The Business of “Open”
SANGKI HAN, Ph.D.
Graduate School of Culture Technology
• Yochai Benkler @ Harvard Law
School and Berkman Center for
Internet & Society
• A socio-economic system of
production that is emerging in the
digitally networked environment
Peer Production and
Since 2005, over 5000
from nearly 500
have contributed to the
Who Writes Linux?
Linux Kernel Development
[Linux Foundation, Aug. 2009]
WHO IS SPONSORING THE WORK
The Linux kernel is a resource which is used by a large variety of companies. Many of those
companies never participate in the development of the kernel; they are content with the software
as it is and do not feel the need to help drive its development in any particular direction. But,
as can be seen in the table above, an increasing number of companies are working toward the
Business Model for 2008/2009 ANNUAL PLAN
This year’s Annual Plan includes increased spending on technical infrastructure to keep pace with Wikipe -
dia’s growing audience, the establishment of the Wikimedia Foundation’s ﬁrst fundraising team, and the
hiring of additional software developers and staff with responsibility for public outreach and partnerships.
The Annual Plan anticipates increased revenues, due to the establishment of the dedicated fundraising
team. All ﬁgures in thousands of dollars.
Wikimania $96K  Board $130K 
Legal $357K 
• Licensing and Professional Service Programs $595K 
Ofﬁce of the
Executive Director $472K 
- GPL for GNU and Free Software Finance & Admin. $1,619K  Technology $2,705K 
✓ As of August 2007, the GPL accounted for
nearly 65% of the 43,442 free software Total $5,974,000
 Includes board meeting expenses, D&O insurance.  Includes salaries for admin staff, audit fees, fundraising expenses, ofﬁce rent, ofﬁce supplies, bank fees, etc.
projects listed on Freshmeat Executive Director and Deputy Director; some fundraising and travel expenses; consul-
tants and contractors; staff and volunteer development.  Includes salaries for techni-
cal staff, servers, bandwidth and contractor expenses.  Includes salaries for ﬁnance/
 Includes salaries for program staff, public outreach expenses, communications expenses.
 Includes salary for General Counsel, and external counsel and consultant fees, ﬁling fees, etc.
 Includes travel for board, advisory board and staff.
✓ Dual Licensing / Distribution & Service [[2008/2009 Projected Revenue]]
Model/ The Ecosystem Strategy / Dual Other Revenue $24K 
In-Kind Revenue $500K 
Product Model / The Web-Based Ad Model Earned Income $811K 
• Donation Community Gifts $3,000K  Major Gifts and Grants $3,000K* 
• Selling manuals, t-shirts, stickers, mugs, etc. Total $7,335,000
 Donations of more than 10K *Includes 1M from Sloan Foundation.  Donations  Includes income from sponsorships, interest, and foreign exchange gains.
less than 10K.  Income from live feed deals, trademark deals, etc.  In-kind donations.
[source: Wikimedia Foundation]
By Tony Hall from Flickr
• A software system which has
programming interfaces (API)
that allow using the software
to function in other ways
than the original programmer
intended, without requiring
modiﬁcation of the source
Open Standard vs.
Open Standards vs. Open Source
Attribute Open Standards Open Source
Nature Set of speciﬁcations Software code
Openness of interface By deﬁnition By design
Interoperability Enabled Cannot be assumed
Licensing Various types Various types (GPL, BSD, etc)
Development model Collaborative Collaborative
[Source: Roadmap for Open ICT Ecosystems by Berkman Center]
Since each page of webmail comes with ads, more users means more revenue.
Chart: Steven Leckart; Chart design: Nicholas Felton @ WIRED
How Can a CD Be Free?
Chart: Steven Leckart;
Chart design: Nicholas
Felton @WIRED; Sources:
Daily Mail, O2 Arena
Free Business Models
From: “Free! Why $0.00 Is the Future of Business” by Chris Anderson @ WIRED
- Coined by Fred Wilson
- Cell phones, ‘free lunch’
• Zero marginal cost
- Online music -- Some artists give away their music online as a way of marketing
concerts, merchandise, licensing, and other paid fare
• Labor exchange
- Rating stories on Digg, voting on Yahoo Answers, or using Google's 411 service
• Gift Economy
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