Estimating Value : Labour Costs (Part 3)

In my last entry I discussed the different ways software companies could try to increase the revenue lifespan of their products. This interests me because, to go back to my original analogy, there is a labour value issue. I am likely to value a software subscription more if I feel there is a reasonable amount of work going into it.

But what about where that isn't the case? If I "subscribe" to the movie Casablanca then what realistically are the makers going to do with it (that wasn't horribly degrading the original product)? Perhaps some sort of discussion group or trivia about the movie, but these are things we can already get for free?

Moving away from intellectual property from corporations for a moment - how about the fruits of individual labours?

The work I do today I am paid for in a months time. Whether or not my work produces utility beyond this point or not is besides the point, the exchange is made. I may stay at my work for one month or for ten years - my pay will still be on a month by month basis. This is of course because I am a salaried employee.

For others, it is not the same. For others, work pays today and tomorrow. And beyond.

Recently, a campaign involving Cliff Richard and others asked the government to extend the period of copyright on musical performances. A BBC article outlines the issue :

Currently, performers in the UK can receive payments for 50 years, at which point their work goes out of copyright. But Sir Cliff says they should be given the same rights as songwriters, who get royalties for life plus 70 years.

"It seems to me we should ask for parity," he told BBC Radio 4's Today programme. "It doesn't seem just."

According to the singer, many musicians recording in the 1950s rely on their copyright payments as a pension.

"It seems terribly wrong that 50 years on they lose everything from it."

This to me is very interesting. Leaving aside the parity issue, what is suggested here is that people deserve remuneration for labours performed over fifty years ago.


But should this apply to other workers? Should the builders of a house receive a small sum every year for every house they built which remains standing? Should the designer of a bridge receive a penny for every hundred people who walk across it? If not, why not? Well, arguably :

1. Musicians are different from bricklayers because they are using some creative gift which morally should stand on a separate level from mere construction.
2. Musicians are different from bricklayers because the product they contribute towards retains it's utility value (i.e. the enjoyment derived from the recording) indefinitely, whereas houses require continuous maintenance.
3. Musicians are different because they have arranged their affairs so as to rely on such royalty income in place of a pension.

Of these, I should find arguments three least satisfying of all. I have no pension arranged but I appreciate this is idiocy on my behalf and that the world owes me no favours because of my miscalculation. Presumably (if it was considered at all) most musicians didn't (if they had the option) factor in living much past seventy and as such they suffer from the same problems as the rest of Western Europe. Of course if particular individuals should fall into hardships then of course the welfare state should be there to support them.

The first argument is stronger, but I'm not really sure that it can rationally be defended. Why should a man who works with his mind be significantly advantaged when compared to a man who works with his hands? Or alternately, if I happen to be born with musical talent then why should my rewards continue for many decades beyond my labour when a midwife receives no additional payments beyond her labour (no pun intended). Should a surgeon receive a tithe from every patient he saves in perpetuity?

Which brings us to the second argument - a stronger restating of the first point. If the public continues to gain "value" from a musical work, then why should people not pay for this right? Well, while my views are fairly clear on this subject, the debate does seem to consistently divide people.

I would say, quite bluntly - no they deserve no special status. The world does not owe you a living. No-one demanded you become a musician, and if after all your efforts you can find no-one to pay you for them then why should you expect payment? Once again, I will re-emphasise that I would not see anyone fall into hardship and I would always encourage assistance to be given to those who require it. But why should we have special laws enacted to restrict the actions of others (i.e. copyright) simply because people made little provision for their futures?

My own view is quite simply that creative endeavours (however noble) should not be privileged in law. In defence of this view I should say the following.
- I am not here referring to contractual agreement between an artist and company, or worker employee. If your employer says he will pay you a certain sum every month for the next twenty years (instead of paying you up front for your work) then this is a private matter between yourselves. Similarly, arrangements between software supplier and it's customers are not more or less "wicked" if they involve regular maintenance costs. What I am opposing here is the idea that morally such labour should be privileged (and by extension, such privilege should be defended by law and ultimately by violence).
- Creative acts are undertaken by all manner of salaried staff. The contributions I have made to my own companies systems will not last for decades, but would certainly contribute "value" should I leave tomorrow. Despite this, it does not seem that I should expect special payment for this, simply because my work was of a particular kind. If musicians should expect moneys for decades then in motion pictures what of set-designers, costume designers, make-up artists and others in movies? Do they not contribute to the "value" of a movie? Again, I am not referring to contractual agreements but what we should like to see enshrined in statute.

