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ISSUE 22
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LEAD STORY


LEAD STORY
New Emerging Business Models
C
reative Commons is a nonprot
dedicated to sharing. Over the last
twelve years; writers, musicians,
museums, designers, photographers and
creators of all kinds have used Creative
Commons copyright licenses to freely
share over 1 billion works with the public.
Business use of Creative Commons has
lagged behind as freely sharing works
online seems counter intuitive to revenue
generation. Last summer, my Creative
Commons colleague Sarah Pearson and I,
ran a successful Kickstarter crowd funding
campaign to write a book that shows the
world how sharing can be good for business.
Since then we’ve been interviewing dozens
of dierent businesses across all sectors and
from around the world who are succeeding
with business models using Creative
Commons licenses.
e book we are writing will prole each
business and show how they use Creative
Commons to generate economic and social
value. In addition to the proles we’re
doing high level analysis to show business
model themes and strategies. Our goal is
not to identify a single formula for business
models that use Creative Commons,
but instead to show a diverse range of
possibilities that can be replicated, adapted,
and adopted by others.
We are discovering a rich diversity of
open business models that use Creative
Commons. ere isn’t one model, there
are many. I have been impressed at how
many dierent types of businesses are using
Creative Commons licenses. Furniture
designers and manufacturers, visual symbol
creators and distributors, educators, games
developers, hardware manufacturers,
publishers, researchers, art museums,
journalists, technology platforms… e
list goes on. Use of Creative Commons by
business is widespread not niche.
It has been even more interesting to
discover a diverse range of business models
being used across these dierent sectors.
With each new interview we hear dierent
ideas on how Creative Commons is being
used as part of a successful model. I feel a
kind of unexpected wonder and delight
with each new model. Like receiving a
gi and glimpse of an alternative kind of
economy just emerging.
Here is a sampling of new emerging business
models based on Creative Commons.
Model #1 - Digital to Physical
Many of the businesses and organizations
we have interviewed operate at the interface
between digital goods and physical goods.
In this model digital goods are openly
licensed with Creative Commons and made
available online for free. is generates
all kinds of value for both the creator and
society including:
Access
Participation
Innovation
Reputation
ese open benets are generalizable to
all the open business models but worth
stating here upfront. When a digital good
is converted into a physical good costs are
incurred. Money is required for the raw
physical resources themselves and for the
production of the physical output. en
there are the signicant additional costs
associated with physical good storage,
replication, and distribution. Digital to
physical can also apply to digital works
available online under a free open license
but in person performances, appearances,
or services costing money. e conversion
of bits to atoms is a point of transaction
where revenue generation for many of the
businesses we interviewed happens.
Method #2: Direct Connect
In the past musicians, writers, artists and
other creators had to rst nd an agent,
record label, publisher, or other third party
to represent them. is intermediary sat
between the creator and their hoped for
fans and played three roles; Judged whether
their work was worthy of publishing;
Invested in supporting creation of the
work and acted as the representative and
distributor of the work to the public.
e “direct connect” open business model
eliminates creator reliance on such middle
man intermediaries. Instead, creators use
the Internet to go direct to fans, readers, and
their audience. ey openly license their
work using Creative Commons licenses,
put it up online and invite everyone to
listen, read, use, and distribute it. Rather
than restricting access to the work until
payment is received, it is freely given away
with an explicit invitation to copy it and
share it with others. Fans and audience are
the ones who, through word of mouth, have
a promotion and distribution role. is
By. Paul Stacey, Associate Director of Global Learning Creative Commons
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ISSUE 22
NEW EMERGING BUSINESS MODELS IN THE COPYRIGHT INDUSTRY
LEAD STORY
leverages the unique social aordances of
the web.
Going direct to your audience is only one
part of this model. e creators weve
interviewed also make an extensive eort
to “connect” with their fans. ey post
images, tweet, facebook, blog, and use
other forms of social media to represent
themselves directly to fans. Sharing daily
lives, experiences, and insights is a form
of open transparency that deepens fans
understanding, interest, and trust. It invites
connection, dialogue, and a bond. It creates
relationship and establishes a channel
for reciprocal exchange. It makes people
interested in the work you do and want to
support you in doing it.
