[p2p-research] Fwd: Dual Licensing of Research in Renewable Energy

[Michel Bauwens]

Dear Austin,

concerning your possible adaptation of your research,

here's what I would be very interested in:

- a study of actual business models used by existing open
design/manufacturing models, as practiced by arduino, openmoko, buglabs  as
well as uncovering the new field of open energy research and design ...

On Wed, Jun 17, 2009 at 3:41 PM, Austin <brentley at gmail.com> wrote:

>  thanx Michel...
>
> off to class shortly.  talk soon,
>
> -ABB
>
>
> Michel Bauwens wrote:
>
> Hi Austin,
>
> I'm adding a few extra people who may have valuable input ...
>
> Vinay, Paul, Smari, Chris, etc... : Austin is doing research into business
> models for the development of renewable energies, through a scheme of dual
> licensing for research, using a royalty system.
>
> Your input on how to fund renewable energy research and make for viable
> startups in this area would be most appreciated,
>
> Michel
>
> On Wed, Jun 17, 2009 at 2:09 PM, Austin <brentley at gmail.com> wrote:
>
>>
>>
>> Stan Rhodes wrote:
>>
>> Austin,
>>
>> First, I look at the reason why a proposal is being made--the problem it
>> sets out to solve.  I'm glad you explicitly state this, because so often
>> readers are left to assume.  You say, "The current energy, environmental,
>> and economic crises all have roots dating back to the 1970s (even further in
>> fact), and thus far, neither free-market nor government solutions have
>> brought us out of this quagmire."
>>
>> I'm skeptical that this frames a problem in a meaningful way. The crises
>> and failed solutions are vague. Which problem are you hoping to solve?  How
>> do you know it's a root problem, and not a symptom of something else?
>>
>> Continuing, you do give a general answer of the proposal's goal: "bring
>> renewable energy solutions to market." This implies that the problem you
>> see, and are trying to solve, is that we don't have enough or good enough
>> renewable energy solutions.  Again, I'm skeptical that this follows from
>> your statement about the "quagmire."  Also, I'm left wondering, what are the
>> criteria for the quagmire being resolved?  Energy consumption will continue
>> to increase until the cost of energy rises enough to reduce consumption.
>> Implicit is the assumption that renewable energy can solve your stated
>> problem.  Plenty of people make this assumption, but I've yet to see
>> convincing evidence.  There are no guarantees focused R&D will solve
>> problems, particularly when breakthroughs are needed for viability.
>>
>> You also say "The goal is not to prove that this model is or isn’t viable
>> (although I hope that it is). Rather my goal is to accumulate the skills
>> necessary to make even more substantive contributions in the future."  I
>> like this real goal, it's mine as well.  However, to accumulate skills for
>> more substantive contributions, you need to assess the viability of your
>> proposal--how else can the skills be built?
>>
>> I'll now leave my critique of your premise for the proposal, and assume
>> that the purpose follows rationally from the problem, so we can look at the
>> economics of your proposal.
>>
>> Michel asks if we need royalties, and includes some good points.  I'll be
>> covering similar ground, from a different angle.  If you included royalties,
>> you had a reason, so let's question it.  My question: what are the economic
>> implications of royalties in this situation?  I'll answer this with a few
>> points.
>>
>> 1. The point of having information in the commons is not just more eyes,
>> but also production at the lowest possible cost--in economics terms, the
>> lowest possible barriers to entry.  Crowdsourcing for private profit isn't
>> new, and doesn't fall under the general definition of p2p used by the p2pf.
>>
>> 2. Looking at the implicit reasoning behind the proposal, the ends
>> (renewable energy tech) are being used to justify the means (locking up
>> production with a royalty scheme).  The ends aren't worth the means, and I
>> don't know of any strong evidence that such a scheme would result in more
>> renewable energy innovation than making all IP part of an information
>> commons that actually lowers barriers to entry for producers.  In this
>> proposal, the barriers to entry for innovation are raised implicitly--an
>> innovator must add in royalty costs when producing derivative products.
>>
>> 3. The monitoring and enforcement infrastructure required to ensure rent
>> collection raises costs, for sure.  The public inevitably pays these costs
>> in one way or another.
>>
>> Now, to revisit the concept of p2p.  All nonrival goods creation supported
>> by peer effort or money should be part of an accessible information commons,
>> if not also licensed in a GPLish way, i.e. "source" such as research data
