A new CrowdFunding based Business Model

“You never change things by fighting the existing reality.
To change something, build a new model that makes the existing model obsolete.”

― Richard Buckminster Fuller

Introducing the Consumer Sponsored Software Development Business Model (CSSD):

GNU Aerospace TestPilot seeks to utilize CrowdFunding, to fund the development and delivery of the “Next Generation” of flight simulation technology, as a web based service, 100% compatible with existing Microsoft Flight Simulator X scenery and add-on products content. TestPilot restores freedom of choice, and establishes a clear future path to enhanced features and functionality “beyond FSX”, which Microsoft denied with the cancellation of FSvNext (a.k.a. FS11/FSXI) and the closure of the ACES studio 3 years ago.

In the modern world of finance, fixated on the exploitation of their “muppet” customers, far too many innovative and disruptive products and services are denied funding by a lazy, bloated and noncompetitive government licensed and regulated monopoly.

Crowdfunding initiatives like Kickstarter and IndieGoGo have launched a “consumer led revolution” in the financing of innovative and disruptive product development.
Products that otherwise would not exist, having been denied funding by conventional means (Banks, Investors, Publishers) exist through a direct symbiotic relationship between developers and consumers.

By providing direct funding to teams of “independent” game developers, products such as Double Fine Adventure, which just raised $3.3 million dollars from 87,000 people, and Minecraft, which has sold over 5 million copies, exist where conventional funding was previously denied. By eliminating the publisher, and going to a direct sales model, the consumer cost of games has been significantly reduced, and resulted in an extraordinary level of quality and customer satisfaction.

However, there have been a number of Crowdfunding projects launched which turn out to be an elaborate fraud, and have successfully raised funding only to completely disappear without a trace, threatening to strangulate this emerging threat to the conventional funding industry.

It is our opinion that the “purchase transaction model” represents the greatest threat to the potential long term success of Crowdfunding.

The practice of “Abandonware”, where a company halts further development and support of a product or service, has in the past, been the result of the business failure of a small company. Abandonware today, is a routine, widespread and mainstream practice undertaken by the largest and most successful of corporations such as Microsoft with billions of dollars in profits. As the source code is a closely held company secret, there is no possibility of competition emerging to offer a viable alternative, with the customer left with no choice but to accept the “new terms” often resulting in higher costs, and reduced functionality.

The Consumer Sponsored Software Development Business Model (CSSD) seeks to establish a “new model” of business which places the customer in a position of power, by offering the benefits of a symbiotic development of products through Crowdfunding, combined with continuous access to the products source code while under development, thereby eliminating the practice of Abandonware forever. If successful, this new business model will result in a practice of the development of Eternalware.

Instead of purchasing a license to a piece of software, as is the common practice, TestPilot, being a web based service requires a different approach to licensing, which emphasizes the purchase of “development hours”. Consumers can choose to purchase any amount of development hours, motivated by the amount of perceived value the existence of the completed service represents, in comparison with the lack of the service in the absence of development. To avoid the development of features and functionality which consumers do not value (and is the scourge of the traditional practice of “speculative software product development” and of consumer product survey research, where products are developed with consumer feedback and fail to find sufficient customers to purchase), consumers can choose to assign a specific task which their funds are to sponsor.

GNU Aerospace TestPilot restores freedom, however there is no such thing as a free lunch (or free beer).

When users first encounter the service, they need to “try it out” for no cost. There will be situations such as schools and other institutions for which the funders of the development of the service wish to sponsor their costs. There will always be users who will seek to abuse the system, and customers who fund the development costs have a privilege to penalize or ban those users. (parasitic free rider problem)

Those persons who have the most desire for the product or service will naturally have the highest level of motivation, to provide the funding, provide independent oversight, punish parasitic free riders, and look for alternative development teams when un-reconcilable situations arise in the management of a project. Project funders will be motivated to recruit others to participate in the funding activity. Service fees will be significantly higher for regular service customers than for customers who have purchased development hours.

