Traduceri legalizate

Marketing, Organization, and Financing

2011-02-01T23:03:00.000+02:00

Unlike other companies that have a focused manner of development, the open source is less clear-cut. There are mature open source products that perform product marketing, but most of them have no global planning authority. This is justified by the fact that open source is not a business, but an entire business, which moulds to the market itself. The product marketing for the global open source community operates in the way a capitalist nation operates its economy, rather than the way a company plans its products.

Networks of programmers can be formed via the Internet. They can create large and complex software products, and the team increases progressively according to the phase of the development. Software is extremely modular by nature, and thus many people can work on different segments of the software, almost autonomously, if they agree how to share tasks. A good example would be the Debian GNU/Linux Distribution. This system includes more than 16,000 software packages maintained by over 1,000 volunteer developers worldwide.

Open source is funded directly or indirectly as a cost-centre item by the companies that need it. This software is developed in order to use it for other activities, which are the ones that bring profit to the business, so the cost of development is less important than the future use of the software. Such contributors are willing to invest in this kind of project because it allows them to spend less on their cost centers by distributing the cost and risk among many collaborators.

Open Source Components

2011-01-30T10:42:00.000+02:00

There are several contributors on the market of open source: volunteers, Linux distribution companies, companies with a single open source program as their main product, hardware vendors, end-user businesses and their contractors, service businesses, government, academic and scientific researchers. The synthetic comparison of the actors is to be found in the appendix section. [1]

i. Volunteers – this activity starts from a hobby and it does not imply a financial motivation. It gradually becomes volunteering.

ii. Linux distribution companies – they work mainly as integrators of the work of others, they do a lot of maintenance work in order to eliminate bugs for their paying customers and they do original open source software development to enable their product or a new market. Today we are experimenting the second generation of open source business plans: some Linux distributions are trying to imitate proprietary software. Behind their costly box of software or per-seat license is a product that the customer could acquire without charge through other channels. The best name for this business model is proprietary open source, as services are offered but the business is operated in the proprietary box-software model. It is important to emphasize that not all Linux distributions engage in proprietary open source, and that proprietary open source is not the dominant business model for open source software development (ex: Red Hat, Novell).

iii. Companies with a single open source program as their main product – these can be of three types: mixed open source and proprietary licensing model (My SQL AB, Sleepycat Software), a core open source program with proprietary software accessories (also called widget frosting, ex: Sendmail Inc.), pure open source plus services model.

iv. Hardware vendors – they produce open source because there is no conflict between open source and differentiation for them as there is in a software company. This activity enables sales, does not reduce their hardware-based business differentiators and thus it does not threat the profit centre (ex: IBM, HP).

v. End-user business and their contractors – their contributions come from the internal software support and development staff, or contractors supporting the company (ex: eBay).

vi. Service businesses – they participate in the development and maintenance of open source programs, but not intensively in any one.

vii. Government – it provides services that enable economic and social activities.

viii. Academics and scientific researchers – they are usually graduated. In science the maxim is publish or perish and it holds true for open source as well. To be considered valid, scientific research has to be capable of being duplicated. Some research work is performed by unsalaried students.

[1] See Appendix no. 7 for a comparison

The Open Source Paradigm II

2011-01-27T23:08:00.002+02:00

The customers for a particular open source product generally identify themselves: they search for the product in a directory of open source software, and then they download and test the software. If tests are successful, they deploy it. Thus they gain a continuing interest in the product. At that point if they desire additional features to the product, they have an incentive to become co-developers of the software they are using.

The companies that join open source collaborations are seeking to use the software in a non-differentiating, cost-center role. Their profit-centers are things other than software, and software is for them an enabling technology. In order to continue to operate their profit-centers, they must make some investment in their cost centers. In the case of differentiating software, they have little choice but to make use of the in-house or contract development paradigm, because they need to prevent their differentiators from falling into the hands of their competitors. For their non-differentiators, they have the choice of the retail or open source paradigms.