That copyright extension campaigns should arise now is not a coincidence and is linked into many other debates on the use of intellectual property in a digital age but also the general pensions crisis faced by most of Western Europe. People are living longer which in turn is outstripping pensions and other savings. Musicians mainly recording in their twenties or thirties may not have considered that they would live past seventy or eighty, but this is increasingly a possibility. They're not alone. Many thousands of others will not have much (if anything) to supplement whatever state income they have at 65 and beyond. We shall all be in the same boat.

There are numerous policies out there supposed to remedy these problems, it is hard to know whether they will ever be soluble while we persist with individual financial destinies and top-heavy demographic structures. Many of them (like raising the retirement age) seem to be either delaying the inevitable or simply unworkable.

If however, the legal position of "content holders" retains (or gains) additional privileges and protections then it would massively increase the drive towards self-employment (already a strong position due to taxation). Conversely, for employers there would be large advantages to retain salaried employees and to enthusiastically contribute towards FOSS projects. Or, in another sense : what will happen when the choice is between free amateur YouTube-esque video (the standards of which will improve enormously over the coming decades) and a Hollywood blockbuster for which you have to pay ever time you watch it? I'm pretty sure I know what I'd pick. For those who think "amateur" efforts will never rival their professional counterparts then I would like you to examine the newspaper circulation figures (some of which in London at least actually reprint people's blogs!).

To finish off, if you'll indulge me the following quote:

What the bourgeoisie therefore produces, above all, are its own grave-diggers.
 - Karl Marx

Marx was referring here to proletarians, the final stages of which is arguably in development today with the great transformation of the Indian and Chinese economies. But could it not be considered here too? Perhaps not capitalism but certainly are not the gravediggers of profitability the open content produced directly as a result of these fruits of capitalism (i.e. dissemation of PCs, cheap powerful camcorders, etc).

Hyperbole? Sure. But it's worth thinking about and I think Dr Marx would certainly approve.

Estimating Value : Software (Part 2)

So, following on from my comments about value I want to look at software in particular. Simplistically, a new product from a software supplier faces four main competitive threats.

1. Other companies who offer a similar product.
2. Other companies who offer a radically different product which could make their product obsolete.
3. Open source projects who offer similar products for free.
4. The last version of the companies own software.

To explore this, let's look at a fairly high profile example : MS Office, the great cash cow of the Microsoft Corporation.

Tens of billions of dollars have been generated by different incarnations of Word, Excel and the rest, and it's still one of the companies largest earners. Beyond mere financial impact it's fair to say the suite has had a cultural impact. Almost every business I have visited has used MS Office in some capacity and the one example of a government department I know which tried switching to Open Office actually switched back after staff complaints. And this is very much the point - it's so widely that almost everyone knows how to use it (quirks and all) and this in turn means it is widely used. On a personal level I've personally been using Microsoft Word since 1991 and I'm embarrassed to say that it remains on at least one of my PCs at the moment, although I tend to use a text editor for most purposes these days.

So...could anything unseat Office? I'm certainly not aware of any commercial desktop office suite which could even remotely be said to be close to challenging Microsoft in this area. So of our threats above, we can eliminate 1 straight off.

Two is a different story. For years people have predicted the end to large locally stored applications and the development of true Web Applications. And recently, there's been some movement in that direction - the most high profile recent additions to this field being Google Spreadsheets. And such products do indicate a new way of doing things where you wouldn't have to have large client installations on your home or office PC. Instead (the theory goes) you would simply login anywhere in the world and be able to interact with the same system. And if that sort of future develops, Office as we know it could become unstuck. Of course, MS would be (and are already) offering their own alternate products.

However, I think anyone who has used something like Google Spreadsheets at any great length would concede they are not quite ready to replace programs like Excel - at least not in the corporate environment where the big bucks are earned. And indeed there are still PCs out there which do not have a persistent reliable connection to the internet (although this figure must be falling rapidly in terms of proportion of total PCs). For these reasons and others I think it's unlikely that web apps will realistically challenge MS Office within the next three years.

Skipping onto #4 for a moment, I would say the main competitor to MS Office 2007 is MS Office 2003 (followed by Office XP and even '97). The biggest threat to MS's revenue stream is not that other companies will produce an Office killer but that users will simply not bother upgrading. Office for a while now has been dangerously close to "good enough" for a great many users (even though it's still maddening to use at times). If a product is "good enough", even if it's not great then why bother upgrading?

Yes, 2007 is better than it's predecessors but in the eyes of many users, it's not good enough to justify a new licence. Using the terms from my last entry - there simply isn't enough perceived utility value in upgrading. Of course, one cannot explain such an attitude by labour value - the £200 to upgrade to MS Office 2007 is undoubtedly a tiny fraction of the development costs - but it would still represent poor value for some consumers.

