recent DISCUSSION

• James Bryce Clark says:

  Knut argues for the BSI / AFNOR / CEN model: he considers charging for standards and participant fees to be “more balanced” than free standards and participants fees. Balanced with what? Such a model probably ought also to take into into account substantial governmental subsidies and preferences — how they are deployed now, and how that might change or be optimized. A total budget comparison might also factor in the direct contributions of expert time and in-kind donations from commercial interests in both types of organization.

  Mattias points out that a non-zero price for standards is not necessarily inefficient.
  Certainly. But it’s not required, either, to assure spending on development, promotion, etc. Those are sources of costs; Knut’s point goes to sources of revenue.

  Like Ken, I found this comment acutely interesting: “In addition, studies show that participants in formal standardization bodies see the distribution of standards for free as disincentive for their engagement.” Such data might simply indicate that the members of those bodies self-select, for a preference for economic barriers to access. (I.e., maybe people in an exclusive club just like being exclusive.) But this relates to transparency how?

  Anecdotally, I also suspect there might be a relationship between economic stage, and preference for costs. There might be fewer large stakeholders who prefer the for-pay model in lesser-developed countries.

  We’re probably not innovating enough, yet. This is not a binary decision. One could imagine a model where rudimentary data is freely available, but more detail, or automated intelligent access, has a cost. (Note ISO’s consideration of deploying some of its lookup-list-type standards as something more like queryable databases with advanced features.)

  We ought not underestimate what is happening with the re-factoring of distribution models for information. Not too many years ago, major music recording “labels”, and movie videotape sellers, assured us that their markets would not fundamentally change. Whatever the arc of change will be, in the economics of standards development, we’re not at the end of it.

  Regards JBC
• Mattias Ganslandt says:

  Knut, Important points. Mandating distribution of the full text of standards free of charge is not motivated. Generally, a positive price is perfectly compatible with allocative efficiency (even if the price of duplication is zero). The virtues of a system in which output is sold at a positive price dominates as quality, marketing and commercialization is stimulated./Mattias
• Neil Reeve says:

  Knut is correct. There is not one financial model that fits all standardization. However for the formal public consensus standardization like in CEN/CENELEC and ISO/IEC the balance comes down on trying to increase the participation (low cost barrier for participation); and (regretfully for some) cover much of the staff costs involved in the central organizations (not the costs of the standards developers themselves) by an as low as possible charge for the resulting standard. As in all business, the challenge is then to run an as efficient as possible organization to reduce the central staff cost.
• Peter Gray says:

  Knut, how do these dimensions – process/output – interact with each other? You discuss a trade-off between the two-sided market in which the SSOs operate within, this seems to indicate a general trade-off between transparency within the dimensions you describe. Aside from the study you mention, does shifting the revenue stream from users to members, to increase output transparency, result in increased barriers and reduced process transparency?
• Ken Krechmer says:

  There is another dimension to transparency. Public standards should require public visibility of IP costs. Private deals on IPR corrupt the standardization process. If it’s a public standard, the deals made by commercial organizations to allow implementation of the standard need to be public knowledge. Since users pay, they have every right to know. How can any license be seen as reasonable and fair if there is no public disclosure of terms?

  “In addition, studies show that participants in formal standardization bodies see the distribution of standards for free as disincentive for their engagement.” Most unusual information. I wonder if they polled the IETF participants? In the case of compatibility standards this study result is very likely wrong. Considering that consortia almost always give away their “standards” it is hard to imagine how this “study” result was achieved. Details, please.
• Tim Simcoe says:

  Your observation about two-sided markets is an interesting one for a couple of reasons.

  The theory of many-sided markets says that a platform (in this case, the SSO) can maximize profit by setting a high price to those with a low price-elasticity of demand and subsidizing those on the other side of a transaction. So in ICT standardization, you charge the participants and give away the specs. In other settings — especially where standards take on a quasi-regulatory status (e.g. the fire code) — you sell the specs and make it easy for anyone to be a participant.

  This way of thinking about things turns the often vague concept of transparency into the easy-to-grasp idea of a price. I like that.

  It also highlights a tough issue confronting the business model of selling the specs: the Internet has arguably made consumers of information more price sensitive, and more willing to engage in behaviors like copying. Perhaps SSOs can learn something by watching how other “two sided” industries like recorded music or print journalism respond to the same challenge of decreased willingness to pay for information goods.
• Niklas Lindblom says:

  Knut, I believe that there is a value in SSOs following different business models as it allows for differentiated organizations showing various degrees of agility etc. However transparency is vital regardless of business model and, as you mention, a further degree of public consultation is definitely moving developments in the right directions. So I agree with you that there should not be any required distribution of final standards documents, as long as transparency is high throughout the standardization process. //Niklas