The Open Source Paradigm I

2011-01-25T20:05:00.000+02:00

In this model, multiple entities come together to develop a software product. Generally the initial development is done by a single entity as in the in-house and contract development paradigm, and the software is released to the public as soon as it is useful to others, generally before it would be considered a finished product and thus much earlier than a retail product would be released. Once the software is useful, other entities make use of it. Only when the software becomes useful to others does the open source paradigm work fully, because only then will other parties have an incentive to use the software. Once they are using the software, these other parties will have an incentive to extend the software to implement additional features that are of interest to them. This extension is performed by the customer's own employees or contractors under the customer's control.

The incremental cost of adding a feature is much smaller than the cost of the entire development. Parties that create modifications have an incentive to write them in such a way that they will be accepted by the other developers on the project and will be merged into the main body of source code that is shared by all developers. Thus, open source tends to foster a community of developers who make contributions to a useful product. The cost and risk of developing the product is distributed among these developers, and any combination of them can carry on the project if others leave. Distribution of cost and risk begins as soon as the project is mature enough to build a community outside of its initial developer.

Open source is developed directly by its end-users. For example, Apache web server features are added by the companies that need those features to operate their own web sites, or sometimes by contractors working for those companies.

Efforts At Collaboration Without Open Source Licensing

2011-01-24T22:32:00.000+02:00

Consortia used to be the standard means of collaborating between companies upon software development. Closed consortium software (gated communities) has a record of titanic failures (Taligent and Monterey intended to create a replacement for Unix, but Linux replaced them) and it is the wrong structure for the development of non-differentiating software. A consortium costs more because there are fewer members to share cost and risk than with an open source project and more structure and overhead as well.

Digital creativity

2011-01-23T09:00:00.001+02:00

Compared to atoms which make up the physical world, digital bits are weightless and intangible. Digital coding is a major technological influence on how ideas are expressed, shared and communicated. Robert Metcalfe, who invented Ethernet networking and founded 3Com Inc., the maker of the Palm Pilot, proposed a law of networks which says that the community value of a network grows as the square of the number of nodes increases. The smallest possible network consists of two people. In this case, Metcalfe’s value is 4. If a third person joins, the number of connections rises to three and Metcalfe’s value is 9. If a fourth, it rises to six and the value is 16.

The Internet is not a hard-wired network, like the telephone network, but a soft network, consisting of the manners, rules and procedures by which hard network is used. It is best described as a set of administrative arrangements for connecting users to information via other networks. At first, the owners of the hard networks hardly noticed the Internet. For many years, it had no impact on their infrastructures, services or prices.

Digital economy

2011-01-22T20:36:00.000+02:00

Money management in the creative and conventional economies does not substantially differ. Thinking and creating are not free. Research represents a long and strenuous process of investment (time and money). The cost of operating a business with intellectual assets only is lower than the cost of starting a conventional business which uses both physical and intellectual assets. The former also has the advantage that it can delay paying for the intellectual assets, or pay them with equity. But the insubstantial nature of these assets deters would-be investors, and even those who have a stake in the business have problems in valuing it and their share. That is why patents, copyrights and trademarks have seldom been used as collateral for loans and, when they are, their value is underplayed.

One of the fields where more intellectual assets are used is the digital economy. With regard to the research in software industries, I shall further develop a separate chapter in which I shall describe the main types of innovation and the impact of open source.

Creative workers

2011-01-22T13:20:00.001+02:00

However, creative workers can start up their own business at any moment. What they need to possess are: vision, focus (on one thing only), financial skills, pride and urgency (doing things at the right moment). The work of a creative person may be intermittent and volatile, but someone who creates their own intellectual property and manages their own work can be more secure than a salaried employee of a large corporation.

