Friday, September 17, 2010

Participation Inequality and Licensed Based Collaboration

Whenever I give advice to people about what to look for in a collaborative tool, I tell them to steer clear of anything that is based on a licensing model where the organization has to buy a license for every person in the organization, preferring instead to look at open source alternatives.

If you combine the 90-9-1 rule with a proprietary licensing arrangement (as I have in the info graphic above) you can see why: the return is only about ten cents on a dollar.

For Example

Let's consider the following:
  • 500 person organization
  • Enterprise wide solution at $130/license

Making the total cost to the organization $65,000

The participation breakdown within in a organization of 500 people is approximately:
  • 5 heavy contributors
  • 45 intermittent contributors
  • 450 non contributors (lurkers)

Therefore the approximate cost breakdown under this model is:
  • $650 spent to enable heavy contributors
  • $5,850 spent to enable intermittent contributors
  • $58,500 spent to enable lurkers

The production breakdown within this model is:
  • 1% producing 90% of the outputs
  • 9% producing 9% of the outputs
  • 90% producing 1 % of the outputs

Overall licensing is cost neutral but with significant differences:
  • Licensing heavy contributors is highly cost effective because they produce at a 1:9 ratio.
  • Licensing intermittent contributors is cost neutral because they produce at a 1:1 ratio.
  • Licensing lurkers is cost burden because they produce at a ratio of 9:1.

Looking over this example, it is no surprise why I recommend against engaging with vendors that use per user licenses as a distribution control. The model absolutely breaks down when you look at participation models. I personally think there are two caveats worth discussing from here: (1) what does this mean for vendors and in house resellers and (2) what is the value of lurking.


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