Again, this is not to say Office is perfect. I am still mystified why after fifteen years and many billions of pounds worth of investment the automatic numbering system is still so dreadful in Word in Office 2003 at least the tabling options are at the very least non-intuitive. But are those problems enough to convince people to upgrade? Seems doubtful. (Especially given at least numbering still seems terrible in Office 2007 from what I've seen).

So, undoubtedly marketing hype will convince some to upgrade. Others may genuinely need the new features offered in the new edition. But is that sustainable indefinitely? What about Office 2009 or whatever that itiration is called?

Case in point. At my workplace we upgraded to Office 2003 recently. This was not because of extra functionality nor because of users demands but simply because MS stopped supporting our previous edition. Unless we wish to use unsupported products (given our risk averse IT department this is unlikely) we had to move up. Effectively MS boosted the utility value of Office 2003 by deliberately reducing the utility of their older product.

Will that work indefinitely? It seems unlikely.

Which brings us finally to the point. Much like exhausted oil reserves, the prospect could loom that revenues could dry up. Sure, it might not happen now, or even in Office 2020 or whatever we'll have by then. Either way, I think it's fair to say that the commercial desktop office application could eventually become an unviable business prospect (at least in the form it exists now). New business would offset some of this, but again that can't go on forever - you might get to the stage where everyone in the world has a copy of Office, but could you get them to buy two? This isn't Coca Cola we're talking about now.

One solution which could offset a lot of these problems is a different model for selling software (and other content). Much like our datasets described previously we'l pay a charge for the software which won't buy the licence outright but will instead be renewable on a monthly / annual basis. It won't be phrased this way of course. Instead, you'll be paying for server maintenance, free upgrades and unlimited technical support. And a bit like World of Warcraft, if you stop paying your fee, your software simply won't work.

Is that a feasible model? Whether the numbers can be made to work is another issue, but from a consumers perspective this would seem like a dreadful deal. Even if the cost was absurdly low (say, £1 for a year of Office) you would be in the position where the product could be withdrawn at any time and could undergo price changes in the future. You also could get interesting political consequences where software functionality could be removed centrally and affect everyone simultaneously. This is even more worrying with regards content - imagine watching Star Wars one morning and finding out that Greedo shot first? Or, more seriously that Eurasia has always been at war with Oceania.

Paranoid fantasies aside, what about value? If we've got to the stage where the applications are (almost) good enough now, it's going to take some pretty compelling reasoning to persuade people to pay a montly fee for the rest of their lives.

And here is where we return to the Open Source alternatives. Yes - Open Office is not as good as MS Office 2007 - I've said it. But when compared to a software which (theoretically) could have a continuous charge levied with it, surely this advantage will shrink rapidly? Many users may simply keep old version of MS Office of course, but those who want access to XML document types or whatnot will very quickly see that Open Office is "good enough". And so unless Microsoft make their software incredibly easier to pirate (hardly unprecedented but not easily feasible with online applications) their home-consumer market will slowly vanish. I suspect their business market will not be far behind it either.

Of course it might be that MS can develop enough new features in their products to keep up the utility value in a monthly subscription. At present, it's not clear this will be easy though.

And so, the overall problem can be stated as thus : How do businesses ensure that consumers continue giving them money after they've already supplied the product? If the product is good enough, the consumers may never need another one. Given all businesses require a continuous stream of revenue to maintain their operations how can this be resolved?

Obviously it's not just a Microsoft problem. Outside of the mainstream it's interesting to see the different approaches undertaken by different suppliers to this overall problem. Our asset management system cost something in the region of £60k when first bought. There is an additional support cost of something like £4k per year which obstensibly pays for our access to support services but perhaps more importantly is a condition of the original licence. We cannot opt out - not if we do not wish to cease using the software. It's fairly obvious that in the first year or so we contacted their support desk several dozen times. The second year probably involved about fifteen calls. This year I will be surprised if we exceed five. Now, I am not complaining that we do not have many problems with the software, and our fee pays for additional updates to the software, made intermittantly. But the value of these updates (at least in my opinion) is steadily declining. The software is not doing anything particularly special, and there is no patented secret formula at it's heart which couldn't be reproduced in a non-intellectual property infringing manner.

And indeed, in time, the inevitable will come. Someone young scamp will produce a FOSS alternative. Such a project will gain momentum and (fairly quickly) will approach the point where the additional utility provided by our software will not justify the annual expenditure. Only companies which enthusiastically innovate and develop their products (i.e. leading their markets) will have a chance at retaining profitability. The rest shall perish.

