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The parable of the garage: Why the business model shift is so hard

12 February 2012 316 views 4 Comments
An auto mechanic works on a rally car at the 2...

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Mike Taylor has a parable on the Guardian Blog about research communication and I thought it might be useful to share one that I have been using in talks recently. For me it illustrates just how silly the situation is, and how hard it is to break out of the mindset of renting access to content for the incumbent publishers. It also, perhaps, has a happier ending.

Imagine a world very similar to our own. People buy cars, they fill them with fuel, they pay road tax and these things largely work as well as they do in our own world. There is just one difference, when a car needs its annual service and is taken to a garage – just as we do – for its mechanical checkup and maintenance. In return for the service, the car is then gifted to the mechanic, who in turn provides it back to the owner for a rental fee.

Some choose to do their own servicing, or form clubs where they can work together to help service each other’s cars, but this is both hard work, and to be frank, a little obsessive and odd. Most people are perfectly happy to hand over the keys and then rent them back. It works just fine. The trouble is society is changing, there is an increase in public transport, the mechanics are worried about their future, and the users seem keen to do new and strange things with the cars. They want to use them for work purposes, they want to loan them to friends, in some cases they event want to use them to teach others to drive – possibly even for money.

Now for the mechanic, this is a concern on two levels. First they are uncertain about their future as the world seems to be changing pretty fast. How can they provide certainty for themselves? Secondly all these new uses seem to have the potential to make money for other people. That hardly seems fair and the mechanics want a slice of that income, derived as it is from their cars. So looking closely at their existing contracts they identify that the existing agreements only provide for personal use. No mention is made of work use, certainly not of lending it to others, and absolutely not for teaching.

For the garage, in this uncertain world, this is a godsend. Here are a whole set of new income streams. They can provide for the users to do all these new things, they have a diversified income stream, and everyone is happy! They could call it “Universal Uses” – a menu of options that car users can select from according to their needs and resources. Everyone will understand that this is a fair exchange. The cars are potentially generating more money and everyone gets a share of it, both the users and the real owners, the mechanics.

Unfortunately the car users aren’t so happy. They object to paying extra. After all they feel that the garage is already recouping the costs of  doing the service and making a healthy profit so why do they need more? Having to negotiate each new use is a real pain in the backside and the fine print seems to be so fine that every slight variation requires a new negotiation and a new payment. Given the revolution in the possible uses they might want to be putting their cars to isn’t this just slowing down progress? Many of them even threaten to do their own servicing.

The problem for the garages is that they face a need for new equipment and staff training. Each time they see a new use that they don’t charge for they see a lost sales opportunity. They spend money on getting the best lawyers to draw up new agreements, make concessions on one use to try and shore up the market for another. At every stage there’s a need to pin everything down, lock down the cars, ensure they can’t be used for unlicensed purposes, all of which costs more money, leading to a greater need to focus on different possibilities for charging. And every time they do this it puts them more and more at odds with their customers. But they’re so focussed on a world view in which they need to charge for every possible different use of the “their” cars that they can’t see a way out beyond identifying each new possible use as it comes up and pinning it to the wall with a new contract and a new charge and new limitations to prevent any unexpected new opportunities for income being lost.

But things are changing. There’s a couple of radical new businesses down the road, BMC Motors and PLoS Garages. They do things differently. They charge up front for the maintenance and service but then allow the cars to be used for any purpose whatsoever. There’s a lot of scepticism – will people really pay for a service up front? How can people be sure that the service is any good? After all if they get the money when you get your car back what incentive do they have to make sure it keeps working? But there’s enough aggravation for a few people to start using them.

And gradually the view starts to shift. Where there is good service people want to come back with their new cars – they discover entirely new possibilities of use because they are free to experiment, earn more money, by more cars. The idea spreads and there is a slow but distinct shift – the whole economy gets a boost as the all of the licensing costs simply drop out of the system. But the thing that actually drives the change? It’s all those people who just got sick of having to go back to the garage every time they wanted to do something new. In the end the irritation and waste of time in negotiating for every new use just isn’t worth their time and effort. Paying up front is clean, clear, and simple. And lets everyone get on with the things they really want to do.

 

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  • http://scholarlykitchen.sspnet.org/ David Crotty

    Ah, the ever-difficult car analogy. I’m not sure it holds water here, as you’re talking about a report on the research, not the research itself. No publisher claims a patent on the research itself or tries to charge a researcher for continuing to work on the same subject. Furthermore, many publishers grant the author full copyright and require no payment or permission for re-use of the material in the published paper. Regardless, you, as the author, have a pdf of your own paper. You don’t need to pay rent to access it.