A kind of reciprocity emerges with creators
when they celebrate and promote derivative
works their audience creates including
things like fan ction, music remixes, and
video. Direct connect revenue methods
include:
1. Donations : is method appeals to
users, fans, and audience for a small
donation that goes toward costs. e
donation model tries to spread costs
across a large number of small personal
donations.
2. Pay-what-you-can : is method asks
fans when they download a work to
pay an amount of their own choosing.
3. Free and for sale : is method makes
works available as both a free openly
licensed download and a for sale item
through traditional channels.
4. Unlatching : is method, a variant
of crowd funding, appeals not to the
crowd” but to a specic group to
aggregate upfront funding to make a
resource open.
5. Patrons : is direct connect method
asks fans to commit to providing
an amount of money for each work
you create on an ongoing per item or
monthly basis.
Method #3: Matchmaking
Technology platforms play a unique role
acting as bridge matchmaking creators of
openly licensed goods with those who need
those goods. In a sense, platforms play the
third party intermediary role eliminated in
the “direct connect” model. ey are the
new web based intermediaries representing
creators and matchmaking supply and
demand.
Platforms oer creators of Creative
Commons licensed goods a place to upload
and store their work. Platforms provide
functionality enabling creators to establish
an online presence and identity which
serves as a means of online promotion and
marketing building a creator’s reputation
over time. at’s the supply side. On the
demand side, platforms provide users
seeking specic types of openly licensed
works a one-stop shop destination for
nding resources they may be interested in.
Platforms usually support search, browse,
and download.
Many platforms create value for themselves
by becoming the destination for openly
licensed works. However, platforms do not
always provide reciprocal value (beyond
reputation) for the creators who are
puing their openly licensed works on the
platform. For our interviews, we focused on
platforms who go beyond merely hosting
openly licensed content by oering creators
additional matchmaking support.
Method #4: Value-Add Services
In this method services are built on top of
a resource that is free and open. Revenue is
generated through sale of premium services
rather than sale of the resource itself. ere
are lots of dierent value-add service model
types:
1. Customization: this value-add
service type charges for customization
services.
2. Hosted Supported Service : this
value-add service type charges a fee for
hosted and supported access and use
of openly licensed resources.
3. Supplemental R esources : is
value-add service type charges a fee
for resources that supplement a core
Creative Commons licensed resource.
4. Training and Education : this value-
add service type charges a fee for
training and education related to
Creative Commons licensed resources.
Method #5: Members
One of the surprising results of our work so
far is the absence of advertising as a revenue
generation component of open business
models. ere seems to be a general
abhorrence of advertising and a sense that it
conicts with mission and adversely aects
business perception.
Instead of advertising some rely on
members, sponsors or partners to directly
fund creation and availability of Creative
Commons openly licensed content.
Mix and Match
Open business models use diverse means
to generate revenue. Many of the businesses
and organizations we interviewed make
use of more than one method mixing and
matching them together. e integration
of dierent methods is an area of open
business model innovation. Combinations
can be devised to custom-t a particular
business purpose and generate unique
value and dierentiation. Diversication
of revenue methods mitigates risk and
provides multiple paths to sustainability.
Revenue = a means to an end
For open business models revenue
generation is a means to an end, not the
end itself. e end game for everyone
we’ve spoken to is not prot but impact.
Traditional business models start with
exclusivity, denying access to a good until
money is paid. ere is no impact without
rst a nancial transaction. Open business
models start with inclusivity, participation,
and universal access. Impact is enabled up
front and revenue generation follows.
I hope this post helps you see this dierence
and realize that just because a business
is open doesn’t mean it can’t generate
revenue. In many ways I think open
business models are more sustainable and
benecial to the world than closed ones. An
expanded version of this article including
actual examples from the businesses we’ve
interviewed can be found at: What is an
Open Business Model and How Can You
Generate Revenue.