As we move towards the end of the OpenLearn pilot phase, there’s a lot of evaluation and reflection to do, especially on what business models might take us forward. I spent some time this month at the Economies of the Commons conference in Amsterdam. (Other people have blogged the event here so no need to post my 14 pages of notes). Since I’ve returned the Ithaka report on Sustainability and revenue models for online academic resources has been published in draft form for comment.

The conference, as the name suggests, was about how you make money from open content so you can sustain its production. Refreshingly, it wasn’t just about fab shiny young startups making tons of cash for a good idea that’s cheap-ish to produce. Speakers included those managing the digitisation projects for National Archives and the scale of these projects was overwhelming. For example, Images for the Future is the largest digitisation project in Europe. The facts: 173 million Euros to restore, conserve, digitise AND contextualise the assets (eg for school curriculum as they recognise just putting assets out there isn’t useful enough). Between now and 2014 they will digitise 137,200 hours of video, 22,510 hours of film, 123,900 hours of audio and 2.9 million pictures. They calculate that reuse of the assets will generate between 20 and 60 million Euros for the Dutch economy.

Interesting questions were raised such as: Are we creating a commons for a rich community? Who is paying for the gift economy? Is free culture just a fad? If scarcity of information is now over, might it return? How do we tip the idea of openness so it becomes commonplace? Are the community the new archivists? When will copyright die?

Free is not an option for digital businesses, it’s a reality. The value of what is easily copyable is low and getting lower. So we need to monetise the uncopyable (eg live performances making more money for an artist than their MP3s) and understand how the drivers to pay for open content relate to education – Embodyment (the live experience of seeing a band in concert), Immediacy, Personalisation, Interpretation, Patronage, Findability, Authenticity, Accessibility. We’ve understood this from the beginning - OpenLearn makes our educational resources freely available but doesn’t replicate the experience of being a student at the University. We’ve also recognised that times are changing - copyright may not be dead but it won’t necessarily make us money in the future. Plus while the copyfight (copyright vs copyleft) is in stalemate, innovators (albeit often illegally) are moving the world forward and shifting cultures in profound ways that we can’t ignore or change. So OpenLearn is The Open University experimenting with the Creative Commons license. And we’re not the only sector recognising this need to experiment with new models (see the news on Harpers Collins).

At this point in the lifecycle of OpenLearn we need to do more than experiment and start work on the new business models. OpenLearn can’t be seen to be a nice standalone experiment that makes everyone at the OU feel good about working here - although it is and does - but as something that presents an ongoing challenge that needs to be worked out for the future sustainability of our entire business. Economic equilibrium takes time as we move from one cultural paradigm to another - it doesn’t happen overnight, or even in the lifetime of a 2 year pilot. The example of Le Monde, France’s national newspaper taking 11 years to get to economic equilibrium with its website is a powerful one.

One business model won’t be enough. The French National Archive project made half of what it spent last year by employing several models (which doesn’t sound good but 600K is better than nothing). So what models are peeking over the parapets?

Pre-finance - get someone to fund you. We were lucky to be funded by The William and Flora Hewlett Foundation to start OpenLearn and certainly other sources of funding have been realised for research projects and are being investigated.

Sponsorship – there are organisations we have worked with over the past year that might have paid us a sum for the opportunity to say “we offer free learning in association with the OU”. We sponsor events in the real world such as Edinburgh Festival, so there are relationships that could work the other way, extending and capturing the knowledge of real world events in open content form and providing sponsorship opportunities.

Subscription – essentially charging for extra services. This needs some thought around how people could be enticed into a stronger ongoing relationship with OpenLearn, past dropping in for a cup of tea and a slice of knowledge from a search engine and only returning by chance (actually not chance, but the fact we are taking over search engines real estate - add evil laugh and cat stroking here).

Currently about 3% of our visitors have registered for free extra services, so what services would be so compelling that these people and more would pay for them? With many sites it is about the user’s social status in that website, so Last.fm make something like $2.50 from each user who wants to indicate their fan status on their profile (this means their user icon changes from one colour to another - costing Last.fm next to nothing to satisfy a user need).

This is about making what we already do more attractive, which might be extending our offer (pay to join an online video conference with an OU tutor) or communicating it differently (pay to see who else is studying online) and perhaps even closing off some of the current functionality (since closing down access to content would be detrimental for both users and the promotional/ business benefits of having freely accessible and distributable content).

This depends on us understanding our market and finding out what organisations and individuals will pay for – hosting and branding their own open content on OpenLearn, DVDs of content to upload to their own Learning Management Systems, Print on demand etc - and how much they will pay for it. As Jan Velterop, CEo of Knewco succinctly said, “He who has most interest pays”. So who has the most interest in open educational resources - the institution, the learner, the teacher, the private business or the government?