Estimating Value : Now and Tomorrow (Part 1)

When you get a cab home after a night out, do you ever get the feeling - maybe five minutes after you're home and comfortable - that perhaps the £20 you spent wasn't quite worth it? I mean, you could have got the night-bus for £2 or walked for free, but you didn't. You valued the comfort, warmth or security of a cab over twenty pounds. Or at least, you did half an hour ago. Once you're home such things don't necessarily seem as clear.

Or perhaps you've ever bought something ludicrously expensive in an impulse. Maybe a stereo, or some other shiny electrical goods. Seconds before hand it all seemed like a good idea, but now...who knows? I suppose the question is basically : how much are things really worth?

These things have certainly happened to me. And trying to determine what something is worth is something which we as individuals struggle with on a daily basis. And beyond the personal we have to do the same in relationships and at work. And beyond the mundane and day-to-day things this topic is at the heart the most challenging debates in economics or philosophy.

I do not claim to be able to shed much light on things as an economist or philosopher. I do however wish to consider things from the perspective of an individual, or an individual business when, in this case, an investment is being made.

Consider recruitment. In some places, recruitment is a long and arduous journey, fraught with perils, difficulties and barely comprehensible procedures. My workplace is no exception. Part of this journey a question is asked - perhaps the most important of all : "How much does it pay?"

And so my department have just started recruiting for two new posts. And, as expected, the topic of salary inevitably arises. Now, the final rate the successful applicants ends up getting will depend on their specifics but obviously we need some indication now so we can advertise the job. And as usual this will depend on input from management, HR and finance. And in this case it's also needs input from your truly.

Can't We Use A Random Number Generator?

To be quite honest with you, I'm not sure I know how to approach the question.

How much is this position "worth"? God knows. Of course, analytically I can think of a few approaches.

1. Market Analysis
We write the job description and person spec and then simply compare with the rest of the market. What do other organisations pay for similar roles? What do similar jobs in our own organisation pay?

But then what does that mean in terms of individual variance. What price should we pay for the premium of the better candidate? And how do we know the market has got this right? Sure, if other companies are struggling to recruit or retain certain positions then we might assume they're not paying enough. But what if they're paying "too much"? How might this be determined? The overall impact on their cost structure might not be significant and it's not like many businesses publish statistics on how many staff are "too good" for the role they do.

2. Utility Value
If we find that similar jobs are paying £100k then we would of course abandon recruitment. "It just wouldn't be worth it" we might say. But what do mean by this?

Well, one way of looking at it would be that value generated by such a position would not justify the expense of hiring someone. But again, what do we mean by "value" here?

Sure, with some jobs it's easier - a salesman might be able to show how much revenue he or she has personally produced over their peers. What about where it's not so easy?

The only simple answer is that we make an educated guess. Are we likely to boost revenues by hiring person x? Cut other costs? Increase productivity? Meet statutory obligations? Reduce risk? Etc. etc.

3. Labour Value
One way to assess what an individual's work is worth would be the costs involved in someone else replicating this work with freely available resources. Picasso's paintings are worth so much partially because it is impossible to properly duplicate. Conversely, a brick layer will find his work easily copied by most with a basic training. The "utility" produced by a staff member is less valuable if anyone else can do the same.

And so the value of a man's work will depend on how much other men will do it for, or for what an outsourcing company will do it for or even what a machine can do it for - this is his labour-value.

4. Morality
It is silly to assume that discussions of pay do not involve some notion of morality - that is not the case in any real-world example I have encountered. At least rhetorically the level of pay a person receives will depend on :

- How much they need to live on.
- The presumed difficulty of what they do.
- The presumed unpleasantness of what they do.
- What other people get (both doing similar jobs and beyond)
- What their pay could alternatively be providing
- Their personal characteristics.

Some of these will be more common in some environments than in others but I think it suffices to say that "moral" arguments over pay will probably be more important in the public sector or indeed anywhere with a particularly high profile.

Of course, all of these arguments will bleed together. If I feel my pay is unfairly low then I will probably think this for a given reason - i.e. that my work is very important to the company, or that other people in the same sector earn much more for similar jobs or that my pay is not enough to live on. Similarly, even if you generate a vast amount of utility-value for your employer then if there are many thousands of other employees willing to do your job for a very low pay then it is likely you will not earn much.

How much is data worth?