>> should be made available (disclosing data should be a norm for studies now
>> anyway), and further derivative works--if applicable--must fall under the
>> same license.  All peers must be able to produce, using information in the
>> commons for free, to achieve the lowest possible barrier to entry.
>>
>> -- Stan
>>
>> On Tue, Jun 16, 2009 at 2:58 AM, Michel Bauwens <michelsub2004 at gmail.com>wrote:
>>
>>> Hi Austin,
>>>
>>> May I ask you a very basic question: do we really need royalties?
>>>
>>> Let's assume that a company designs and sells electronic circuit boards,
>>> but uses open designs. It still can sell the 'products' with a moderate
>>> profit, and re-invest part of that in its own research, while sustaining an
>>> overall commons with other companies similarly engaged. On top of that, it
>>> can keep a moderate amount of dually licensed improvements, of its own
>>> making. This is what I think happens in the OS world, dual licensing is what
>>> the companies themselves develop, on top of the open commons.
>>>
>>> Presumably, there's a problem with such a system for large upfront
>>> investments, but this could for example be supported by grant money for the
>>> public good, as if for example proposed for pharma research by Stiglizt and
>>> others.
>>>
>>> If adapt such a policy, don't you largely remove the problems with
>>> monitoring, rewarding etc..., i.e. you just retain it for the marginal
>>> improvements, like it is currently done, while the bulk is done in the
>>> commons and does not need anything but 'acknowledgement and recognition,
>>> which is automatically traceable in open design systems.
>>>
>>> Michel
>>>
>>>    Hello P2P and Open community,
>>
>> Thanx for the flood of responses....very encouraging.  Because I'm in
>> Kuala Lumpur at the moment, I'm probably 12+ hours ahead of most of you …and
>> I will work through these emails in reverse order to ensure that I don't
>> answer questions that have already been answered.
>>
>> But I see that Stan and Michel's emails about royalties are very similar,
>> so I have tried to combine my responses....a bit long…but I tried to be as
>> thorough as possible.  By explaining my background and reasoning, perhaps
>> you can uncover more holes and pose more questions.
>>
>> To Michel's questions:
>>
>> Another good point.  Are royalties entirely necessary.  I'm not really
>> sure actually.  Because I have to approach the problem from a purely
>> academic perspective (sigh), I have to use existing frameworks….and based on
>> the journals I'd read, dual licensing, open innovation, stakeholder theory,
>> network theory were all the most applicable existing models that I could
>> find, and licensing/royalties came up quite a bit under the first two
>> frameworks.
>>
>> I think the other reason I selected royalties is because they only apply
>> to successful uses.  i.e. they encourage manufacturing companies to take a
>> stab without too much risk.  You only pay if you win. So yes, producers must
>> factor in the cost of royalties….but…they don't have to pay for these costs
>> upfront.  So in theory, this could lower barriers to entry.  I like the idea
>> you listed above about selling products, but my focus was more on R&D
>> exclusively.  i.e. you have a centralized (or networked) R&D entity and they
>> focus in this area only….this info goes into the commons, and then producers
>> could use this R&D for their own purposes.  Whatever I as a producer was
>> spending on R&D before….in theory, I can spend less now since someone else
>> is doing much of the work for me.  This also means that companies without
>> large R&D budgets can enter the game, so there would be more
>> competition….which could lead to more innovation.  I must stress that this
>> is all intuition and not based on any evidence.  I just tried to apply my
>> very very limited understanding of economics, open source, and innovation.
>>
>> The main stumbling block with royalties, however, is litigation and
>> enforcement.  It's sounding like there is no way to keep royalties in place
>> AND keep enforcement costs down.  So even if R&D costs go down for everyone,
>> you still have high costs in other areas (higher in fact).  I'm wondering if
>> there is another way to attract enough funding to sustain this model….and
>> maybe even pay back initial investors.  I like the general idea of donations
>> and government funding, but would this be enough?
>>
>> I have the advantage of being early enough in my research to change
>> directions, so I would be interested in exploring any other options.
>>
>> To Stan:
>>
>> I think I understand now the vagueness of my research assumptions.  Thanks
>> for pointing that out (if you didn't do this now, my graders eventually
