Difference between revisions of "2. Some Basic Economics of Information Production and Innovation"

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&larr; [[Part One|Part One: Overview]] | [[3. Peer Production and Sharing|Chapter 3]] &rarr;
 
 
 
== Content ==
 
 
 
* [http://www.benkler.org/Benkler_Wealth_Of_Networks_Chapter_2.pdf Full text (PDF)]
 
* [[Sentence-sliced Text Chapter 2|Full text, sentence-sliced (wiki)]]
 
* [[Summary Chapter 2|Summary (wiki)]]
 
 
 
== Summary ==
 
 
 
Information is nonrivalrous (we can both use it at the same time). It is also circular in that it is both input and output to its own production -- building a table requires wood, writing a paper requires other papers. Copyright laws are justified as making information rivalrous and thus creating a market for it but are constrained so that later the result can be used in the circular production process. But how is producing information actually motivated?
 
 
 
Strategies of producers fall along two axes: benefit maximization (using exclusive rights to make money, using nonexclusive rights to make money, using nonexclusive rights to get non-monetary benefits) and cost minimization (using public domain information, using purchased/owned information, and using privately shared information). This results in nine production strategies. Each strategy receives different inefficiencies from copyright law, so a law's effects depend on which strategies are used. But which strategies get used depends on the law.
 
 
 
Which strategies are used also depends on the technology. New technology has made nonmarket strategies more practical, but incumbent firms want to protect their own models by strengthening copyright laws.
 
 
 
==Sources==
 
===Sources cited in the chapter===
 
===Other relevant readings===
 
 
 
==Case Studies==
 
===Supporting examples===
 
""As it turns out, repeated survey studies since 1981 have shown that in all
 
industrial sectors except for very few—most notably pharmaceuticals—firm
 
managers do not see patents as the most important way they capture the
 
benefits of their research and developments. They rank the advantages that
 
strong research and development gives them in lowering the cost or improving
 
the quality of manufacture, being the '''first in the market''', or developing
 
'''strong marketing relationships''' as more important than patents."
 
from page 40-41
 
 
 
(emphasis on their strong relevance to Open Source bazaars - [[User:Red1|Red1]])
 
 
 
In the case of Open Source the author gave the example of how IBM spends millions on it to gain other benefits of savings here, but the criteria above of branding and strong market gains are ever more relevant. So much so, erroneusly learning from Linux, many copycat projects are exploitatively trying to ride on ''planting the flag on the mountain'', and what they put out even though open, are more of 'market positioning' ploys. A September 2006 case is [http://en.wikipedia.org/wiki/Compiere Compiere ]been a premier OS player in the Small Medium Business sector, but adopts a  [http://en.wikipedia.org/wiki/The_Cathedral_and_the_Bazaar ''Cathedral''] approach instead. They soon lost the branding advantage to [http://www.adempiere.com/wiki/index.php/Media_Coverage ADempiere] been obediently true ''peer-based community'' Compiere fork which proves the author's basis in this chapter. The ''wealth of networking'' by the community members quickly obliterate whatever [https://sourceforge.net/project/stats/?group_id=176962&ugn=adempiere advantage] Compiere had prior to it going after some funding - the matador's cloth of many OSS ploys. As another more recent case of [http://opensourceculture.blogspot.com/2006/11/yes-i-know.html Redhat vs Oracle] shows, such ''ploys'' are beginning to show its slip.  
 
By such account, other pro-monetary projects such as MySpace, Google, YouTube may suffer the same threats as Netscape, Yahoo! and Hotmail has. [http://www.adempiere.org ADempiere] and another similar [http://en.wikipedia.org/wiki/Mambo_(CMS) OSS] fork, [http://www.joomla.org/ Joomla!] are living proofs that OSS can stay rich for all its members without funding, and in perpetual mode.
 
 
 
===Counter-examples===
 
 
 
==Key Concepts==
 
 
 
'''Non-rival''' (36)
 
 
 
'''Standing-on-the-shoulders-of-giants Effect''' (37)
 
 
 
'''Input/Output Circularity (see Standing-on-the-shoulders-of-giants Effect)
 
'''
 

Revision as of 05:58, 18 August 2007

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