In the creative economy, people start their own companies, process which entails a decrease in traditional full employment. The post-industrial society needs the post-employment job. Employment will only include just-in-time persons (people who are hired only when and where they are needed) with specific expertise and the ability to insert into the team. Gerard Fairtlough, the former chief executive of Celltech, believes the ideal size of a team is seventy, which he calls a creative compartment. This team should be dynamic, so as to encourage leaders.(1)

(1) HOWKINS, John, “The Creative Economy. How people make money from ides”, London Allen Lane, The Penguin Press, London, 2001, p. 150

Thinkers and creative people

2011-01-21T20:19:00.000+02:00

In a creative organization, creative people must take control. Thinkers are highly needed, as their job involves not only pondering, but also the use, the management, of every kind of thought process. The team should be guided by the creative entrepreneur. Entrepreneurs in the creative economy believe that creative wealth, if managed right, will engender more wealth. Sometimes, workers have better ideas about how to run their company than do the managers, but they can never put their ideas to practice. They have no access to financial capital and their intellectual capital is not sufficient.

There are innumerable obstacles to innovation in the actual corporate environment. Thus, managing innovation is an absolute must. Competition, mistrust, and scarcity of time, money and other resources make it very difficult to innovate. These same reasons make innovation imperative. Almost any major innovation was developed as a response to a problem of some kind. Besides, there will never be a shortage of opportunities to innovate. Historically speaking, a series of innovations have changed the economy of many countries and the world. Most often, these innovations were badly managed (or not managed at all) and had unfavourable or tragic consequences for the people involved with them.

In order to capitalize on the innovative capacities within a company, there are some basic elements that foster it in the organization. The way these elements are provided can be formal or informal, and adapted to the size and nature of the company, but they must be present in some form to truly encourage and leverage innovation. They are direction and alignment between the goals of the individuals and the company, a safe environment to take risks and share ideas, and a compensation system that recognizes and rewards innovation and collaboration.

The economics of creativity

2011-01-20T08:15:00.001+02:00

The economics of creativity differs from Adam Smith’s conventional economics. The latter revolves around the firm, which is considered more efficient than the individual in identifying and using resources. In the economics of creativity, creative people are not dependent on organizations to the same extent. They do not need large resources of capital and equipment. They often have low transaction costs. The law of diminishing returns, first formulated by David Ricardo, hardly applies. It states that each additional input factor of production becomes harder or more expensive to acquire and that therefore at some point the cost of producing one more unit exceeds the revenue obtained from selling it. The point at which marginal cost meets marginal revenue is called the equilibrium point. This holds true if resources are limited and under price competition. But in an economy based on intangible and often immeasurable resources the costs of production are less important.

In the creative economy, individuals and firms use resources which are not rare, over which they assert intellectual property rights, which may be short-run, and which do not compete primarily on price. The world of diminishing returns and scarcity of physical objects is being replaced by a world of increasing returns based on the infinity of possible ideas and people’s genius for using those ideas to generate new products and transactions. Control of product and price (performed by the company) become less relevant if production resources are freely available, if products are intangible, if price competition is negligible, and if the market is driven by demand not by supply. In the knowledge economy, firms either charge prices well in excess of marginal costs, or they give their products away for free (the case of free software and its mechanism will be approached in the next part of the paper).

Creative and Innovative Management - part 1

2011-01-19T22:03:00.000+02:00

Business is one of the most creative activities ever. It creates ideas. Both creativity and business can go together, they are not mutually destructive as the majority believes. The economics of creativity deals with two system values. One concerns the physical products, which are tangible. The other is based on intellectual property, which is intangible. Managing creativity involves knowing when to exploit ideas and then when to assert intellectual property rights.

Despite the fact that business is meant to make a profit, free-riding, which means benefiting from another person’s ideas without paying, occurs. Free riding can be seen as a cost for the creative economy. Some of the most self-explanatory costs of creative economy are broadly described in the second last part of this paper. People use free-riding to enhance their own knowledge and skills. From a supplier’s point of view, free-riding shortens technological and product life cycles. Being first to market is a major advantage but an innovator has only a short time to establish a new product before others begin to compete. But, in order for some people to benefit, others must go without. Debate has gone on about this exchange. Some economists argue that any constraint on idea hampers creativity slows down economic development; others consider that monopoly is necessary to reward innovation and to better allocate resources.

