Dyson (1995), Lessig (c. 2000) P2P – Napster, Kazaa, et al. Open Content Projects Project Gutenberg, Wikipedia,... Open Content Licences

26. Copyright 2000-2004 26 Open Content Licence Exemplars The N.S.W. Judicial Decisions Licence (1995) The AEShareNet U, P, S and C licences (1998) Gnu fdl (Free Documentation Licence) (2000) Creative Commons U.S. License (2003) Creative Commons Aust. Licence (2004) AEShareNet FfE – Free for Education (2004) ? (Pr)ePrints ?

27. Copyright 2000-2004 27 N.S.W. Judicial Decisions Licence The NSW Attorney General licenses reproduction of 'judicial decisions', subject to conditions The licence does not allow the reproduction of headnotes, summaries, footnotes, comments, case lists, cross-references or other editorial material prepared by the official law reporting agency http://www.agd.nsw.gov.au/__4a2565d200027216.nsf/ 0 f39cefdebdbcc270ca256e4d007bbaee?OpenDocument (Gazettes 23/1995; 110 / 1996; 20 / 2001)

28. Copyright 2000-2004 28 AEShareNet A Ministerial company owned by the nine Australian bodies politic Facilitates licensing of content that is relevant to learning and teaching, esp. in the Vocational Education & Training (VET) sector Origin of the name is Australian Educational Sharing Network; but support is provided not only for gratis and cost-recovery approaches, but also for for-fee/profit-making

29. Copyright 2000-2004 29 The AEShareNet Licence Set U nrestricted use P reserves the integrity of the work Freely copiable, but may not be altered S hared use among Members Enhancements belong to the original licensor E nd-user licence, for use, not modification C ustomisable and commercial, by negotiation Published 1998, implemented 2000 http://www.aesharenet.com.au/coreBusiness/

30. Copyright 2000-2004 30 GNU Free Documentation License (Gnu fdl) Complements the GNU General Public License (gpl), which is for free software The fdl is designed for the software manuals But it can be used for any textual work, particularly those for instruction or reference It includes the concept of ‘invariant sections’ Derivative works must be no less free (‘copyleft’) http://www.gnu.org/copyleft/fdl.html Original of 2000; v.1.2 of November 2002

31. Copyright 2000-2004 31 Creative Commons U.S. License Focusses on creative / artistic / literary content Is captioned ‘No Rights Reserved’, but CC offers 11 variants of the license, varying the terms re: Right of Attribution (cf. moral rights) For-Fee Reproduction Derivative Works Share-Alike (cf. ‘Copyleft’) Is expressed in terms of U.S. copyright law, but local projects are in train in many countries Original of 2003 – http://creativecommons.org/

32. Copyright 2000-2004 32 Creative Commons Australian Licence Revision of CC(US) to work under Aust. law by QUT (Cochrane/Fitzgerald), Blakes (Oi) Focusses on creative / artistic / literary content Differences arise in various areas, including Derivative Works, Moral Rights, GST A single licence-type is currently available: Attribution-Required, Non-Commercial, No Derivative Works, Share-Alike Original of 2004 http://creativecommons.org/projects/international/au/

33. Copyright 2000-2004 33 The AEShareNet FfE Licence and Mark: Free for Education (FfE) is for content intended for educational use, e.g. corporate and governmental fact sheets, standards, and open content on publicly accessible websites Free for reproduction and use Enhancements are not permitted Editing, supplementary works and inclusion in compilations are permitted Implemented 2004 http://www.aesharenet.com.au/coreBusiness/#ffe http://www.aesharenet.com.au/FfE/

34. Copyright 2000-2004 34 Open Content Licensing A Fuller Set of Choices Ownership Exclusivity Sub-Licensing Integrity Protection Entirety Copyright Notice Reproduction Control Permission Use(s) / User(s) Republishing Control Permission Use(s) / User(s) Format(s)/Media Incorporation Tech. Protections Adaptation Control Permission Review Distinguishability Copyright Vesting Usage Territory Purposes Person-Types Fields of Endeavour Liability Management Warranties Indemnities Pricing One-Time Fees Repetitive Fees

35. Copyright 2000-2004 35 Roger’s Public Licence for His Content © Xamax Consultancy Pty Ltd, == > To use for profit, gain approval from Xamax. May be subject to payment, plus conditions May be reproduced and distributed gratis, subject to the following conditions : re-publish in its entirety reference to this copyright notice appropriate attribution authorship not to be misrepresented ownership not to be misrepresented

36. Copyright 2000-2004 36 Roger’s Public Licence for His Content Ownership X Exclusivity X Sub-Licensing Integrity Protection √ Entirety √ Copyright Notice Reproduction Control √ Permission √ Not-For-Profit Only Republishing Control √ Permission √ Not-For-Profit Only √ Any Format/Media √ Incorporation — Tech. Protections Adaptation Control X Permission — Review — Distinguishability — Copyright Vesting Usage √ Any Territory, Purposes, Person-Types, Fields of Endeavour Liability Management X Warranties X Indemnities Pricing X One-Time Fee X Repetitive Fees

37. Copyright 2000-2004 37 A Research Paper (Pr)ePrints Licence for Harnad? Ownership X Exclusivity X Sub-Licensing Integrity Protection √ Entirety √ Copyright Notice Reproduction Control √ Permission √ Any Format/Media √ Not-For-Profit Only Republishing Control XPermission ––Not-For-Profit Only ––Incorporation — Tech. Protections Adaptation Control X Permission — Review — Distinguishability — Copyright Vesting Usage √ Any Territory, Purposes, Person-Types, Fields of Endeavour Liability Management X Warranties X Indemnities Pricing X One-Time Fee X Repetitive Fees

38. Copyright 2000-2004 38 Requisite Variety in Open Content Licences C reative Materials Creative Commons L egal Materials ? NSW Crown ? A rtistic Materials Creative Commons R esearch Materials ? (Pr)eprints ? K nowledge Gnu fdl E ducational Materials AEShareNet And Works can be offered under multiple licences

39. Copyright 2000-2004 39 The Ideologies of Copyright and Copyleft

40. Copyright 2000-2004 40 We live in a quicksilver technological environment with courts ill-suited to fix the flow of internet innovation The introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through well established distribution mechanisms

41. Copyright 2000-2004 41 Yet, history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be: a player piano a copier a tape recorder a video recorder a personal computer a karaoke machine, or an MP3 player

42. Copyright 2000-2004 42 U.S. Court of Appeals 9th Circuit August 19, 2004 MGM v. Grokster Full Court Decision Opinion by Sidney R. Thomas Thus, it is prudent for courts to exercise caution before restructuring liability theories for the purpose of addressing specific market abuses, despite their apparent present magnitude