    I get what you’re saying here, but the analogy is strained. If you took your car to the mechanic, paid to have it fixed, then if there were other people who wanted to know how the car was fixed, but the mechanic charged a fee to access that information, that might get closer to the current situation. But it’s still a stretch.  And issues of copyright, access and IP never translate very cleanly to real-world analogies.

  • http://cameronneylon.net Cameron Neylon

    I take the point its an imperfect analogy but I’m not really trying to make an argument here but focus on the mindset that I think is trapping a certain kind of publisher into thinking about every new form of re-use as a potential income stream and not recognising that the whole approach is starting to cause problems – and really irritate certain portions of the research community. Possibly I should have said that at the top – when I use this in a talk it is to try and quickly illustrate what I see as a mental trap – not to make a broader rhetorical point.
    I am actually looking for a better analogy that doesn’t devolve into reports or something similar. Its hard to get to the heart of the issues without provoking all sorts of Pavlovian responses from all sides – so a good analogy would actually be really useful if it enabled a clear discussion of issues with a little less heat. I don’t think the various food analogies are too good either. I tried to come up with something to do with living space and tardises but that became way too contrived very quickly.
    As a side point for a number of my own papers I don’t actually have a pdf (or at least not a legitimately obtained copy). In most of these cases my only legitimate path to a copy is via the rental $30 a copy/day route.

  • http://scholarlykitchen.sspnet.org/ David Crotty

    Creating real world comparisons to abstract concepts is a difficult thing to pull off.  Over at The Scholarly Kitchen today, Kent Anderson made a similar attempt that made his point, but fell apart upon close examination. That’s probably why we revere those who have a facility for making abstract concepts concrete, great teachers like Richard Feynman or Edward Tufte so much. The analogy I’ve used, at least to illustrate the problem with the “taxpayer funded it so taxpayer must get it for free” argument is the NYC subway or bridges and tunnels. But those comparisons have their limits as well.

    But the point is an interesting one. Publishers likely see new forms of re-use as potential income streams because so many of them are proposed by for-profit startups. Just as many researchers feel resentment toward publishers who take the work they’ve done, add some services on top of it and turn a profit, so the publishers react the same way to companies that take the work the publishers have done, add some service on top and (at least hope to) profit. Perhaps there’s a lesson to be learned in both directions…

    Given the nature of copyright law though, publishers can claim a right to a share of those derivative works. As you’ve addressed here and elsewhere, the copyright status of such works is undergoing close examination and potential change. But it should probably come as no surprise when a rights holder does what the law allows them to do in order to drive profits. One of the institutions I was at was licensing their patented cell lines to biotech companies like Genentech for use in further research. I’m not sure it’s all that different.

  • http://cameronneylon.net Cameron Neylon

    Actually I quite like the analogy with public-private partnerships for public infrastructure but they tend again to inflame debate. Generally speaking in the UK the current view is that the private partners in public infrastructure projects here got ridiculously good deals – some NHS investments likely to cost double what they would have just to build them for instance. It also lets you look at the problems with different parts of the process. So for instance if we imagine a private company running a publicly built railway where the infrastructure is still maintained by government then there is no incentive to undertake the running of the railway in a way that helps support innovation in the underlying infrastructure. Similarly our private publishing industry hasn’t had any real incentive to build back into the research process and support the development of better research recording, that would in turn reduce costs for publication.
    Also there is a strand of economic argument that suggests that for a government it actually does make more sense to allow the use of public transport for free. The nett gains from economic activity are greater than the public subsidy – often a lot of the costs go on making sure that fares get paid, creating a nett economic drag. The question for me is one of overall benefit. How do we build the system so as to maximise outcomes. Without the funders there is no research and no publication, therefore they hold all the cards. Public and charity funders have a clear obligation to maximise the effectiveness of the investment and that’s why I’m a strong believer in research communication as an integral part of the research process. Because without communication there are no outcomes – and the work may as well have not been done. But I agree this cuts both ways, my lack of sympathy for publishers trying to corner every market also extends to researchers bleating about “their research”.
    But yes, you can’t blame private companies for seeking to maximally exploit their property. And the bottom line is that for most of our system it _is_ their property for good or ill. That’s why I’m a supporter of mandates the block researchers from giving over all the rights to be honest.