Freemium – pretty much the same concept as subscription where people are paying for added services but the paid for offer is usually made more cleverly at the point of need and familiarity with the product (ok I made that up, I just needed another sub-heading as this blog is getting text heavy). When 1% are paying for 99% of users to use the system, the costs of production and maintenance need to be lower than ours are currently and the user numbers need to be higher. Freemium works for Web 2.0 sites because of low costs and high user numbers. This could be a model we could pursue once we have mainstreamed the production of open content (so instead of digitising legacy material, we are working with new materials that have been developed with open content in mind). Perhaps we could bring down costs in areas other than production. For example, rights as we begin to gain more experience in rights clearance for online use. To bring rights costs in line with the economic model for open content, perhaps we need to seek new agreements. Could we pay the rights holder per download of their asset, or offer the rights holder an affliate deal where open access to their content proves to bring them income? Could we negotiate deals that are more like the public lending rights agreements that libraries have where authors get a capped payment per year related to the amount of times their content was lent from a public library? Could we give tiered access, so that users pay to get access to the versions that include third party materials and a portion of this money goes to the rights holders? (I should point out, if its not already clear, that I’m not the OpenLearn rights expert).

Advertising – this could be cross selling our own services through OpenLearn more effectively (something we’ve been quite timid about) or it could be selling third-party services. We need more eyeballs to make any money. Advertising brings its own costs as it needs to be managed. However, it is one possible income stream. Almost immediate benefit could be gained from affiliate partnerships with retail partners (selling tickets to museum exhibitions, books on Amazon that related to the content - having a targeted audience is as good as having a large audience). And since we can’t get a marketing budget for OpenLearn unless we can prove it generates student registrations, perhaps we can make income from our own Marketing department for every clickthrough from OpenLearn that results in a registration. And perhaps we can think more deeply about whether rewarding informal learners for their study can grow our student numbers rather than canabalise them - if you track use of OpenLearn and give people time/money off the relevant paid-for course, will that increase use of oepn educational resources, improve conversion rates from enquiries to student registrations and ensure the student is better prepared for study?

Of course once you have advertising you can charge people a sum to have it turned off in their ‘advanced profile’ (isn’t this why people pay for their TV license?). We all know how people who love education, hate advertising, so voila!

Private partnerships – eg Google paying for digitisation of assets. Normally this would include some sort of exclusivity agreement but hybrid models that tie the market economy with the commons are worth investigating because of the huge sums of money that are available. In these partnerships negotiating the best deal is crucial to avoid becoming an imaginary owner of our own content (the third party has the potential to make more revenue than we do from our content so ensuring a fair deal is crucial). See Peter Kaufman’s report Good Terms - Improving Commercial-Noncommercial patnerships for mass digitization.

Community donations – appealing to the good people of the internet. This is where we can learn lessons from the pirates and the open-source community, like the producers of Steal This Film and the animation guys at Blender who got 100KE from their users to make their closed software open. The Steal This Film guys consider subscription, advertising and pay-to-download, doomed business models. With 4 million viewers of their pirate film in 1.2 years, 1 person in every 1000 donated sums of between $1 and $500 in the first 1-2 months. Most donations were in $15-$40 range. People connected with their ‘League of Noble Peers’ identity which set them out as pioneers in the field so the financial viability of this model might depend on whether you have cult status or can appeal to someone’s passionate defence of freedom and democracy.

“Voluntary supportive donations for the post-IP generation” are being exploited by sites that make it easy to donate. Each asset is given a fingerprint, and as it travels the inter-web with this identifier people can donate wherever they consume the asset. The aim is that 10-15% of all content consumed via P2P networks will result in voluntary donations. The P2P networks get a cut of the donations. A donation can be made from any point in the distribution chain – from P2P client to the embedded media player.

So when we think about voluntary donations it may not just be our website visitors donating, but also the consumers of our content in other online and potentially offline spaces.

At the moment we give no huge incentive to donate – we don’t strongly appeal to the learners to donate even though we know from feedback they love the resources. What if we made donating simpler? We could encourage small donations and make it possible to donate at every point in the distribution and consumption chain. What if you asked every viewer of an Open University programme on the BBC to donate a small sum to create free study materials related to the programme? What if open content became an ethical gift - you could buy someone a study unit and dedicate its creation to them (massive OU friendly audience of teachers, lifelong learners and alumni that this would appeal to).

Open source consultancy/training – helping other educational institutions and organisations use open content/ Moodle. We know there is demand for this and some of our research projects (and the good people of the technical team) have been trying to meet the demand.

Gift economy - doesn’t this rely on gift exchange? “Oh, you shouldn’t have” is always a lie. Of course you should have! Give us something back - we didn’t go to all the effort and expense of using the CC license if we didn’t want our content repurposed and shared back with us. This is a model that hasn’t been realised to any great extent in the time of the pilot - perhaps because we are ahead of the curve in educational institutions. Early adopters have started to share and co-produce materials and their feedback suggests the process is of value, and that there will be opportunity to decrease the costs of course production through open content in the future. Making open content more visible to educators through things like the OER Recommender is essential to open content reaching a tipping point.

Deep breath. If you got this far, you are special