The Recognition, Protection and Classification of Creative Products - Part 3

2011-01-18T20:12:00.001+02:00

Human beings are called homo creator, but creativity does not always lead to a creative product. The creative equation deals only in creative products, not creativity, and differentiates between a creative product and a transaction. It states that the creative economy (CE) is equivalent to the value of creative products (CP) multiplied by the number of transactions (T); that is, CE=CPxT. Creativity itself cannot be quantified. The number of creative products can be quantified, but the multiplicity of products and the confidentiality of many deals may hamper the process of making an accurate account.(1)

Apart from the creative products and the transactions incurred which come to a fore when talking about creative economy, management plays an important role in the deployment of the creative activity. Thus, a creative and innovative management system best suits a creative and innovative activity.

(1) HOWKINS, John, “The Creative Economy. How people make money from ides”, London Allen Lane, The Penguin Press, London, 2001, p. xi-xiv

Copyright, patent, trademark and design

2011-01-18T07:18:00.000+02:00

Copyright law covers an individual’s creative expression. It accrues automatically to any qualifying work and does not need to be registered. It normally lasts for the author’s lifetime plus seventy years. Patent law originated in the need to protect inventions of new industrial products and processes. It gives the inventor a monopoly in the making of the new product, typically for twenty years. Whereas copyright accrues automatically, a patent has to pass stringent tests before being approved. It must be novel, non-obvious and useful. None of these tests applies to copyright. Once registered, a patent gives stronger protection than does copyright. A trademark does not require any artistic or creative expression or any expert skill. It is a mark or symbol that represents an organization or trade. Trademarks are registered, they have to be actively traded and to pass tests of type and uniqueness. A design is a shape or symbol that, like a trademark, has the character of being distinctive and unusual. Legally, it is a hybrid. It often qualifies for copyright; it may also qualify for a special design right (as in Britain); and it is usually registered like a trademark.

These systems can overlap. An artist’s working sketch for a trade-mark qualifies as an artistic work and merits copyright protection quite separately from the trademark itself being registered as a trademark or a design. Computer programs which automatically qualify for copyright may in some countries also be awarded a patent.

The copyright industries consist of all industries that create copyright or related works as their primary product – advertising, computer software, design, photography, film, music (publishing, recording and performing), performing arts, publishing, radio and TV, and video games. The International Intellectual Property Alliance (IIPA) distinguishes between the “core” copyright industries and the total copyrights industries, which also include the manufacturing of products which depend upon copyright goods (computers, TV receivers).

The patent industries consist of all industries that produce or deal with patents. The dominant ones are the pharmaceuticals, electronics, information technology, industrial design, materials, chemicals, engineering, space and vehicles. The dominant activity is scientific research and development which is carried out by commercial companies, technical laboratories and universities. The US, Japan, Germany, France and UK are only some of the most prolific countries in this field. Patents registered by the US and UK Patent Office by country of applicant in 1999 can be found in the appendix section

The trademark and design industries are more widespread, and their size and diversity make them less distinctive. It is possible to identify the creativity involved in the creation of a trademark, but it is less easy to calculate its economic value or to identify the economic gains attributable to the trademark in the total product mix.

Together, these four industries constitute the creative industries and the creative economy. The creative economy consists of the transactions in these creative products. Each transaction may have two complementary values: the value of the intangible, intellectual property and the value of the physical career or platform. This creative economy covers a wide range of branches, and money made out of them reach significant figures. To have an idea, the market size of the creative economy in 1999 is depicted in the appendix section.

