The Dilemma of Shar­ing IP Free

B- schools mull the op­tion of shar­ing pro­pri­etary in­for­ma­tion free on­line, but there are sev­eral is­sues to be ironed out.

Business Today - - CONTENTS - The au­thor is JL Kel­logg Dis­tin­guished Pro­fes­sor of Ac­count­ing & In­for­ma­tion Man­age­ment, North­west­ern Univer­sity, US. He is also the Founder, Dean & Chair­man, Great Lakes In­sti­tute of Man­age­ment, In­dia and Founder & Chan­cel­lor of Great Lakes In­ter­na­tional

B-schools mull the op­tion of shar­ing pro­pri­etary in­for­ma­tion free on­line, but there are sev­eral is­sues to be ironed out

Ed­u­ca­tion is the ba­sic right of ev­ery hu­man be­ing. In the by­gone eras, there was never a ques­tion of charg­ing for ed­u­ca­tion. I’ll be the first to ad­mit, how­ever, that to­day the modus operandi of de­liv­er­ing ed­u­ca­tion has changed and a cost does need to be at­tached to it if only for the pur­pose of break­ing even. The down­side is that this au­to­mat­i­cally de­prives seg­ments of the pop­u­la­tion the chance to learn in a for­mal set-up/man­ner.

To­day, “Ed­u­ca­tion” is a pre-em­i­nent “In­dus­try” and a gi­gan­tic one at that, cur­rently val­ued at $100 bil­lion. This is ex­pected to nearly dou­ble to $180 bil­lion by 2020 (ac­cord­ing to a 2016 re­port by Technopak). Higher ed­u­ca­tion con­trib­utes 15 per cent of the mar­ket size while text-book, elearn­ing and al­lied ser­vices con­trib­ute 28 per cent and vo­ca­tional ed­uca tion in man­u­fac­tur­ing and ser­vices con­trib­utes 5 per cent. At present, In­dia’s higher ed­u­ca­tion sys­tem is largest in the world en­rolling over 70 mil­lion stu­dents and the profit mar­gins are huge.

From this, it is not far-fetched to imag­ine that ed­u­ca­tion in­dus­try will see an in­creas­ing num­ber of play­ers and ex­cel­lent in­no­va­tion. That said, a good num­ber of schools and col­leges also op­er­ate as not-for-profit in­sti­tu­tions. Here profit-mak­ing is not a goal, but in­ci­den­tal and nec­es­sary for sur­vival and long-term sus­tain­abil­ity.

So, when a not-for-profit leader in ed­u­ca­tion, like the MIT, starts shar­ing pro­pri­etary in­for­ma­tion with the world for free, it cre­ates an in­ter­est­ing co­nun­drum. There is the cre­ator of con­tent, the in­sti­tute where he/she works and a third party – which is likely to be an IT com­pany with prow­ess in stor­ing and trans­mit­ting the con­tent. Much of the con­tent in higher ed­u­ca­tion is cre­ated by the

course in­struc­tor and the con­trac­tual en­gage­ment be­tween the school and the in­struc­tor needs to be clear on who holds the right to the said in­tel­lec­tual prop­erty. Even if the con­tract ex­plic­itly states that all con­tent cre­ated in the course of em­ploy­ment be­longs to the school, there may be is­sues with the con­tract (like whether signed un­der duress) which can cer­tainly be chal­lenged in a court of law. The case of MIT and Bose sound sys­tems is a clas­sic case in point. Amar Bose not only cre­ated the tech­nol­ogy for the fa­mous Bose sound sys­tems but also owned the IP in spite of the fact that he was then study­ing at MIT.