So much for employees. But what about other things? In my last entry I discussed buying OS map data at work. I suppose my overall point was that I didn't feel it was worth it, in the current form data is supplied. This topic was discussed in a bit more detail in another blog, on which you can find some of my comments. See : http://giscussions.blogspot.com/2007/01/gi-is-worthless.html

But can the schema above help us to evaluate how much other investments like this are worth? How much is this mapping data really "worth"?

By definition, the market rate is the price we were quoted - £16k. It's probable for reasons discussed elsewhere that this is probably too high. For our purposes here we'll use a much lower £5k value.

Would this be worth it? Well, analysing the investment in terms of utility-value, we are back to the problems of measurement. We might assume (or hope) that costs can be lowered by GIS data - but how do we quantify this? The OS give some copy that we might expect to save £2 for every £1 in the first year. Which sounds pretty good, but as I've said, this is what everyone says. Realistically, can we prove it?

Probably not. However, given that our overall budget is many many times larger than a £5k we would only need a modest reduction in costs for our investment to be repaid. If for instance, we had a 0.05% reduction in maintenance costs across the board then this would represent double our spend saved in one year. For our purposes here, we'll say this is feasible, although I have some real concerns about where time saved "goes" after changes in processes and systems. That's the subject for another time however.

What about labour value? Well, hopefully here the link with my previous entry should be clear. Costs quoted by a company for a dataset like this must be compared not only to commercial rivals and the cost saving expected but also the cost of internally producing the data (or doing a similar thing in a different way).

Indeed, almost any dataset like this could be evaluated by the total number of labour hours it would take to make a satisfactory reproduction of it (not everything is reproducible of course).

I will provide a very crude guess and say that to map our housing stock to the quality we realistically require at least a thousands hours of someone's time (this number should not be taken as a serious analysis I hasten to add). Which we might redefine as £20,000. And, in this very simplistic example the £5k investment wins easily.

The morality of the investment is perhaps not the same as with recruitment, but there are still concerns. I would personally suggest it is immoral to spend such a sum on data which should be in the public domain, or which has so many restrictions on it. These can likely be ignored here. Other moral concerns (as to whether we should "waste" money on maps at all) could easily be rebuffed if we could demonstrate likely savings as a result.

Ongoing Costs

And so it all seems straight-forward. The £5k figure we're saying is a market-generated figure and it's easily justified when looking at the labour-cost of the project or the likely utility we'll receive.

Unfortunately, things do not end here. We have only considered barely half the issue yet. For a start, there will be implementation costs and the like, but we shall ignore those for now. What we have not considered is the ongoing costs of data itself.

The £5k is not to buy the data. It is to licence it. Or, to put another way - to borrow it. After two years we have to pay £5k again. And then again, two years later. This is not layaway - the data never becomes ours and if we stop paying we lost all functionality immediately.

And so our cost-benefit analysis becomes more complex. The utility-value will remain largely unaffected while we keep paying, but the labour-value changes.

Essentially, we did not want to do it in-house because the costs were too high. Our own map would have cost £20k. Hugely uncompetitive. But, looking forward :

	In House	External Map Data
Year 0	£20k	£5k
Year 2	£21k	£10k
Year 4	£22k	£15k
Year 6	£23k	£20k
Year 8	£25k	£25k

...and so on. The specifics of the table are of course completely speculative, but one can see the point in any case.

Simply put, the issue is that after the initial production of the dataset (drawing the map in this case) the labour-cost drops. Maps do require investment to keep them up-to-date, but except for specialist maps, this investment will not be the same amount as took to draw them in the first place. Places change, but not that fast. To repeat : most of the estates we own and manage have had the same street names in and on them since the 1960's and 1970's. Where there are changes in road names or the location of green areas these would almost always be :
- involving us anyway
- well publicised
- with a large amount of prior notice

And so for these types of amendments (surely 1-2% of the full dataset per year) we would be well placed to make changes ourselves.

To take another example. The Royal Mail address manager software is licensed at £1,250 for the first year and £500 for subsequent years. But how many of Royal Mail's post-codes change a year? For our new properties there are new post-codes certainly, but this is handled through a separate arrangement when they're built. So of the remaining, how many change on our estates? 5%? Less? I suspect the figure is closer to half a percent.

To look another way, if we buy the data to check our own database, we might find we make correction to 10% of all records in the first year. In the second, barring some training or data integrity issues we're unlikely to make corrections to more than half a percent of all our addresses (there's no reason to assume we couldn't get it down to 0.01%). Paying £1 to correct each wrong address (as in the first year) is probably justifiable. Paying more than £20 per wrong address seems less so.

Whichever analysis you feel is more convincing (or relevant) you hopefully get the idea that products like become less valuable as time goes on - both in terms of labour or utility-value. The cost also thankfully declines with the Royal Mail software, but no way near as quickly as the value does.