Customers who fund the development of features shall:

1. Pay the company which is performing the development task by the hour.
A fixed development “hourly rate” for the project shall be established, and this will serve as the basis of assigning special recognition credits and privileges

2. Be provided will all information related to the funded project:
Project plans, milestone tracking, status reporting, management decisions, meeting records, expenses, emails, time tracking information.

3. Be provided with access to the products source code, as it is developed, with the source being released under a Free and Open Source license such as the GPL V3.

4. Receive credit in the product or services source code, website, and about screen.

5. Receive special identification in their customer profile for the amount of development hours purchased, and any specific features proposed and financially sponsored.

6. Be provided with a special privilege to ban/sponsor any non paying users on the service.
Usage statistics are available to all paying users of the service. Abusers of the free service are penalized by users who paid for the development of the service.
Free usage is envisioned for schools and other educational organizations and institutions.

7. Choose to sponsor a specific feature of the product or service
This is to ensure that only features that have paying customers are developed first.

Remaining funds not otherwise allocated will be spent to fill critical gaps in product features, which is a privilege assigned based on credit.

If for any reason significant gaps remain in the products development, and there are not funds nor sponsoring customers to complete the feature, the task will be contracted out
to another team to perform, on a bid process basis, with the expense spread into the overall customer service charge, from which the development funding customers are exempt.

8. Customers who fund development have a lower (or in some cases no) service charge than those regular service customers who did not participate.

9. Customers who fund development shall have the privilege to establish the service fees rate.

In addition, the company undertaking the development task or operating the service shall:

1. Limit Employee compensation to reasonable living expenses + a fixed amount for savings/retirement/vacation.

2. Commit any remaining development funds left unspent to the exclusive purpose of funding continued maintenance of the software.

3. Provide Customers with the ability to reward individual employees working on the project with a payment identified for the purpose of a bonus.

4. Impose a fee for customers making inquiries to cover the costs of preparing and delivering a response/proposal.
The purpose of which is to minimize external interruption in the day to day management of the project which can result in significant loss of productivity and
increase development costs.

5. Maintain access to the source code for customers who have purchased development hours.

6. Having completely exhausted a project’s funding by development costs, the source code for the project shall be released to the world, one year after having reached this condition.

The primary purpose of these rules is to ensure that the employees developing the product are accountable, and focued on producing a high quality product or service.

If customers detect issues with the development or management of the project, and make enquiries for further explanation, they must bear the additional costs involved in the inquiry.
Customers can choose not to provide further funding at any time. With full access rights to the source code, they can choose to seek to assemble a new team to complete the work.
This competition acts as a deterrent to abuse, and motivates the production of higher quality work.

A major issue of tension and stress in any project is recognition and reward of individual unique contributions. Employees and management are locked in an eternal struggle on this point. By focusing compensation on reasonable expenses, employees are not constantly distracted with efforts to “self promote” and undermine the performance of co-workers (blame) in order to game the system to their selfish advantage. When a task falls behind, it is in everyone’s best interest to correct it, otherwise there is a risk that the company and the employees will loose the project to a competitor.

Second Life, a 3D virtual reality service provided by Linden Labs found a solution for awarding bonuses and recognition that works by taking the decision out of the hands of the management and placing it with the employees. There is also potential for abuse with this scheme, and therefore we have altered it to allow the customer to decide who and how much to reward with a bonus at the end of a development phase.http://en.wikipedia….iki/Second_Life
Employees are prohibited from self promotional activities, and their identities are hidden from customers until the end of the development. (privacy/promotional)

When the product is complete, and is made available to the world as a service, its source code is also released to the world at the same time, to ensure that the company which operates the service lives by the same rules as those that existed during the development. This assures that the service has the lowest possible cost, and the highest level of customer focus on satisfaction, and serves as a check on abuse of regular service customers by development funding customers.