A New Spin on Open Source Business Models

IT Managers Journal is reporting that a Canadian communications student is trying to put a new spin on open source business models. Greg Dean, a student at Simon Fraser University, is attempting to merge the principles of open source with that of a co-op and a regular corporation. From the article: "On the first slide of his presentation, Dean described the ICT/OS as a 'participatory, self-managed workers' business' designed for 'getting the benefits of a corporation through the convivial democracy of a co-op.' Punctuated by dozens of questions, the rest of the presentation explained exactly how he thought this goal could be achieved. In his vision, the co-op would involve three types of members: full members, who are freelancers in high-tech professions and have full voting rights; associated members such as lawyers who provide services to the co-op; and non-members with an investment in the company."

Comments

Some differences..

[indraneil]

The premise of the idea sounds interesting. I have had opportunities to work on localized open source work at University level in India. My father used to participate in a co-operative and I got to see some of the action up-close-and-personal.
I agree that the two may work well together, but I am a bit concerned how the division of tasks will take place. In co-operatives, (atleast the one that I saw), there is usually a clear division of tasks. This worked ok because

1. Though the notion of a co-operative is egalitarian, actually, there is a small group of dedicated people, who are most involved
2. These people who usually form part of the board, are "more equal than the rest" and can actually make people do stuff that is important for the co-operative, but can sound unsavoury
3. Also, the co-operative is a pyramidal thing, with the people towards the bottom being less skilled than the ones at the top. Its a small pyramid with a wide base, but, it is for sure a pyramid. The only reason the people at the base are willing to work there are, the money generated is for real, (and sometimes, because they trust the people above them to be working for their benefits)

While what I said is nothing new and is already in place in most successful open source models, I find some differences which I would be interested in knowing, how the new model will bridge

1. A co-operative of software engineers is hard to maintain, since every one comes with a high level of skill sets and the resultant ego. This makes the setting up of a pyramid very hard
2. While there are successful models of monetization of open source, they are few and far between and most of these models are hard to replicate. This takes away the basic incentive of a co-operative
3. A co-operative is often a below the radar operation, generating wealth with out too much of recognition. Most opensource projects (the way I see them) work the other way round

Do correct me if I am wrong, but I would love to read more on what other people think on this!

We're doing this with hosting, colocation, etc.

[Graham Freeman]

Hi,

Our group has been operating as a co-operative for about 10 months now. We're on the verge of incorporating, likely as a multi-stakeholder for-profit co-op based in British Columbia, Canada.

We do colocation, virtual servers (Xen), virtual hosting (IMAP, Jabber, Apache, Zope/Plone, Drupal, DNS, etc.), and consulting in a co-operative model. Our members get pricing that reflects, as accurately as possible, the true cost of providing any given service. We also sell to non-members, from whom we attempt to make a profit. Members get the opportunity to provide consulting services through the co-op, and all profits go into improving the co-op's infrastructure and/or providing membership dividends.

We have 16 members, ~US$3,000 in member investments, and a full-cab at a pretty good carrier-neutral colo facility in San Francisco. We have members in British Columbia, California, Hawai'i, Florida, and England. We also have participants in the Czech Republic.

You can read more about our efforts here: http://www.cernio.com/cooperative/

Graham
+1 415 462 2991 (09h00 -> 22h00 Pacific time)

Clarification on the Co-op - by Greg Dean

[cooperativeway]

So this article has some holes and presumptions built into it that are leading people astray.

1. When 'Open Source' is used to mean OS type processes. That is to say that the co-op, through Balanced Job Complexes, participatory management, holoptic (everyone can see everything going on) transparency, etc., will run on these type of processes...
So this is not a business model, but a business process model. I have very distinct ideas about how to make this bugger cut throat profitable, including cornering %12 of the Canadian and %5 of the US market but that is up to the membership to decide democratically through the business process model.

2. This is new; it incorporates a complex share structure that no co-op I've come across has, it will apply parecon (see www.parecon.org) principles like BJC, self-management (your say matches you stake in the matter), and collective capital along with collective effort & sacrifice based remuneration. Some of these things are relatively new in of themselves and putting them all together in this frame work is new (although sure, there is nothing new under the sun).

3. I'm not a bleeding heart when it comes to business. After that quote I said something to the effect of our 'community economic development' work (as far as I'm concerned) will be setting up businesses for a parecon framework that will bank based on market development of loyal patrons to co-operative/parecon economies, and just good margins on products and services. If you saw a way to set up a distinct new brand that you could corner a market with and charge a premium, you'd do it too.

4. ICT workers will manage the company with guidance from the board of themselves and professionals like are lawyers, MBAs and accountants, just like any other corporation. But the workers manage it and do so sufficiently because it's in their interests and b/c they take on roles outside of their specific expertise resulting in them having more perspective on the business as a whole and so being able to collectively manage the biz through enterprise software which gives them a holoptic view. There will also be training of workers in basic business management skills and practices.

I'm sure there's more to clarify but I've got an enterprise to set up, a contract to bill for, and a book to write.

Greg