Subscription Models

The above examples might be thought of as rather silly but I'm sure you can see the point. If payment for something does not reflect either (or potentially both) the value obtained from it or the (labour) costs to the supplier then irrespective of our personal morality the product will become less attractive to clients.

Now, if you are fortunate enough to be a monopoly or state backed entity this might not be a concern. The BBC's value might have declined for some customers in recent years but while you can still be imprisoned for not paying the fee this may not be as important for the BBC Governors as it otherwise might be.

Where you do not enjoy such state protection or where consumers enjoy choice things will be different. And by "choice" here, I do not necessarily just mean competition from other commercial entities offering a similar service or product. That is a common misunderstanding.

For example, you make a widget which allows corked wine bottles to open easily without the use of a corkscrew. You enjoy revenues of £100m. This revenue is potentially threatened not just by competition but by choice in a range of areas :

- Consumers could buy another firms widget which does the same thing.
- Consumers could buy another device which achieves the same thing (e.g. a corkscrew)
- Producers of wine could stop using corks in their bottles.
- Consumers could switch to beer instead of wine.
- Consumers could switch to Islam and forsake alcohol completely.
- Consumers could borrow their friends widget and not buy their own.
- Consumers could make something in their own home which achieves the same thing as your widget.
...and so on.

And so our mapping dataset is not just threatened (as we've seen) by amateurish, slightly crazed DIY projects like mine. There are already projects which are producing public domain maps of varying quality. A steep decline in basic GPS equipment combined better free software to generate maps the idea of user-produced maps is much more of a viable option. If an organisation were to seriously contribute to such an effort then mapping data for a given area could feasibly be collected in months. And as stated, such Open Source projects already exist.

The analogy here with Wikipedia is of course obvious. And Wikipedia has many detractors, but these usually centre how easy it is to make amendments and how (theoretically) anything could be wrong at any moment. I personally feel these concerns are misplaced but if we so desired we could easily avoid them here. Wikipedia's "problem" is that needs (or at least, permits) very fast updates to account for changes in current events, etc. With a map of a local authority there is little reason to think things will change very quickly at all, short of the Rapture.

And with such conditions we could restrict updates to certain persons, or require all updates first be approved by a given set of individuals (again, if we found this necessary). And speaking selfishly, for those of who us live in high population density areas the task goes from merely achievable to almost trivial. London borough's (in which many thousands of people live and work, and whose local authorities have many millions to spend) usually only cover something like 20 to 60 square miles - which even given the patchwork of streets would be easy if even a few people from each area got involved.

Of course, you could argue that the map would never be as up-to-date as a professionally produced centrally authorised map. While this might be true, I would point out that the maps we use in my place of work were produced in the 1970s. And they suffice - we simply do not need (for day-to-day purposes) information that is razor accurate. Similarly, there might be a higher error rate in an open source map, but for any non-trivial query a surveyor, architect or planner would visit a site and make their own measurements. People do not build houses without visiting sites (or at least, they shouldn't) and we shouldn't over-emphasise how accurate such data needs to be.

And in this way open source projects can reduce the commercial value (to nothing) of certain products. Unless things change, I am unlikely to buy a commercial video file player for my home PC because the open source (and thus free) VideoLAN (VLC) is by far the best product I have tried. The utility value of such player remains as high, but the market value for them has collapsed, or to put another way, the labour-value of installing a competitor has been reduced to zero.

Of course, with data (and software) this model will not necessarily work for everything. I would not want stock quotes that were possibly out-of-date or edited incorrectly. Now, I'm sure any project could work given the right set of people involved, but it'll be made much harder depending on the level of accuracy required and the volatility of the dataset in question on one side versus the ease in collecting data and the number of likely reliable volunteers on the other.

Where the model does work, a small irony might be enjoyed. Open source projects (whose principles are described as either libertarian or communist) will help, over time to seriously diminish the "profits" of government suppliers through competitive market forces.

Who'd have thought, hey?

In the next article I want to look at how these sort of arguments affect the procurement of software and also how musicians and other workers are paid.

Postscript : Additional Notes On Terminology
I use the term 'Open Source' here to refer to projects where anyone can make a contribution, rather than the more common software reference to visible source code. In most datasets there is no "source code" as such, we are only interested in raw data. I use Open Source here because it is a commonly understood term.

However As Richard Stallman and others are quick to point out "Open Source" is not the same as "Free Software" (which is about guaranteeing the right to view source code and modify it). Stallman also emphasises the importance of terminology when discussing these issues. I would agree with this general point, but I think it suffices if when discussing in a non-technical sense we use any term, so long it is properly defined.

