August 27, 2004

Share The Wealth?

Throughout the blogosphere we're regularly admonished to Share The Wealth and reminded that Information Wants To Fe Free.

Fine, but I've also heard that People Want To Eat.

Allow me to introduce a new concept to certain members of the broader open source community, which includes writers as well as coders.

The concept's name is "Economics."

Economics was invented when caveperson Og discovered that he made out better when he traded things of value with his neighboring caveperson Ug than when he tried to kill Ug to gain the latter's things of value. Eventually he learned that he could trade information for futures contracts: Og agreed to tell Ug about the location of a bunch of wooly mammoths in exchange for an allotment of mammoth sirloin.

Economics has been around for a while. It works.

Now, stay with me -- you're not going to read another apologia defending proprietary software and the practice of manipulating perceptions for quick profit at the expense of effective and secure information facilities. Quite the opposite. Open source must prevail, because proprietary stuff has absolutely failed us. The backbone of our systems of commerce and finance and communication and education is vulnerable to the malicious intentions of the totally anonymous builders of worm-borne botnets. It is vulnerable because proprietary products engender a widget-FUD approach to solutions, which always introduces vulnerability.

Open source business models typically predicate themselves on the subsequent sale of services to those who downloaded the product for free. That works -- occasionally. Some open source organizations have the capital and management know-how to emulate masters of services revenue such as IBM, PwC, Accenture, etc. But if you can do that why spend valuable resources developing the product in the first place?

The problem isn't just one of opportunity cost; there's a fundamental disconnect in the prospecting portion of the services-follow-on model. The problem is that its practitioner has selected by definition those prospects who are willing to explore, download, and tinker to arrive at their solutions. They are smart enough and adventurous enough to know how to do some significant portion of it themselves. And they know how to save money.

Contrast that with the typical proprietary IT services customer. To them, the tradeoff is between putting energy into IT versus putting energy into the main focus of their enterprise, whatever that happens to be. They want one direction in which to point a finger when things don't work right, and otherwise they don't want to be bothered thinking about it. To help them avoid thinking about it they open their wallets early and often.

Open source needs a new business model. It can't survive on services customers whose focus is on saving money by doing as much as possible themselves. (Customers like my own company, for example.)

As it happens, there is a model -- a delightful, beautiful, effective, perfect business model staring us in the face. It not only delivers economics to its practitioners, it delivers security and manageability to its clients.

This entire business model is embodied in one of the most wonderful documents ever conceived by mankind. That document is the occupancy permit.

A valid occupancy permit attests to right of a building to be occuppied, of course. But a lot of other attestations are required to constitute that right. The occupancy permit attests to the fact that:

The building was designed by an architect who was duly licensed by the proper public authorities.

The architect has been paid in full, or is satisfied that she is likely to be paid in full.

Assuming it's a commercial building, the same goes for the engineers.

Ditto the general contractor. And its subcontractors.

The building inspector, who represents the duly constituted municipal or regional authority, is satisfied that the structural, electrical, plumbing, gas, and other subsystems have been built to code, that is, to standards that have been established by a duly constituted authority.

Duly constituted environmental, zoning, health and roadway authorities have signed off on the building's compliance with their duly constituted codes.

Literally dozens of professions are involved in the permitting of a building. Each profession requires its practitioner to have a valid, revokable credential. A goal of each profession is, of course, a real estate infrastructure that meets standards of quality, reliability and manageability.

The less frequently articulated, but no less important, goal of each of these professions is to ensure that its members are well compensated for the use of their time, talent, and liability.

Now there may be some intellectual property issues involved in the construction of buildings, but IP is not a big piece of it. A brand of sheetrock may offer some patented feature, but only the sheetrock producer's competitors need be even be aware of it. The patent is of utterly no concern to anyone else in the real estate food chain. It's rare for an intellectual property issue to be a significant par of the process of issuing an occupancy permit.

The key to viable open source economics is the application of public authority to the licensing of open source work product, through the use of occupancy permits.

What if our online facilities were required to carry occupancy permits in order to connect with the highway, that is, the Internet? In order to do so their owners would need to demonstrate to the permit granting authorities that the project is in compliance with public standards, meaning not only that it is secure and manageable but that the professionals involved have been properly compensated for the use of their time, talent, and liability.

So who are these public authorities? The Internet can't be governed by any nation or other geographically-based jurisdiction.

We may draw our answer from the two oldest international governance bodies in the world. Predating not only the United Nations but even the League of Nations, the International Telecommunication Union and the Universal Postal Union have been quietly creating and enforcing telephone, broadcast and postal standards through world wars, cold wars, acrimonious stalemates in General Assemblies and Security Councils and heated ideological debates about the role of international governance bodies. Hey, their role is no more ideological than that of City Hall. We may disagree about birth control for the Third World, but we all know we need a building inspector.

The world needs a City Hall.

Stay tuned right here (Kolabora.com), to find out how this is actually getting underway.

Posted on August 27, 2004 at 05:39 PM

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