The Collaborative Economy is NOT Big.

PART 2. Wikipedia, Open Source Software & Software as a Service & Cloud Computing.

Wikipedia as Commons-based peer production.

What Else is the Collaborative Economy?

Commons-based peer production: Wikipedia

For years Wikipedia has been one of the biggest websites in the world and as of March of this year is the 7th largest site on the planet. Everything on Wikipedia is user generated content (UGC). It is one of the most successful examples of a not for profit collaboration platform. All platforms that have UGC are also part of the collaborative economy. Content creators are matched with content consumers directly through the platform.

Impact:

Wikipedia, along with other sources of information on the internet has destroyed the encyclopedia business. It’s also expedited or damaged our ability to do research. Depending on who you ask. Tons high school and college papers were written/plagiarized with the help of the site. There is some concern about how easy it is to edit the entries, but despite this when it comes to the accuracy of science articles it is on a level with Encyclopedia Britannica.

Today Wikipedia is the place to go for finding general knowledge. A large amount of the articles are written by passionate amateurs on a volunteer basis. It’s one of the first places most people go to find information. Probably second only to Google search.

Future: We can expect to see more articles and more languages added. After that we can expect to see the idea of mass collaboration expand to physical goods. There are currently over 300 Commons Based Peer Production projects http://directory.p2pvalue.eu. For example there’s one called faircointhat distributes their own cryptocurrency of the same name to anybody who wants it! For free! There will be more of these and there will likely be a breakout case of one that reaches mass adoption in the next 3–5 years.

Collaborative Creation: Open Source Software (OSS)

We rarely think about how amazing open source is. People volunteer time and energy to build great free software for anyone who wants it. Often the open source option is the best or second best like Firefox, Apache, Linux, and Asterisk.

It has gained mass adoption. Companies who fought it tooth and nail have turned around. Last year Microsoft open sourced .Net to compete with Java.

Facebook, Nike and VMWare all have open source initiatives. Toyota, Jaguar and Land Rover are planning to use automotive grade Linux soon. Accenture, GE, HP, Huwaiwei, IBM, Pivitol, SAP and Verizon, to name a few are all running open source in some capacity.

More and more companies adopt it because open source is on average more secure, of a higher quality and more customizable than proprietary code. It also saves a lot of money. Basically it makes business sense. Github, a git repository host for open source and enterprise software is now worth $2 billion.

IMPACT:

Blackduck published a study in 2009 looking at how much code is created in the open source movement. In this report it says “We estimate that reproducing this OSS would cost $387 billion and would take 2.1 million people-years of development. In addition, we estimate that 10% of US-based development, representing $22 billion, is redundant and could be offset using OSS…”

The 2009 figure of $387 billion is really interesting because in the same year, Microsoft was valued at $183.5 billion. Half of the estimated value of Open Source Software.

Linux and it’s derivatives started popular features like desktop spaces and 3D desktop virtualization. Currently between 60–70% of the world’s Web servers are running Linux. Modern television with app support. Linux. Refrigerators with built-in computers. Linux. DVR systems including TiVo — all Linux or one of it’s derivatives. Android too. And Chrome OS. And 90% of the worlds supercomputers.

Languages like Python, Ruby and Perl are open source. Cloud infrastructure, desktop OS, database, big data, containers, IoT, automotive & mobile are all backed by open source software. Google has open sourced TensorFlow, SyntaxNet and Wave. OpenAI, the non-profit AI research organization will end up open sourcing most of what they develop.

Almost every company and government agency in the United States uses open source software in some capacity. Almost every software category uses it or has dependencies on it. Open source software is now ubiquitous.

Future:

We can expect to see more open source software and continued adoption. The quality of software development is improving because of it. Linus’s law states that “Given enough eyeballs, all bugs are shallow.” And though it’s hard to get an accurate number about how many people participate in open source software, I found this answer on quora.

“… my guess would be that there is a million (or a few) who have ever produced open source code or a patch, on the order of ten million who have actively participated in some other way, and perhaps one hundred millionwho have knowingly used or deployed open source software. As for how many end-users there are who have used open source software, the answer is easy: anyone who has ever been on the internet. That’s billions.”

As the software becomes more open, so does the enterprise. This will lead to even more collaborations between the companies and other parties like independent software developers.

The proliferation of Open Source also increases the availability of software in general. Making it all the more likely for us to see more cases like Mark Frind, a solo developer who scaled Plenty of fish to 1 million users by himself and George Hortz who made a self-driving car by himself. Or Instagram reaching a billion users with just 13 employees. The ratio of engineers to impact is growing because of it. Closed source companies will struggle to keep pace.

Because it’s so disruptive, some enterprise software makers will be hurt by it. Proprietary software is on the decline. The angle that some companies take is to sell open source software that has important proprietary enhancements. It won’t be long before we see an OSS company with a successful IPO.

Access Economy: Software as a Service(SaaS) & Cloud Computing

This is one that never gets mentioned, probably because the focus of the sharing economy is in consumer markets. But software as a service is access economy. Instead of paying for proprietary, client-server software that you host on your network you get it on a subscription basis accessing it through the web. The same way an individual accesses Spotify an enterprise can access a CRM. Another name for SaaS that gives away it’s relationship to the sharing economy is on-demand software.

All of the cloud enabled ‘as a service’ services like infrastructure as a service and platform as a service are also part of the collaborative economy.

Impact:

The market is worth $204 billion in 2016 according to a Gartner report. SaaS is now the preferred way to deploy software in the enterprise. “There hasn’t been an on-premises software company funded since 2007,” said R. “Ray” Wang, principal analyst at Constellation Research. “You have no choice. It’s all going to be SaaS.”

Because there’s no buying or maintaining of hardware or software, it keeps growing in appeal. These services are flexible, meaning you can start or quit with a minimal commitment. The entry costs are low. Ramp up much faster than doing it in house. Deploying cloud services starts immediately after you purchase it. There’s no IT support and these services can be accessed remotely with an internet connection. Scaling up or down is easy. All the cloud services have fast deployment and all-inclusive functionality. What’s missing is customization.

Future:

Customizable cloud services just arrived. This is what PaaS or API-based SaaS is, all of the speed and functionality of SaaS but with a low cost of customization. PaaS comes with no user interface, and the services are accessed through a web-based-API. The data that’s accessed through API’s is what makes this service valuable.

There are already a few companies headed in this direction like Twilio, Ordercloud, Contentful and Algolia.

Clearbit for example offers business intelligence API’s. It works by allowing you to send an email or url of a company you’re interested in through an API call and you get back information that will help with marketing and sales.

Algolia is a real time search as a service provider. They allow you to include their advanced high performance search on your site or app. The search feature on most websites sucks. Algolia takes care of this.

API based SaaS allows for an enterprise to create a mash-up of services from several vendors.

Companies are going to be able to use an API based SaaS for say email, CRM, and business intelligence and on and on. Businesses will use existing API based SaaS because so they can launch faster, scale reliably, understand their cost better and add advanced functionality without in house expertise.