In general I am referring to (and saluting) projects which :
- do not charge for their end product (irregardless of whether they receive money)
- where the project puts no substantial restrictions on the use of the datasets.
- are developed at least partially through contributions from users.

In the above by "substantial" I am not including restrictions placed by licences like the General Public Licence or some of the Creative Commons licences.

While I understand how important legally the licence issue is, I do not find it an intellectually stimulating issue. I feel in a sane society most licences over data would simply be unenforceable and as such meaningless.

The Tragedy of the Enclosed Lands

I want to talk a little bit about the use of mapping data, something which periodically piques my interest at work.

First though, I want to quote parts of an email I received a while back (in 2005), when enquiring how much it would be to licence some electronic maps for use internally at my organisation :

This email is to confirm that you have successfully saved estimate reference 6610 on the OS MasterMap Data Selector, as detailed below.

This estimate excludes VAT and is valid until the date shown below, after which it will expire; it will remain on the Data Selector for six months from the date saved.

Price: £16,966.02

Area selected: Pre-defined polygons - Single London Borough

Licensing information
Licence period (years): 2
Number of terminals: 1

So, just to clarify - for the use of mapping data in one licence for two years of an individual London Borough would cost almost seventeen thousand pounds.

I mention this because as I say, I'm interested in GIS technologies. I was actually going to apply for a job at the Housing Corporation a year ago to work in their GIS team, but I decided against it. More generally though, it's obvious how cool applications of mapping data can be.

In the field I work in housing (asset management) the use of maps would be particularly beneficial. On top of this, I also help manage some patch related data for our housing management team. Being able to link all this into some automapping system would make many tasks I perform so much easier. In addition, visual tools are staggeringly useful when persuading people or explaining things to a new audience.

Being able to show a map which outlined that 80% of our Decent Homes failures are in one half of our stock would be a lot more powerful when persuading our board to release extra funds, for instance. The human mind responds strongly to visual stimuli, and maps in particular plug straight into a particular part of the brain.

Of course, to do all this, we need a certain amount of geographical data. There's the maps themselves and then there's geocoding our properties. Which leads to enquiries like the above. No doubt we could afford that, but in good conscience can we really spend £16k on what is effectively a glorified A to Z? £16k after all could supply brand new kitchens to four families, or ensure 8 homes have brand new central heating systems which will cut fuel bills and keep people warm should the weather change. We have to consider the opportunity costs.

Don't get me wrong, the price listed above is probably way above what is required, and there are undoubtedly other options which would be more cost-effective. But cost is not the only problem. Last year I attended a demonstration by some companies looking to supply us with a GIS solution. I did not get to hear any costs at this point, but what maddened me somewhat was the level of restrictions the data suppliers wanted to put on any information they gave us.

These included :

- Insisting that if we put map data on our intranet we'd have to buy a licence for every potential user, i.e. every person who has access to our intranet. Considering this is over a thousand people now (and growing) this is fairly ridiculous.

- Advising us that we would only be able to print out maps (to include in publications to customers) if we got additional licences for this.

- If we decided not to renew our licence for the data, we'd have to destroy all maps produced/printed as well as the more obvious step of deleting all data we'd produced and uninstalling the software.

Now, it is probably the case that in any pre-sale negotiation we could get out of some of these clauses (and they might not even be enforceable legally speaking) - but the fact people selling these sorts of services believe they're reasonable in the first place speaks volumes.

Free Lunch?

It's well accepted that in most cases, there's no such thing as a free lunch. In this particular case, there is a certain cost incurred by those producing / collecting information, organising it and making sure it's accurate and so on. The price we are willing to pay will depend (to an extent) on the expected use we will make of such data weighed against an estimate of how much it would cost to produce the data ourselves (or from another source).

So, what is a fair price? To be honest, I've no idea. £16k could be a reasonable price but you must remember that is payable every two years. This type of "subscription model" (for want of a better term) makes sense with some types of data. Stock prices for instance, change so often that one must keep up-to-date (sometimes up to the minute) with the latest change. So if I'm interested in that sort of information, I'll consider a subscription of an ongoing basis.

Not so with mapping data, or at least mapping data of this kind. Our properties (by and large) do not change locations, and where something major did occur (e.g. one of our blocks being demolished, or a new road cutting through one of our estates) we would certainly be aware of it - probably before any mapping agency. 80% of our stock has stayed the same for the last five years and probably will for the next five years too. So why would we want to be in a position of paying every two years for such information? Well, we wouldn't.