The Recognition, Protection and Classification of Creative Products - Part 2

2011-01-17T19:31:00.000+02:00

The case for intellectual property in economic theory notes certain substantial differences from the case for tangible property. Consumption of tangible property is rivalrous. For example, once one person eats an apple, no one else can eat it; if one person uses a plot of land on which to build a home, that plot is unavailable for use by others. Without the right to exclude others from tangible resources, a tragedy of the commons can result. The subjects of intellectual property do not share this feature of rivalness. For example, an indefinite number of copies can be made of a book without interfering with the use of the book by owners of other copies. When combined with a lack of exclusive intellectual property rights, this nonrivalrousness and nonexcludability combine to make them public goods and susceptible to the free rider problem. A rationale for intellectual property therefore rests on incentive effects to overcome the free rider problem. This case asserts that without a subsidy that is afforded by exclusive rights, there is no direct financial incentive to create new inventions or works of authorship.

As Wikipedia and free software demonstrate, works of authorship can be written without direct financial incentives. Moreover, many important works were created before copyright was invented. One might argue that much more invention occurred after patents came into existence; however, one could also argue that patents were brought into law as the power and influence of industrial interests grew. The status of intellectual property is disputed by various commentators in India, China and other developing nations. The United States and the United Kingdom are the only two nations who consistently receive net balance of payment benefits from intellectual property, and are amongst the chief supporters of intellectual property systems.

The Recognition, Protection and Classification of Creative Products - Part 1

2011-01-16T09:52:00.000+02:00

Once new products and services are created, they have to be protected. Many creative products qualify as intellectual property. Besides the attribute of belonging to someone, intellectual property is intangible. Copyright, patents, trademarks and designs are the most common forms of intellectual property.

By an economic analysis, the incentives granted for intellectual property rights have sometimes served the public benefit purpose and promoted innovation by ensuring that someone who devoted, say, ten years of penury while struggling to develop vulcanized rubber or a workable steamship, could recoup her or his investment of time and energy. Using monopoly power, the inventor could exact a fee from those who wanted to make copies of his or her invention. Set it too high, and others would simply try to make a competing invention, but set it low enough and one could make a good living from the fees (1)

Exclusive rights such as copyrights and patents secure their holder an exclusive right to sell, or license rights. As such, the holder is the only seller in the market for that particular item, and the holder is often described as having a monopoly for this reason. However, it may be the case that there are other items of intellectual property that are close substitutes. For example, the holder of publishing rights for a book may be competing with various other authors to get a book published. In such cases, economists may find that another market form, such as oligopoly or monopolistic competition better describes the workings of the markets for expressive works and inventions. This is one reason to prefer the term exclusive rights over monopoly rights.

(1) http://en.wikipedia.org/wiki/Intellectual_property

Perspectives on creativity - part 2

2011-01-15T21:46:00.000+02:00

Innovation, which can mean a new idea, method or invention used in order to improve the current activity or the introduction of new ideas or methods(1), is a concept closely related to creativity. Innovation has become a lot more important to corporate leaders, in the last decade in particular, because of changes in the business environment, brought on by increased technological capabilities, speed, hyper competition, and faster rates of diffusion enabled by greater connectivity. The second part of my paper refers – inter alia – to innovation opportunities. But while many companies say they are making innovation happen, for most of them innovation is based on old ideas, principles and processes. At best, their innovations are incremental-miniscule improvements in products and services. While there is nothing wrong in achieving small gains, this view of innovation shuts out the truly startling cases of leap innovations.

Leap innovations occur when someone discovers an entirely new approach to a problem, an approach that changes life in some significant way. The leap innovation emphasizes the act of moving into the unknown or unexplored rather than just breaking with predictable patterns of innovation.(2)

Creativity and innovation are present at all levels of business from the management of a company to the development, branding and shape of each product.(3) Companies change at a great speed, due to the fact that competition is increasing and they have to maintain their position on the market. The fruits of creativity are what make them more appealing to their clients and partners. Briefly, their future and profitability largely depend on how creative they are.