So, at a ba­sic level we are deal­ing with at least four vari­ables here – the pro­fes­sor who cre­ates the con­tent, the school that may own the con­tent, the IT com­pany that has de­vel­oped the tech­nol­ogy to share the con­tent, the end-user, the le­gal frame­work of the coun­tries where all this is hap­pen­ing. Even as­sum­ing that the cre­ator and the col­lege are aligned on the mat­ter of shar­ing the con­tent with the world, the ba­sic premise is that there would be no as­so­ci­ated rev­enue. Into this equa­tion, if we bring in a com­mer­cial, prof­it­mak­ing IT en­abler that has the where­withal and mus­cle to store and dis­trib­ute the con­tent, rev­enue be­comes an im­por­tant con­cern. Pho­to­copy­ing of text­books and re­pro­duc­tion of con­tent in the artis­tic fields like cin­ema un­der­went a sim­i­lar shake-up in the late ’80s and ’90s and once again when the ad­vent of the In­ter­net and PCs made it that much eas­ier to copy and share in­for­ma­tion. The IT en­abler is cer­tainly seek­ing to make prof­its and if these are de­pen­dent on the con­tent sup­plied by the au­thor or the school, due ac­knowl­edge­ment or event profit-shar­ing will be a ba­sic ex­pec­ta­tion. An­other twist in the tale would be if the IT com­pany is smart enough to bun­dle the prod­uct with some­thing else or add or re­move lay­ers thereby con­sti­tut­ing a rea­son­able dif­fer­ence in the prod­uct – then they will be un­der no obli­ga­tion to com­pen­sate any­one be­cause their prod­uct is dif­fer­ent. Please also note that when the con­sumer pays for a prod­uct (or ser­vice), an obli­ga­tion is cre­ated. Who will ful­fil that obli­ga­tion? If the prod­uct is found to be flawed, whom will the user ap­proach/sue? Can they re­turn the prod­uct and ask for a re­fund? It will cer­tainly be in­ter­est­ing to see where the pieces of this puzzle land. These are ob­vi­ous grey ar­eas and while some of these con­cerns may be sub­ject to ar­bi­tra­tion in the coun­try of ori­gin, oth­ers may need to be tried in in­ter­na­tional courts. There is no one-size-fits-all in this case. There is also no prece­dence as the busi­ness model and the tech­nol­ogy are new and the global e-learn­ing in­dus­try is at a nascent stage. Pol­i­cy­mak­ers will have to de­velop the ap­pro­pri­ate ways of deal­ing with these is­sues ini­tially on a case-by-case ba­sis and then come to a com­mon agree­ment on which rules will ap­ply given a set of unique cir­cum­stances.

In­dia has be­come the sec­ond-largest mar­ket for e-learn­ing after the US. The sec­tor is cur­rently pegged at $2 bil­lion and is ex­pected to reach $ 5.7 bil­lion by 2020. The dis­tance ed­u­ca­tion mar­ket in In­dia is ex­pected to grow at a CAGR of around 11 per cent dur­ing 2016-2020. More­over, the aim of the gov­ern­ment to raise its cur­rent gross en­rol­ment ra­tio to 30 per cent by 2020 will also boost the growth of the dis­tance ed­u­ca­tion in In­dia. The ed­u­ca­tion sec­tor in In­dia is poised to grow ex­po­nen­tially as we will have world’s largest ter­tiary-age pop­u­la­tion and sec­ond-largest grad­u­ate tal­ent pipe­line by the end of 2020. More­over, avail­abil­ity of English­s­peak­ing tech-ed­u­cated tal­ent, demo­cratic gov­er­nance and a strong le­gal and in­tel­lec­tual prop­erty pro­tec­tion frame­work are en­ablers for world­class prod­uct de­vel­op­ment. With all this al­ready in place, it is a no-brainer that we are look­ing at un­prece­dented changes in the e-learn­ing in­dus­try. What will even­tu­ally hap­pen is that free mar­ket eco­nomics will dic­tate the prac­tices, poli­cies and rules of the game. There is no dilemma here, at least not in the con­text of whether to share or not. Share, we must. How best to do this would be the real chal­lenge. ~

Much of the con­tent is cre­ated by the course in­struc­tor and the con­trac­tual en­gage­ment be­tween the school and the in­struc­tor needs to be clear on who holds the right to the IP

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