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Glyn Moody: Open for business

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A look at the ways in which openness of all kinds can benefit businesses.

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Glyn Moody: Open for business

  1. 1. open for business <ul>glyn moody </ul>
  2. 2. good news, bad news <ul><li>good news </li><ul><li>we are living through a transition that is not just ”once in a lifetime”, but *once in a civilisation* </li></ul><li>bad news </li><ul><li>we haven't done this before, so we don't know how to do it </li></ul></ul>
  3. 3. blown to bits <ul><li>”once in a civilisation” transition </li><ul><li>from a world of atoms to a world of atoms + bits
  4. 4. from an analogue world to an analogue + digital one </li></ul><li>analogue to digital media </li><ul><li>vinyl LPs to CDs
  5. 5. video tapes to DVDs
  6. 6. books to ebooks </li></ul></ul>
  7. 7. the rise of the digital <ul><li>analogue has been with us since the beginning of consciousness
  8. 8. digital has been with us *longer* - since the beginning of life </li></ul>
  9. 9. digital DNA <ul><li>DNA consists of very long strings of Adenine, Cytosine, Guanine, Thymine – A,C,G,T
  10. 10. this is a *digital* code: </li><ul><li>A -> 00
  11. 11. C -> 01
  12. 12. G -> 10
  13. 13. T -> 11 </li></ul><li>CGGTATAAT -> 011010110011000011 </li></ul>
  14. 14. life is digital <ul><li>complex life would be impossible without digital information
  15. 15. only digital information can be repeatedly copied faithfully </li></ul>
  16. 16. the re-invention of digital <ul><li>Nature got there first several billion years ago
  17. 17. humans only got there about 70 years ago
  18. 18. specifically, Alan Turing got there about 70 years ago with his description of a Turing machine </li></ul>
  19. 19. there is only one computer <ul><li>one deep consequence of Turing's work is that it proved all (sufficiently powerful) computers are essentially the same </li><ul><li>they can be made to emulate any other computer
  20. 20. they can run any software written for any computer </li></ul></ul>
  21. 21. there is only one computer revolution <ul><li>not possible to limit computer advances to one particular field
  22. 22. digital's 0s and 1s do not come in different flavours
  23. 23. increase in speed, increase in capacity, decrease in size, decrease in cost affects *every* application of computing, not just one corner of it </li></ul>
  24. 24. there is only one Internet revolution <ul><li>what applies to computers, applies equally to the Internet
  25. 25. improvements in transmission speed and reductions in cost apply to *all* digital data that flows across it: there is no discrimination
  26. 26. this is the essence of Net Neutrality </li></ul>
  27. 27. the race to the bottom <ul><li>computer and Internet progress is a scalar quantity – its magnitude may vary, but its direction is constant – so there is an inevitable race to the bottom
  28. 28. the cost of processing anything, storing anything and transmitting anything, tends ineluctably to zero </li></ul>
  29. 29. of CDs... <ul><li>first CD appeared in 1982 </li><ul><li>without any kind of copy protection
  30. 30. because it was impossible to copy the CD's 700 Mbytes of data: the 1983 IBM PC XT had a 10 Mbytes hard disc – less than one song
  31. 31. similarly impossible to share it across the Internet: the Hayes Smartmodem, released in 1981, had a speed of 300 bits/s – about 400 hours to upload one song </li></ul></ul>
  32. 32. ...and MP3s <ul><li>developed in early 1990s, just as Internet was taking off
  33. 33. used clever tricks to reduce music file size to 10% of original – reduced time to upload file by factor of 10
  34. 34. modem speed then 14.4 Kbit/s – less than one hour to upload/download one MP3 song: slow, but possible </li></ul>
  35. 35. today <ul><li>Mbit/s broadband connection mean that entire films can now be shared
  36. 36. P2P networks like BitTorrent make it even easier to distribute those files and share them in the background
  37. 37. 1 Terabyte hard disc (1000 Gbytes) costs € 50; stores 150,000 MP3s </li></ul>
  38. 38. tomorrow <ul><li>a 1 Petabyte (1000 Terabytes) USB stick will cost € 50 and store every song ever recorded in CD quality (no compression)
  39. 39. a 1 Exabyte hard disc (1000 Petabytes) will cost € 50 and store every film ever recorded
  40. 40. the race to the bottom will be over </li></ul>
  41. 41. absolute zero <ul><li>the race to the bottom means any digital content can be copied and shared and hence acquired for a trivial cost that is tending to zero very rapidly
  42. 42. what does this mean for business? </li></ul>
  43. 43. DRM: less than zero <ul><li>DRM is not the solution </li><ul><li>DRM only needs to be broken once for content to be uploaded, copied and shared everywhere
  44. 44. DRM will always be broken at least once
  45. 45. DRM makes digital content less valuable than freely-available versions without it
  46. 46. digital content with DRM is actually worth *less* than zero </li></ul></ul>
  47. 47. the law is an ass <ul><li>”stricter” enforcement of copyright infringement laws is also counterproductive because it's predicated on attacking your actual or potential customers
  48. 48. worse: many surveys show that unauthorised downloaders spend *more* on content - they are actually your *best* customers </li></ul>
  49. 49. <ul><li>what's left? </li></ul><ul><li>to stop sharing of digital goods there is nothing
  50. 50. the only option is to *embrace* it
  51. 51. not surprisingly, first to do so was the world of computing
  52. 52. free software/open source
  53. 53. GNU/Linux </li></ul>