>> would).  Let me try to bring greater clarity if I can....here goes:
>>
>> As I understand it, the two holy grails of renewable energy are capture
>> and storage.  Fossil fuel, for all of its faults, already addresses these
>> two issues.  In addition, the switching costs are very high since, despite
>> many externalities like environmental damage, fossil fuel and renewable
>> energy are perfect substitutes, but the former is much cheaper by
>> comparison.  So even if we manage to solve the capture and storage issues,
>> convincing users to purchase renewable energy (RE) might prove difficult.
>> I'd have to do more research on the diffusion of innovation with regards to
>> newly created substitutes, but it would seem that for widespread use to
>> occur, the price of renewable energy would have to come down enough so that
>> people are incentivized to cross over.  Government taxes, subsidies, and
>> mandates could help.  And of course, many people are price insensitive when
>> they know they're making a difference.  But still, we have a long way to go.
>>
>> Making RE more efficient, transportable, and cheaper can happen any number
>> of ways.  Economies of scale and gradual improvements could do the trick.
>> New breakthroughs and outside the box thinking is another path.  In either
>> case, however, greater research and development is required.
>>
>> However, R&D, thus far, has been problematic since it can be expensive
>> (meaning not enough players at the table) and it is often proprietary
>> (creating silos of secrecy and redundancy).   It is quite possible that the
>> solutions to capture, storage, and price already exist…but due to closed
>> networks, no one has been able to connect the dots.
>>
>> So the goal of my paper is how best to lower R&D costs, invite the highest
>> number of collaborative contributors, and attract the largest amounts of
>> funding….in order to speed up innovation, solve the capture, storage, and
>> price issues, and help bring RE products to market that can compete with
>> extant fossil fuel technologies.  My reasons for wanting to remove fossil
>> fuels from the equation are varied…resource wars, the environment,
>> pollution, Hubbert's Peak, etc.  I'm not nearly as concerned about which
>> renewable energy succeeds (I imagine that any open community will be
>> self-organizing and the better ideas will rise to the top…especially if
>> driven by external market forces)….I just want enough new ideas to work
>> (gradual innovations and breakthrough technologies).
>>
>> When working out potential frameworks, I disqualified traditional market
>> solutions (since they haven't worked so far), and traditional open solutions
>> (since some aspects of this project might need generous funding from the
>> beginning and in regular installments thereafter).  Perhaps excluding both
>> or either was premature (I'm quite new to open communities).  In any event,I
>> developed the current framework which tries to combine aspects of both
>> (perhaps a forced fit).
>>
>> I imagined what incentives each of the relevant stakeholders would need
>> throughout the value chain (I'm still an MBA student…for better or for
>> worse, and the value chain has been drilled into me….sigh).  I also tried to
>> design this framework so that government involvement could help….but
>> wouldn’t necessarily be a prerequisite for success.  i.e., if this model
>> could be shown to work, any group of people (investors, scientists,
>> citizens, and manufacturing companies) could lift it off the ground.
>>
>> Hope this clarifies things a bit Stan.  It helps my own thinking to 1.
>> Have you poke holes in my assumptions and framing….and 2.  To force me to
>> more clearly verbalize my ideas.  If and when you have time, I welcome even
>> more feedback.  Gonna turn to other responses in my inbox.
>>
>> Thanks for all the help everyone,
>>
>> -Austin
>> (Eugen, is this the posting style you wanted...)
>>
>
>
>
> --
> Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
> http://www.dpu.ac.th/dpuic/info/Research.html -
> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>
> Volunteering at the P2P Foundation:
> http://p2pfoundation.net  - http://blog.p2pfoundation.net -
> http://p2pfoundation.ning.com
>
> Monitor updates at http://del.icio.us/mbauwens
>
> The work of the P2P Foundation is supported by SHIFTN,
> http://www.shiftn.com/
>
>


-- 
Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
http://www.dpu.ac.th/dpuic/info/Research.html -
http://www.asianforesightinstitute.org/index.php/eng/The-AFI

Volunteering at the P2P Foundation:
http://p2pfoundation.net  - http://blog.p2pfoundation.net -
http://p2pfoundation.ning.com

Monitor updates at http://del.icio.us/mbauwens

The work of the P2P Foundation is supported by SHIFTN,
http://www.shiftn.com/
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