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February 2007

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How Open Source Will Close Markets

by Glen Emerson Morris
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Time magazine's choice of "you" for the 2006 person of the year was appropriate, given how consumer created content now dominates the Internet, but in several ways Time's analysis did not go far enough. Unfortunately for advertisers, consumers are beginning to make a lot more than just media content for themselves.

Collectively consumers are banding together to produce a variety of products and services under variations of the term open source. This is going to become a major problem for advertising agencies because open source products, developed by volunteers working without a budget, will naturally lack any kind of budget for advertising. The more open source products are in the market the less advertising there will be from traditional commercially produced products.

Though the consumer created content explosion is just the beginning of the mainstream open source movement, it offers some insight into what's ahead.

Several media pundits have dismissed the emergence of consumer created media by saying that it will sharply diminish once corporations move into the market with content with higher production values. This view fundamentally misses the point of what's actually happening, and in several ways.

The technological advantage professional grade audio and video products have over amateur AV products is rapidly diminishing. Soon the difference in quality will be barely noticeable by most consumers.

Even if this weren't true, it should be remembered that the popularity of the iPod and other MP3 players has happened despite the audio quality of the players, not because of it. People were perfectly willing to trade high quality audio in exchange for portability and reasonably good audio quality. The same thing is happening with DVD recorders people use for time shift viewing. Sure, there are video artifacts and other image distortions with DVR playback, but people are perfectly willing to trade video quality for the convenience of being able to watch TV programs when they want to, and not on a schedule dictated by a network.

Some consumer generated content is also preferred by consumers because it covers topics corporate sponsors, for a variety of reasons, would prefer not to be associated with. Topics involving controversial political views, sexual lifestyles and religion have always been dangerous ground for advertisers and journalists alike. Edward R. Murrow's television show on the working conditions of migrant workers in America, "Harvest of Shame," may have been his best work, but it alienated his network's advertisers and his bosses, and it ultimately cost him his job.

So far, the best examples of open source products have been computer based, like the open source operating system Linux. Ten years ago the general wisdom in the software industry was that it took about half a billion dollars to develop a viable operating system. Linux proved that wisdom wrong, as it was done entirely by volunteers.

There is also no shortage of open source applications. Many are too specialized to be worth being developed commercially and could only be developed as an act of love, but there are already some very mainstream open source applications. Today there are at least two open source equivalents of Microsoft Office, and the quality and performance gap between the open source versions and the Microsoft version is continuing to narrow. Neither of these open source applications generates the revenue needed to support advertising.

Other open source projects are going well beyond software.

In Europe there's an open source project dedicated to developing and open source car, appropriately named Oscar. This project is a long shot, but it's still a possibility, especially given that many car factories are largely robotic and designed to make cars based on computer files (in CAD, or computer assisted design, format). Once the Oscar project finishes the CAD file for their car they can contract with a robotic car factory to produce the finished product. Enough people will have to place orders for Oscars to make the production run worthwhile for the factory, but it's possible that would happen.

Another variant of open source is a subscriber based video news network being developed in Canada. It will depend on a lot of free help, and once again it will exclude advertisers from being sponsors. This news network may not have the slick graphics and other visual effects that are now common with the major network news shows, but many consumers are not likely to care.

Yet another direction open source is likely to take will be based on what I call desktop manufacturing, an evolution of the current technology of 3D printing. Over the past decade 3D printers that can print anything from prototype detergent bottles to working TV remote control units have dropped from $250,000 to $25,000. Within a decade most homes will have some kind of 3D printer, and within two decades most consumers will be using their 3D printers to make a significant percentage of the items they currently buy. These items will likely be based on open source designs downloaded from the Internet. Once again, this will leave advertisers substantially out of the loop.

The direction the open source movement may take the world may seem extreme, even unlikely now, but several major scientists including Arthur C. Clarke, Buckminster Fuller and James Burke have been predicting this would happen for years.

In his tour de force book "The Axemakers Gift," science historian James Burke argued that new technologies are always a double edged sword. Each time a new technology has been introduced, people accepted it for the short term benefits it offered, and usually with little, if any, consideration of the long term consequences it would present. Advertisers and the media did this when they adopted desktop publishing and digital video production. It saved them money in the short term, but in the long term, the new digital technologies became so inexpensive that even the average consumer could afford them, and once that happened advertisers and the media lost their virtual monopoly on content creation and distribution.

Will the open source movement doom advertising? Probably not, but it will contribute to a long slow decline of advertising as we know it, and cause economic earthquakes we can barely imagine now. It's too soon to predict what a post open source world will look like, but one thing is certain. The world we're going to have in the future will be a lot different than the one we have today.

Glen Emerson Morris has worked as a technology consultant for Network Associates, Yahoo!, Ariba, WebMD, Inktomi, Adobe, Apple and Radius, and is the developer of the Advertising & Marketing Review Data CD.

Copyright 1994 - 2010 by Glen Emerson Morris All Rights Reserved

' keywords: Internet advertising, Internet marketing, business, advertising, Internet, marketing. For more advertising and marketing help, news, resources and information visit our Home Page.

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