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Open-Source vs Licensing: How to recoup development costs

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Prototyping can be a painful (and expensive) experience! The first Farm Hack event I attended at MIT had a focus (at least as I remember it) of trying to get farmers and engineers together to develop new technology. The conversation since then has shifted primarily to farmers documenting their projects. It can be helpful to suggest when writing a grant that you will document your project on Farm Hack, in the sense that the institution with the funding is looking for the greatest possible return on their investment. It works out for the farmer because now they have some money to develop their ideas.

Any time another farmer has ever asked me anything at all about what I do, whether it's who my restaurant accounts are, what prices I get, or what variety of carrots I like, or whatever, I've never held back from answering as well as I can. We need to take care of each other to survive! On the other hand, I'm always really wary of asking farmers (or anyone for that matter) to work, and give their time, without it being valued. I think Barry from Slow Tools has a vision where farmers and engineers collaborate, capture funding, and then "license" their designs to small/distributed manufacturing centers for production. There's a lot of potential for this model to recreate the same market generated problems we're already stuck trying to overcome. But would this approach create both more benefit for everyone and more fairness? And is it a more realistic method for generating new technology that will have a measurable impact on our farms?

andysmiles's picture

I agree that there needs to be some business model or at least some remuneration for all of the time that goes into such a well-designed product that you are talking about- licensing is one way, I'm sure there are other ways as well. One other potential benefit of publishing plans is to have multiple people working in parallel on the same problem and helping solve parts of the puzzle- this is how open source software works and why it is so successful. of course, that is assuming there are enough people working on it and have the time and then they publish their findings too.

Louis's picture

I wonder if there is a kind of balance that can be had. I think a traditional licensing model could end up being more trouble than its worth. Companies like Apple spend more on legal fees than R&D!

One solution is that the developer try to maintain an online storefront, but to outsource actual production and fulfillment as much as possible. Perhaps this means a one month lead-time for these types of mechanical projects.

Granted that it takes more involvement than licensing, but it gives the developer a stronger "brand-name" helping them compete against possible knock-offs. It benefits the developer too because they have direct customer contact and feedback this way. Its certainly money well spent compared to legal fees.

Work could then still be released open-source, but periodically allowing the developer to arrange parternships for distribution. Openness for physical tools is less of a catalyst for parallel development since they have more barriers than that of software. Generating an identical build to someone else's is exceedingly difficult. On the other hand, providing kits so that co-developers can exist may be a revenue stream in itself.

Dorn's picture

So many of the next steps we have talked about are around improving the value for the participant in farm hack, which in my mind is access to relevant information and community. One of the values of participating in opensource is as Rob mentions, is access to project capital that would otherwise not be available. This is clearly an area that has a lot of potential to be enhanced on the site through facilitating multiple distributed funding methods - but this is just part of the value. Another value is access to documented ideas and experiences from folks with skilled minds ready to problem solve with you - this is a little more complex because it requires a certain critical mass of people to jump in, and is more fragile because the exchange and value is more based on social relationships and a more nebulas future return which will likely not be directly linked to your own contribution. In academic terms it is "complex reciprocity" - it is like a barn raising. By showing up and contributing, you put yourself on the list when you need a barn raised by the group - it is a sort of informal community contract. As in a barn raising those that make large contributions are recognized by the group but that return can come in many different forms - in learned skills, in shared experience, in good food, and in future connections and idea exchanges.

I, as a farmer, am not interested in developing a tool business, but in improving my farm and I would like to have access to the best tools for a kind of agriculture that has not yet been developed. I see the speculative R&D and manufacturing being a poor fit to rapidly develop adaptive technology that will meet my needs and the needs of the next generation of farms and farmers needs. In my view, anytime there is a license involved, it puts up a road block to expanding on that bit of insight, which will slow down innovation (think apple/samsung). The music industry and sampling controversy is the most common example, but there are so many examples (patent trolls in computer hardware and software making a fortune by producing no value but instead creating a toll in road of common progress).