  54. 54. what's GNU? <ul><li>GNU born in 1983 at MIT
  55. 55. GNU is ”GNU's Not Unix” - a recursive acronym
  56. 56. one man's attempt to create a free version of the leading Unix operating system </li></ul>
  57. 57. a change of heart <ul><li>by 1991, GNU was still unfinished: it lacked a ”kernel” - the heart of the operating system
  58. 58. in March 1991, 21-year-old student Linus Torvalds started writing one ”just for fun” – in his Helsinki bedroom
  59. 59. key inflection was August 1991, when he opened up his ”Linux” project using the Internet </li></ul>
  60. 60. opening up <ul><li>decentralised </li><ul><li>anyone, anywhere, could join in </li></ul><li>bottom-up </li><ul><li>people fed suggestions, problems and solutions to Linus </li></ul><li>collaboration easy </li><ul><li>Internet was more affordable </li></ul><li>scalable </li><ul><li>no formal training required – everything is out in the open </li></ul></ul>
  61. 61. Linus' Law <ul><li>Eric Raymond: ”given enough eyeballs, all bugs are shallow”
  62. 62. different people approach a problem in different ways
  63. 63. adding more people increases the probability that someone’s approach will match the problem in such a way that the solution is obvious (”shallow”) to that person </li></ul>
  64. 64. power, economy, reliability <ul><li>91% of top 500 supercomputers run Linux </li><ul><li>1% run Microsoft Windows </li></ul><li>Google runs its services on millions of servers running Linux </li><ul><li>so does Facebook, Twitter etc. </li></ul><li>Android mobile phone system runs on Linux </li><ul><li>400,000 handsets activated daily
  65. 65. launched November 2007 </li></ul></ul>
  66. 66. billion-dollar business <ul><li>Red Hat (1993) </li><ul><li>annual revenue to February 2011 $909 million; profit $107 million </li></ul><li>main products </li><ul><li>Red Hat Enterprise Linux
  67. 67. Jboss Enterprise Middleware </li></ul><li>services </li><ul><li>consulting, customisation
  68. 68. technical support
  69. 69. training & certification </li></ul></ul>
  70. 70. easy as nails <ul><li>Nine Inch Nails: Ghosts I-IV </li><ul><li>free – first 9 tracks
  71. 71. $5 download – all 36 tracks
  72. 72. $10 2xCD with 16-page PDF booklet
  73. 73. $75 Ghosts I-IV in a hardcover fabric slipcase containing: 2 audio CDs, 1 data DVD with all 36 tracks in multi-track format, and a Blu-ray disc with Ghosts I-IV in high-definition 96/24 stereo and accompanying slideshow
  74. 74. but that's not all... </li></ul></ul>
  75. 75. $300 deluxe edition <ul><li>4-LP set of Ghosts I-IV on 180-gram vinyl in fabric slipcase
  76. 76. separate, large, enhanced fabric slipcase containing 3 embossed, fabric-bound, hardcover books </li><ul><li>Book 1: 2xCDs, DVD, Blu-ray slideshow disc, as for $75 option
  77. 77. Book 2: 48 pages of photographs
  78. 78. Book 3: two exclusive art prints </li></ul></ul>
  79. 79. sold out <ul><li>despite the high price-tag, the Deluxe Edition sold out in two days
  80. 80. limited to 2,500 copies
  81. 81. gross income $750,000 </li></ul>
  82. 82. getting personal <ul><li>Jill Sobule used a donation model </li><ul><li>$10 – download; $25 - advance copy of CD; $100 – these plus T-shirt; $200 – free admission to her shows for a year
  83. 83. $500 – mentions customer's name in instrumental track; $1000 – song written personally for customer
  84. 84. $5000 – comes to your house and sings for you and friends; $10,000 - *you* get to sing on her CD </li></ul></ul>
  85. 85. open opportunity <ul><li>allowing digital content to be shared freely doesn't mean it's impossible to make money
  86. 86. make money in different ways
  87. 87. but sharing digital content also brings other big benefits that can save and make money </li></ul>
  88. 88. open innovation <ul><li>open development brings past and future users in early
  89. 89. offer critiques of your ideas, plus their own
  90. 90. allows collaboration with companies on pre-competitive work </li></ul>
  91. 91. open marketing & sales <ul><li>when you allow digital content to be freely shared, you turn the Internet into part of your marketing department
  92. 92. best kind of marketing: word-of-mouth recommendations to friends and family
  93. 93. allows ”try-before-you-buy” </li></ul>
  94. 94. open products <ul><li>builds closer links with customers
  95. 95. openness allows greater customisation </li><ul><li>greater need for post-sales input and consultancy </li></ul><li>digital abundance makes new kinds of revenue streams based on scarcity possible </li><ul><li>human-based services
  96. 96. analogue goods </li></ul></ul>
  97. 97. open culture <ul><li>going open has many other benefits
  98. 98. encourages other companies to do the same
  99. 99. encourages other open projects </li><ul><li>open content, open access, open data, open science </li></ul><li>increases the knowledge commons
  100. 100. encourages open government
  101. 101. generates new business opportunities </li></ul>
  102. 102. open society <ul><li>society based on openness and sharing </li><ul><li>more collaborative
  103. 103. more creative
  104. 104. more innovative
  105. 105. more efficient
  106. 106. more sustainable
  107. 107. more fair
  108. 108. more happy
  109. 109. more safe </li></ul></ul>
  110. 110. openness is inevitable <ul><li>the ”once in a civilisation” transition is unstoppable – you can't ”de-digitalise” the world
  111. 111. the choice is between exploiting the resulting digital abundance by opening up...
  112. 112. ...or watching your competitors do it first – and maybe closing down </li></ul>
  113. 113. a binary choice <ul><li>[email_address]
  114. 114. twitter.com/glynmoody
  115. 115. identi.ca/glynmoody
  116. 116. opendotdotdot.blogspot.com </li></ul>