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Tuesday, October 24, 2006

Open Services

There is a discussion going on on the Open Business site regarding Open Services and what they should look like.
On this matter, as I see it, there is what would be ideal (from the theoritical point of view) and then there is economic reality.

We have gotten used to get all services for free, thank you Google and co for my email, calendar, text editor, web pages, blog, forums, photo+audio+video storage etc… This is great and it does cost money (lots of money if you look at how much YouTube was pouring down the tube every month). And while it would be nice to have truly open services, something where the company that owns the infrastructure behaves ethically (The famous Google “do no evil”), then I think that the fake open is a good compromise if it can keep the model sustainable.

It is the same concept as for open source: you get the code, but the experts who built it or improved it get paid to support you using it. Nothing is really free, just easier to access even if you do not have a large budget but lots of time instead. For Open Service, you get the service, but you agree that the content will be on that one website so that they can benefit from the mass effect to get some revenue from somewhere. After all we are talking Infrastructure, this is a better alternative than having the government provide it (and charge us taxes for the service).
My concern is actually that we are not even sure that this model is completely sustainable for the long term. YouTube was said to be loosing money all the way to the day they got acquired. Google is getting so big that they may end up imploding: just think of the payroll they carry for example, how much innovation can you sustain with such a big organization? Could it be why Google Video did not really take off (too much friction internally) and why they had to buy YouTube instead to keep the motion going?

A solid underlying infrastructure is healthy, having large companies to take care of it is ok: we have today at least 3 big players to keep the competition going (MSFT, Yahoo, Google). And it may come a time when P2P technology will allow us to get the same infrastructure from home computers all connected together and sharing resources (a la Skype for example). But even then we will have to figure a way to pay for these computers and these connections. There is no such thing as a free lunch…

Having said this, I am also sure that the day people really want to edit the content that is available and the issue of licensing is clear enough (a whole other subject) that they can do so without problem, then it will be easy for a GooTube to add functionality to let users do this. And if they want to keep their audience they will probably do it too, because somebody else could offer the option and attract users away from them.

The key to an healthy ecosystem is the balance between the investors who want to see some return on their investment, the users who want the service and the company employees who want a salary for their work. A good guideline for Open Services should take this into account. Assuming this, Open Services do not have to be about users doing what they want with their content, but about the communication between the 3 groups (investors, employees and users) and keeping sure it is open enough that all can function together with minimum or no friction.