Thoughts on Making Money and Capitalization

Distributed systems are all about creating value.

There is nothing wrong with monetizing some of that value.

However, the less value of the *system* that you monetize, the faster it will grow, and the more money that can be made by participating in the system.

This is how you create the fabled "network effect".

Traditional equity or stock structures of capitalization and ownership tend to work counter to the network effect.

They are concentrating structures rather than distributive structures.

Traditional equity ownership includes rights of liquidation, which in distributed systems would imply the right to liquidate value that someone *else* created. Not exactly an encouragement to participation.

They tend to centralize decision-making power into the hands of a small number of people (a board of directors), where distributed systems' vibrancy comes from local autonomy and ingenuity.

The most effective strategies will harmonize proprietary and common ownership. They will not choose one at the exclusion of the other. Both will be present and honored.

There is enormous value in exploring new ways of conceiving and structuring "ownership" that can move us beyond this dichotomy.

Government ownership is just a special case of proprietary ownership.

As a rule of thumb, try recovering investment in common infrastructure and product development from other participants. This can be something like a "revenue bond" paid by a fee on participants using that part of the infrastructure.

Ongoing costs of maintaining infrastructure is usually a self-tax on those using the infrastructure.

Participants make money through the expansion of market size (increase in number of participants), and providing value/products to customers.

Compensating entrepreneurial effort to initiate distributed systems can be built into both the infrastructure and ongoing costs, although probably should not be permanent or unlimited.

There are almost certainly a large number of other business models consistent with distributed systems, but care is needed not to mix up the business that are appropriate to participants (almost anything), and those appropriate for the systems themselves (something closer to public financing approaches, but will benefit from experimentation).