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

[Michel Bauwens]

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...)
>



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