Fashion is the most public example of a billion dollar industry based on no design protection. Anyone can copy anyone else and they do - that is why the brand identity is so important. It identifies quality craftsmanship, or other qualities that are built on trust (maybe not the best industry to emulate, but you get my point). However, what you see in fashion is constant churn of designs and rapid adaptation to changing markets. I think this characteristic fits adaptive direct market agriculture much better than the model on the other end of the spectrum of living on royalties based on unchanging work done decades before.

As Lois and I have talked about a lot, there are clearly revenue models in opensource hardware (and software), but they are different revenue models based on service and skills transfer rather than knowledge protection. By sharing development risk, we can also reduce the amount that we each need to recover back from a project in order to move on to the next project, and instead of looking to recover a large development cost, we can focus on marketing our products and skills. Even Wikipedia now has professionals making a living - not by licensed content or ads, but by writing and maintaining really good entries for third parties.

Our project is a little different than wikipedia, but I believe not as different as we would think. I think we tend to dwell in our discussions on a very narrow set of projects that are expensive to prototype and require specialized fabrication skills. That is why I was so interested in the french FarmFab concept http://www.adabio-autoconstruction.org. They have an entirely separate program around fabrication skills that is much more like vocational training- with traveling trucks with equipment that can show up at a farm to do a build of a previously set design. When I was doing the weekend biodiesel workshops with Girl Mark, she would charge for the weekend and people would bring their own materials etc. SO the knowledge was free and open source, but Girl Mark's time was compensated for - (and those projects required low skill levels and few special tools). These two models might be something we could build on. I think we would do well to separate the skill development track from the documentation and design work. I think this would enable us to focus on the social and online process of designing and sharing things that are easy to share electronically and socially first (photos, software code, parts sourcing, 3d components, skills videos, shared experiences, approaches, food etc.)

There is certainly demand for fabrication skills development but by developing a separate track for projects that require it, we might be able to move faster on other projects. Not everything on farmhack will require machining and metalwork - but it is easy to dwell on it as a barrier. The fabrication skills development track and lowering the cost of access to tools- like mobile setups, coops, fablabs, partnerships with schools etc. could then continue as an objective but not a road block. I don't think this would be an abandonment of our current work, but rather a refinement that would also help clarify and define what "farm hack" events are all about (builds, skills, or designs, or documentation, and how they all relate to one another).

Dorn's picture

Just came across this - seems like we should look into their model for funding physical proejcts


jbd's picture

There are several revenue streams created by Open Source projects that don't require licensing, although the revenue stream itself is frequently protected with a license:

  • Support - offering support/modifications/customization for a fee.
  • Training - offering training and "How To" information for a fee.
  • Customization/modification - although in the software world, modification has to fit within the license, it can still be done at a fee.

Also note that a significant revenue stream is consulting - especially for productization. Note that the rights holder of a copyright and/or patent can offer their IP under multiple licenses - a free "Open Source" license, as well as a "commercial supported" license.

R.J. Steinert's picture

The #1 economic reason why Free and Open Source software has been successful is the additional value you generate from the improvements that other people contribute that you would not otherwise receive if you had not gone Open Source.

It turns out that this makes economic sense for ALOT of things. You created something you needed that didn't exist beforehand, you spend a little extra time documenting it and voila, other people found it useful and are suggesting improvements you never thought of.

Level up future contributors with new skills = profit

My big passion is reducing the cost of making that documentation thus making it more economically viable for more people to produce documentation; I recoup my investment when I learn from everyone. Similarly, someone with soldering experience teaching another person to solder benefits because they've just "level upped" a new potential contributor. I've very keen on thinking about how we can use the Farm Hack network to level up new contributors...

Revenue models for accelerated development

That said, other revenue streams can accelerate Open Source/Hardware development so it's worth talking about. jdb's list is a good list of revenue streams for Open Source projects. For the folks who are interested in developing a tool business, I'd like to add one more revenue stream that is specific to Open Hardware.

  • Support - offering support/modifications/customization for a fee.
  • Training - offering training and "How To" information for a fee.
  • Customization/modification - although in the software world, modification has to fit within the license, it can still be done at a fee.
  • Builds/kits - offering a fully built version or at least all of the parts in an often easier to assemble way.

P.S. I'm loving the talk. Keep it up.