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2008-Latest News Wikinomics

Page history last edited by PBworks 15 years, 10 months ago

Independent.ie

 

Why Open Source Works

 

Sound Wikinomic theory?

By John Kennedy

Thursday February 28 2008

Mass collaboration using blogs and wikis could result in the greatest change in the architecture of business since the industrial revolution

What do IBM and Procter & Gamble have in common? Apart from being global corporations relying heavily on R&D, they are spearheading and profiting from a new trend of online mass collaboration through the use of web tools such as blogs.

 

That’s according to the co-author of best-selling business bible Wikinomics – How Mass Collaboration Changes Everything, Anthony Williams, who is in Dublin today to address the annual Irish Software Association conference.

 

The book, which he co-wrote with Don Tapscott, best-selling author of The Digital Economy, explores how businesses have used mass collaboration and open source technologies to generate success.

 

“In 2005, we noticed a distinct change in the internet with the rise of Web 2.0. Parallel to this, there was the growth of the blogosphere, the development of Linux and the rise of user-created resources like online encyclopaedia Wikipedia.

 

“This all pointed to a new trend and mode of production where products and services traditionally created by large firms were increasingly being generated online by worldwide networks of individuals.”

 

Williams cites IBM’s foray into the Linux community, which began in the Nineties. “IBM had challenges of its own at the time and was looking for a new way to be successful.

“While other people were questioning Linux and open source, it decided to work with Linux developers and set up a small team which spent time working with the community. They ended up building a profitable business that complements everything from software to consulting services and have bundled it in with their hardware products, resulting in $1bn of revenue being earned every year.

 

Williams also cites Procter & Gamble’s expansion of its R&D talent pool. “Its head of innovation told me it has 9,000 world-class researchers in-house. But for each of these, they know of another 200 who are just as good. Harnessing this resource cleverly means they could have access to 1.8 million people who have the potential to influence new products and services.

“We feel every company in the world will find new ways of tapping into external sources of talent. The old paradigm of hiring and retaining the best and brightest may give way to a more fluid model,” he adds.

 

The earning potential of contributing to online communities is at a nascent stage but Williams says there are great examples of individuals already making a living from these communities.

“Large-scale communities like Facebook and YouTube are sharing rewards with contributers. There are businesses thriving off eBay. Some 30pc of Amazon.com’s revenues come from third-party developers.”

 

Williams cites HikingOutpost.com, a third-party retailer of books solely about hiking. “HikingOutpost created a unique customer interface with forums for hikers to check routes, maps etc. But all the books and images are from Amazon.com’s database. They get a 7pc commission for each book sold, but Amazon does the post and packaging.

 

“Amazon has the world’s leading e-commerce system. It’s realised how to turn a proprietary asset into a saleable asset and create an ecosystem of external developers. Large companies are also deciding that instead of building their own e-commerce system, they’ll sell through Amazon.

 

“YouTube already shares ad revenue with the best producers of video on its site and people make a living this way,” says Williams, referring to such individuals as “prosumers”.

“Second Life is the perfect embodiment of this principle. The owners of this virtual world actually only own 1pc of the content. 99pc of what’s on Second Life is created by users and they own the IP rights to their creations.”

 

Traditional proprietary stalwarts like Microsoft are also getting in on the act, Williams observes. The Seattle giant rocked the software world last week with the news it was publishing 30,000 pages of open source documentation previously kept top secret.

 

Other industries are beginning to wake up to shaking off the proprietary model. “I think the record industry shot itself in the foot by failing to proactively embrace the digital revolution. Its business model was to go out and sue the people downloading music, when it should have been finding ways to take advantage of this.

 

“Bands like the Beastie Boys are driving new revenue models by producing a cappella tracks for fans to remix. Nine Inch Nails are releasing drum and base tracks of songs for fans to remix. They’ve created a new business model for fans who love music to the extent that they want to become involved in its production.

 

“Eventually, talented remixers will be able to sell their versions and share the proceeds with original authors and the music industry better catch on this time,” he concludes, reiterating the DIY ethic unfolding in our midst.

 

It blows your mind, you see the creation of totally self-organised prosumer communities using the internet for sharing DIY innovation.”

 

© Silicon Republic Ltd 2008

- John Kennedy

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