What is Abundance?

January 22, 2007 · Posted in abundance, economics, innovation, strategy ·  

Do you work, purchase, or consume anything? If so this new understanding of Abundance effects you.

“You keep using that word. I do not think it means what you think it means.” The character Inigo Montoya from the movie “Princess Bride”

In 2000 I began a project to change the world. My partner in this project was The Shad0w, contributor to the BitTorrent protocol and creator of BitTornado program. Napster and other peer-to-peer file sharing systems were in full swing and BitTorrent was just starting to catch on. At that point we realized that it was impossible to stop people from copying information. Music, movies, books, or software programs are all just information. Any information can be digitized. Once digitized copies are basically free. But we also realized that if people weren’t paid to make new information the world would stagnate. The entire legal system of intellectual property was based on restricting copies and now that was impossible.

While Shadow worked on BitTorrent and other technologies I worked on business models for this new world we were entering. I began researching, doing experiments and reexamining everything I knew about information. The result of that were several profound discoveries. One of them was a completely different way of looking at economics.

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BBC moves to file-sharing sites

December 20, 2006 · Posted in abundance, economics, innovation, Intellectual Property, sharing, strategy ·  

Hundreds of episodes of BBC programmes will be made available (legally) on a file-sharing network for the first time, the corporation has announced.

The move follows a deal between the commercial arm of the organisation, BBC Worldwide, and technology BitTorrent firm Azureus through their Zudeo service.
Zudeo users will be able to download copies of Red Dwarf

read the full story.

This is really great news. People all over the world have enjoyed BBC programming but its sometimes hard to get it. In the US BBC television is mostly available through public television. And more recently through file sharing. Its great to see the BBC recognize the value of global distribution made possible using BitTorrent.

I’ve been involved with BitTorrent since 1999, my business partner The Shad0w created BitTornado, a BitTorrent client, to enhance the protocol. Many of BitTornado’s enhancements have been accepted as standards to the protocol.

The original reason we got involved in BitTorrent was to create alternative business models to allow artists to get paid for their work. We realized that file sharing was the natural state and trying to stop it was impossible. So how can artists get paid if making copies is free? We tried to help performers get concert gigs and built a web site that allowed you to audition performers online and then book them for performances. We found paying for bandwidth was too expensive at the time; this led Shad0w to work on the BitTorrent open source project and became one of the major contributors to the technology.

I continued working on business models, and discovered there are four basic types of business models for information. The key factors are:

  Paid Before Creation Paid After Creation
Paid By Consumer
  • Concerts
  • Subscription
  • Selling copies (CD/DVD/MP3)
  • Merchandising
Paid By Another Person
  • Advertising
  • Charity
  • Patronage
  • Licensing
  • Royalties

Copyrights focus on paying after creation or publication. By focusing on business models the pay the artist before creation or publication sharing isn’t a problem, and in general is helpful.

Advertising benefits from file sharing. I spent a lot of time promoting integrated advertising also known as branded entertainment. The Apprentice was one of the biggest successes of branded entertainment. I was unable to get the idea to widely catch on. Oddly enough it wasn’t people rejecting the idea, it was because companies didn’t know how to purchase it. The advertising world is based around the idea of empty space. You buy empty space and place your ad in the empty space. Since branded entertainment is the content there isn’t an empty space to fill with a 30 second spot. The big companies didn’t know which department should handle it. And is the case with most innovations, if its disruptive they ignore it.

We have seen an interim solution with such companies as Revver.com. They tack an ad on the end of videos. So far this is missing the important content targeting to make the ad beneficial to the viewer. Viewers HATE commercials. The post roll approach used by Revver is better than others because the ad is at the end so there is no interruption but advertisers don’t want to pay for something that isn’t seen. There isn’t a strong win-win-win feedback loop.

Patronage and charity are very similar but patronage is more interesting. A patron gains benefit from having the work created. And now that copying and sharing is free groups of people can be patrons of an artist and everyone get a copy of the work. A method of doing this is The Street Performer Protocol. I believe this is the next big innovation, its already being used and I’ll discuss it more in future posts. I’m currently working on a service to make patronage easy and reliable. This will allow consumers to directly fund new movies, books, music, and software that can then be released with a Creative Commons license. No ads, total artistic freedom and consumers choose what is made.

After seeing Zudeo and the ability deliver HD content with an easy to use interface it is one of the outlets we will use for distribution.

Action Items

  • Visit Zudeo and try the Azureus client to download high quality video.
  • Visit Inagada.com, read about the project and sign up for the newsletter to stay informed of the progress.

Google Patent

December 15, 2006 · Posted in abundance, economics, innovation ·  

The second I read about Google Patent on ZDnet, I rushed to write this post. Google making patent search easy gives me so much to talk about I can’t possibly cover it all in a single post. This could break open the flood gates of invention and hopefully innovation.

I’ve been talking about Google doing this for several years. The reason I’ve been so interested is the OutCompete method for predicting future innovation. Think about this for a moment. If you had a list of all possible innovations and an easy way to see which ones were already patented you could go down the list and patent the new ones before anyone else did.

Talk about idea factory! This is systematic innovation!

Of course for someone to do this they need the financial resources to file those patents. And to turn it from invention into innovation they need the engineering & marketing capability. Which company has a lot of cash, a bunch of smart people, and the ability to reach a global market? Google! So will they do this? I don’t know. We haven’t shared the OutCompete method with them yet, we would be glad to do so. Since they are opening up a location in Ann Arbor we’ll be neighbors. So, who knows?

What does all of this mean to you? If your company has a specific niche and you want to secure your market or grow a new one you now have some serious tools for doing it.

Its impossible for one company to patent everything, as I said in my last post “Google is an Innovation Amateur“ there are on average 50,625 ways to achieve any goal. That is a whole lot of patents. And how many goals are there? Infinite!

So, you can block off threats to your niche, and quickly generate a series of innovations to ensure your success for many years to come.

When I first learned the OutCompete method I sat down and applied it to a couple of industries, just to see what I came up with. At the time I was working with BitTorrent and trying to figure out new business models so artists could prosper in an environment where file sharing was now impossible to stop.

In a few hours I created about a dozen solutions to the file sharing problem. One of these doubles the artists profits and give them more artistic freedom, pretty cool. I also discovered a serious threat lurking that could completely disrupt Network TV. And it had nothing to do with copyrights. Even better I found a way for Network TV to triple their return on investment.

With a map of every possible innovation it’s easy to find super valuable opportunities. And possibly more important it’s easy to see vulnerabilities while you still have a chance to do something to save yourself.

Action Items

  • Use Google Patent to search for term related to your top product
  • Estimate the cost of loosing your current top product, including needing to replace it
  • Estimate the value of 12 new inventions, including reducing risk from competitors.

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