Strategy for Information Markets/Non-IP approaches to innovation

Typically for a good to be made and introduced into the market, a firm creates an intellectual property (IP), to go along with the good. This is done so that the owners of that good have recognized rights under the law. By creating an IP, the creators can safeguard their profits from competitors who seek to simply copy the property. Traditional IP creation does require filing for patents and possibly trademarks. Filing for patents, defending your them, and ultimately maintaining an IP comes at the cost of time and money. [1] Alternatives do exist for entities that want to innovate without resorting the traditional IP model however. It is imperative to note that these alternatives still legally produce an IP and thus still have protection under copyright law; the key differences lie on the legal ownership of the IP and the types of rights granted under copyright law. [2] Below are some alternatives to the traditional IP approach towards innovation.

Open SourceEdit

Open source means a source is free to access and edit. However, it is not exactly the same as public domain. but they are not the same thing.The key difference is that open source has some restrictions on using and redistribution. Wikibooks is extremely proper example of open source. Wikibook has its policy on copyright, so it is a open source. Wikibooks offers a free media for users to discuss and share ideas easily and conveniently. People from very different places can communicate opinions, so innovation gets a bigger chance to occur. Another good example is open source software. Opens source software (OSS) is computer software that is available in source code form: the source code and certain other rights normally reserved for copyright holders are provided under an open-source license that permits users to study, change, improve and at times also to distribute the software.A report by the Standish Group states that adoption of open-source software models has resulted in savings of about $60 billion per year to consumers.[3] Today almost every organization has open source technology somewhere in their IT environment, usually in the form of Linux. For example, "most of the cloud infrastructure is based on the open source LAMP (Linux Apache MySQL PHP) stack"[4]. "It’s not only because open source technology works well in this context, but also because the open source licensing model makes it easier on cloud providers to scale their infrastructure"[4]. Linux is using the GNU GPL which is a form of copyleft. Copyleft requires all versions to be free, so Linux is still free though a programmer creates his own version of Linux.


Some researchers care more credits than profits. Academic process is to promote innovation based on that point. Especially for students in high level education institutions, they particularly worry about their credits. Good credits not only help a master to graduate but also help him or her find a satisfying job or higher level education institutions. There is a new movement for "open access academic journals". However, "the idea that research should be freely available is easy to support in theory, but it is a transition that will require a shift in how research journals are financed"[5]. Academic process is might one of the ways to help this movement. Researchers are more motivated by credits rather than profits. Nash Equilibrium Theorem is an example of an academic producing."Game theory, with the Nash equilibrium as its centerpiece, is becoming the most prominent unifying theory of social science"[6]. Nash also won 1994 Nobel Memorial Prize in Economic Sciences for this great innovation.

Academic endeavors are covered under copyright law and treated like most IPs due to how most academic fields place a strong emphasis on authorship. The manner in which this authorship is expressed varies between the academic fields however. [7] [8] As the goal of academic endeavors is not mainly of a financial nature, as long as authorship is maintained there are typically no issues. In this vein, some universities have been pressuring for faculty to submit articles in open access journals. [9] Open access in this context means providing free, unrestricted access to peer reviewed academic journals. [10]


Artistic incentives mean a person is working for love but is not for profit. Though some artists cannot make any money for their special type of arts, they never give up, because they love what they do. Those people are important for innovation. Every popular trend starts with an unknown thing. An information network example is Yahoo Answers which is a community for internet users. Some questions are solved without requirement of consulting professional people, so money is saved. Answers do not answer questions for money but for enjoying to help others.Moreover, another good example is nonprofit arts organizations. "At present, there are more than 170,000 nonprofit arts organizations in the database"[11]. The Santa Clara Vanguard is one of those organizations. "The Santa Clara Vanguard has expanding outward from the drum and bugle corps activity to offer programs throughout the local community that support the arts and education while continuing to teach the fundamentals of excellence, tradition, and integrity that the Santa Clara Vanguard was founded with 45 years ago"[12]. Many significant artistic products disappeared if they are not supported by these non-profit art organizations. To improve employees' interest of their jobs is a good method to obtain innovation.

Like the endeavors in academia, the driving force behind these projects has the main project goal be something other than financial gain. For artistic endeavors, the main objective is art for art's sake. An information network example is deviant art, a network where individuals are encouraged to post their artwork. [13]

Prize incentivesEdit

Prizes are awards to be given to a person or a group of people to recognize and reward actions or achievements, which "have been used throughout history as a means to foster innovation and solve problems"[14]. It is usually offered by wealth organization or government. An attractive prize can highly push people to work harder and better. If a prize is created to devote people to be innovative, then people are encouraged to create useful new things. Nobel Prize is a good example of prize incentives to encourage people to invent innovation. To earn Nobel Prize is almost a dream for every writer. A writer is somehow encouraged to be creative. The classic example dates back to 1714, when the British government offered a prize for discovery of a method for determining longitude. "Today, prizes have become an increasingly common tool, with recent examples including the Netflix Prize ($1 million for an algorithm predicting movie preferences)and Ashoka's Changemakers competition (grants for new development programs)"[14]

There are a wide variety of examples for prize incentives acting as the driving force for innovation within information goods. The independent games festival encourages innovation in indie video games with its different type awards. While a game may for example come up with innovative ways to utilize audio in video games for example. [15] It should be noted that the creators of the indie games still retain their IP, and thus could still go the traditional IP route even if the initial motivation was to win the award. For a pure award incentive, the Open Source Awards promote projects that do not follow the traditional IP approach to innovation. [16]