Beyond this, if we did decide to make a considerable outlay, would being able to use the data on one machine be adequate? Well, no doubt we could engineer our processes in such a fashion so this worked, but by and large for the information to be useful we'd want everyone to have access to it all the time - and this would include publications sent out to customers. This is fairly self-evident.

DIY?

And so what will we do? As is often the case, my answer is DIY : We'll collect the data ourselves. As ridiculous as it sounds, because of the restrictions on the data we'll be much better off simply collecting the information ourselves and using any one of a number of open source applications simply generate the maps ourselves. Or so is my intention.

GPS equipment is now within the reach of the average citizen and a procedure for geocoding our properties could easily be included within our stock condition procedure or even included in with caretaker duties or a void routine.

But...isn't this a bit ridiculous? Aren't we going against a sensible division of labour? Instead of information being collected by experts en masse, we're going to be taking a piecemeal amateur approach. Admittedly with modern GPS equipment it shouldn't be too taxing, but inevitably the quality of the end result will be significantly lower than a "professional" approach. But even given this, the DIY approach will still prove superior because we won't have to worry about any sort of legal nonsense when we have the dataset.

Let's imagine we're not the only person doing this for our area. A local business might feel the same and even the local authority might want to avoid paying the OS fees as well. So, in such a hypothetical situation there would be four parties (the OS, ourselves, the LA, a local business) collecting the same data. Totally unecessary duplication of effort.

But in some instances, duplication is not really duplication at all. There are numerous companies making shoes, but each one does things slightly differently (either in terms of design of the shoe, or the production technique, or whatever). Such diversity is desirable because it increases the chance of innovation and means that "better" designs might predominate.

This can hardly be said to be the case with mapping data - if we're all using the same standards (which we are) then if everyone does things perfectly then theoretically we would end up with identical end "products" - i.e. exactly the same data. We are measuring objectively real conditions and as such there is no artistic or creative flair involved. As such, duplication is not desirable, it is merely waste.

Which leads me to my point. In the United States, the government is restricted from holding certain kinds of copyright and so their mapping data is largely in the public domain (not counting classified military data). Not so in this country. Maps created by government employees are withheld from citizens unless they spend money. As seen in my quote above, in some instances these are not insubstantial sums of money.

In my second example, the cost was not an issue (since I never found out what it was) but the restrictions seemed utterly absurd to me from an operational standpoint. Even if each individual licence was priced at £50 per user there would still be an additional administrative burden on checking we were compliant and the threat if we ever cancelled our licence we'd have to undertake a significant audit of internal data to delete everything we once generated.

I believe these "quirks" are not the result of bad mangement decisions in the companies involved but rather are an inevitable outcome of the "private data" business model. The reason why companies have to be careful about licencing is that if they're not some wiseguy will simply buy one copy of their software and then put it on the web for everyone to use for all time. To maintain their viability they have to undertake measures which are deliberately annoying to end-users. Which often include technical restrictions.

To use an example from a related field - take the Royal Mail postal database. You might think that Post Code data would (as a list of facts) be public domain information. Infuriatingly, you wouldn't be entirely correct. And so, if you want to check your post-code data is accurate you have to hand over a thousand quid (for one user) to the Royal Mail. In some senses this is worse than the mapping data since the Royal Mail are a monopoly with regard to the issuing of post-codes (and you have to pay to get a new road post-coded too!).

In any sensible system, there would simply be a gigantic .CSV or XML or whatever file of all UK addresses hosted in a number of locations free for all to download so people could do interesting or innovative things with the data. Instead, we have slightly rubbish software which deliberately makes plain text exports difficult to do.

Such things are prime examples of a sort of an anti-"tragedy of the commons". If this data was owned collectively (that is to say, was not owned at all) and such basic factual documents were not seen as money making opportunities we would have so many advantages. Instead, we have a situation where hundreds of hours are being wasted simply because of outdated business models sadly adopted by our government. On top of this, such restrictions are stifling innovation. Google Maps may be able to afford to licence the OS data but the average bedroom developer cannot and so there is a less than optimal level of development in this area.

I actually believe that mapping data will be de-facto public domain within the next decade. Until then though, we have alternatives. Of the data we collect, I intend to submit it all to the Open Street Map project (http://wiki.openstreetmap.org/index.php/Main_Page) which is an excellent attempt to bypass some of the legal faggotry in the copyright datasets. Collectively, we can tear down the enclosures. We can rebuild a commons which can help organisations of all sizes innovate with GIS technologies (surely something which can only increase with better mobile devices?)

I'll let you know how things go.