Despite the fact that arts and creativity are allegedly treated as one and the same concept, not only pieces of art are the result of creative work. Creativity is also present in all other fields, such as sciences (especially in research and development). Both arts and sciences use the same thinking and creating processes, but the difference consists in the reasons why they do so. Also, the way how they protect its economic value differs. So, creativity is common to both arts and sciences, the creative products are different.

(1) “Dictionary of Contemporary English – The Complete Guide to Written and Spoken English”, Longman 1999

(2) WHITE, Shira P. with WRIGHT, G. Patton, “New Ideas About New Ideas”, Pretince Hall, Financial Times, London 2002, p. 8

(3) HOWKINS, John, “The Creative Economy. How people make money from ides”, London Allen Lane, The Penguin Press, London, 2001, p. xi

Perspectives on creativity - part 1

2011-01-15T09:11:00.000+02:00

Creativity is the process of challenging accepted ideas and ways of doing things in order to find new solutions or concepts. Being creative means seeing ideas in a different context either by recognizing their inherent potential to be used in a different way, or by putting previously unconnected ideas together to create something completely new. Everybody has the ability to be creative. Thus, creativity is anybody’s ability to generate something new. Creativity occurs whether or not this process leads anywhere.

Over the centuries, creative people have provided new solutions to the problems of their day. The ability of human beings to find creative solutions to problems is essential for the well-being of the human race. On a social level, collective creativity provides the opportunity to improve quality of life. In organizations, creativity is essential to ensure a firm’s ongoing effectiveness in a changing world. On a personal level, creativity can help you break out of routines you dislike.(1) People with ideas – people who own ideas – have become more powerful than people who work machines and, in many cases, more powerful than the people who own machines.(2)

Creativity is not necessarily an economic activity, because there are cases when the product of the creativity may not be put to practice or ever used. However, it is an economic activity the moment when the generated idea or solution has an economic value or when the new product is tradable. In this case, the result of creativity is a creative product. It can be defined as an economic good or service that results from creativity and has economic value

(1) BOULDEN, George P.,“Thinking Creatively”, Essential Managers, Dorling Kindersley Ltd., London 2002 p. 5

(2) HOWKINS, John, “The Creative Economy. How people make money from ides”, London Allen Lane, The Penguin Press, London, 2001, p. ix

Foreword

2011-01-14T19:45:00.000+02:00

The reason for which I chose to tackle the topic of creative economy and the economics of ideas stems from the fact that it represents one of the most dynamic and interesting fields in the economy of our days. Creativity and economics go hand in hand in a world in which competitive advantage is achieved to the extent to which creativity is fostered and its products are promoted. Otherwise, no entity could withstand the market.

The structure of my paper is twofold: the first part is an introduction in which I tried to theoretically outline the main aspects of creative economy; the second part comes to round and explain in further detail the theoretical part. This second part first focuses on one of the fastest moving domains, software production, with a specific highlight on the impact on free software. Further on, I presented, on the one hand, the possible innovation opportunities and, on the other hand, creative economy costs. Opportunities and costs are thus seen as the key factors of describing the creative environment in an economy.

Methods such as analyses, comparisons, study cases, syntheses, and reviews have been used. Insofar as mathematical models are concerned, I have briefly presented the free software economic and mathematical model. Most of the examples are inspired from the current realities especially on the digital, data and communication markets, but fields such as real estate, education, R&D, intellectual property regulations in force and EU innovation issues have not been neglected either.

Each of these approaches in describing creative economy has been accompanied by up-to-date and relevant information about the most dynamic and innovative domains of the economy worldwide. Also, several examples are meant to better illustrate the current situation in Romania and the progress recorded in its attempt to catch up with the more developed countries in Europe.

The paper is not meant to be an exhaustive work and it only presents a point of view built on personal preferences concerning the examples chosen.

2011-01-13T12:07:00.000+02:00

TRADUCERI LEGALIZATE INCEPAND DE LA 12 LEI
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