Patronage is the support, encouragement, privilege, or financial aid that an organization or individual bestows to another. Royal writers and royal painters are good examples that artists are encouraged to innovate by patronage. They are supported by royal wealthy family. "The great artists of the Italian Renaissance were accountable to wealthy entities who became their patrons or gave them commissions" [17]. Many North Korean painters are supported by governments. They do not paint for money but for their countries. Basically, most of their paintings advertise their governments' positive image. Thus, artists who are supported by patronage are somehow restricted to their products. Nowadays, patronage is less common than it was. Henry writes that "the word ' patron ' in the present day has somewhat grown into contempt, because in former times it was too much the custom for pedantic dabblers in art to attempt to bring themselves into prominence with the public by pretending to foster the talent of students, or, by attracting them into their own exclusive circle, to shine with a borrowed light at a small outlay"[18] .However, some new forms of patronage are invented as the development of internet continues. Kickstarter is a website which helps people find patronage. Patronage which is Non-IP approaches to innovation is still important. Neal indicates that "the publishing industry still works for some lucky novelists who find a way to establish a connection with a readership sufficiently large to put bread on their tables, but this is not true for a great many other writers who are every bit as talented and worthy of finding readers"[19]. Patronage becomes a helpful alternative for those unlucky talented artists.

Whereas an IP-approach normally produces a mass market product which caters to all, products from a patronage approach typically cater only to the individuals that purchase them. A form of patronage which still exists is that of an entity commissioning an artist online. Commissioning an artist online may involve going to an art network like Deviantart or going to an individual's website. [20][21] is a network that pairs artists looking for commissions with entity's looking to commission. [22]


Kickstarter is a website that matches projects in search of funding with individuals who might be interested in providing those funds. Essentially somebody makes their pitch on an idea they would like funding for on kickstarter and if the idea is popular it will receive money to “kickstart” that idea. A variety of project are represented in Kickstarter with examples being card games and films. Basically Kickstarter is a funding platform. Moreover, "on Kickstarter, book proposals have attracted from as much as $85,000 (for a memoir about psychedelic visionary Terence McKenna, to be written by his younger brother) to as a little as $324 (to commission original cover art for a self-published e-book)".[23] Since more and more eBooks are available, some writers won’t be able to earn money by sales of their books. Though writers could obtain a lot by sales of books before, some of them have to choose this kind of form to support their life

In order to incentivize funding, rewards are given depending on how much money is given. However, if the funding goal is not met no one gets charged and the project gets no money from kickstarter. The funding goals share many similarities with provision point mechanisms. A provision point mechanism, also known as threshold payoffs or assurance contracts, is a situation where a specific amount of money is announced to all the potential beneficiaries of the public good as the minimum amount needed to provide the good. [24] By combining a patronage like approach where many people fund a project before it is complete and a provision point mechanism in the form of a funding goal; Kickstarter is able to mitigate some of the risks of producing innovative niche ideas and generally greatly rewards innovative ideas with mass appeal.

Kickstarter is a sponsored closed network (the projects are monitored to make sure that not just any idea goes through). Kickstarter is also a two sided platform; the two sides here are the people who fund the projects, and the people who need funding. There are also definite network externalities on both sides of the network. According to the Kickstarter staff, there are many people who browse Kickstarter in search of projects to fund, it would make sense that more projects being provided would give these browsers more variety to choose from.[25] In a similar vein, if more individuals browse kickstarter to fund projects the more funds will be available to project makers.


In addition to copyrights, there are copylefts. Copyleft is a general method for making a program (or other work) free, and requiring all modified and extended versions of the program to be free as well ( The simplest way to make a program free software is to put it in the public domain, uncopyrighted. This allows people to share the program and their improvements, which is especially useful in the software creation process, where anybody can add to a new program, which strengthens the overall network, giving the consumers high demand side economies of scale, because as more people add to the software, the better it becomes.

"The first form of CopyLeft licensing is called the GNU General Public License (GPL)"[26]. It is originally used by Linux, and used by many softwares such as Mozilla, Java and so on. Sourceforge is a famous website that offers copyleft software. "The second form of CopyLeft Licensing is the Creative Commons ShareALike License"[27]. This form is more common in art community.


  3. ^ Rothwell, Richard (2008-08-05). "Creating wealth with free software".[1]. Free Software Magazine. Retrieved 2012-04-25.
  4. a b Yves de Montcheuil. Open source has become mainstream but still drives innovation. [2]. Zdnet. Retrieved 2012-5-2
  5. Carolyn Y. Johnson. Harvard panel pushes benefits of free journals. [3]. Retrived 2012-5-3
  6. Charles A. H. and Alvin E. R. The Nash equilibrium: A perspective. [4]. Retrived 2012-5-3
  11. DEBORAH A. KAPLE. Current Data Resources on Nonprofit Arts Organizations. [5]. Princeton University. Retrived 2012-5-3
  12. In the Community. [6]. Retirved 2012-5-3
  14. a b Josh Cleveland. "In Search of Innovation: Prize Incentives for International Development".[7]. Nextbillion. Retrieved 2012-4-27.
  17. Neal Stephenson. The lack of respect. [8]. Slashdot. Retrieved 2012-5-3
  18. Henry C. Lunn. Patronage. [9]. Musical Times. Retrvived 2012-5-4
  19. Neal Stephenson. The lack of respect. [10]. Slashdot. Retrieved 2012-5-3
  23. Laura Miller. [11]. 4 October, 2011. Retrieved on 24 April 2012.
  24. Bagnoli, Mark and Lipman, Bart. 1989. Provision of public goods: Fully implementing the core through private contributions. Review of Economic Studies. 56, 583-601.
  26. Brian Hu. CopyLeft. [12]. Retrvived by 2012-5-4
  27. Brian Hu. CopyLeft. [13]. Retrvived by 2012-5-4
Last modified on 17 May 2012, at 23:16