Infrequently Noted

Alex Russell on browsers, standards, and the process of progress.

Standards Are Insurance

I keep getting distracted from writing this long thing by responding to the discussion created by the last short-ish thing, but I wanted to explicitly call out one aspect, namely that standards are a form of insurance.

More correctly -- and apologies if this sounds like a Planet Money episode -- vendors sell derivatives contracts (insurance) against the proprietary nature of technologies. I.e., as a hedge against winner-take-all dynamics of network effects and the potential for monopoly rent extraction. Adopters of that technology often refuse to buy it at all without the availability of a derivative to cover their risk of lock-in.

The nice bit about these contracts is that the results (price) are free to the public -- ITU and other old-skool orgs are exceptions -- meaning anyone who wants to implement can assess what it'll cost, and if they can provide a solution at a lower to-end-user price, they can compete under the same terms. The public nature of the derivative contract can have the effect of lowering the price of the good itself in markets that clear and have many participants.

Standards organizations are correctly understood as middle-men or market-makers for these contracts.

Update: It may seem strange to some that derivatives contracts (insurance) can drive prices down, but it happens in many industries. E.g., satellite insurance has done wonders for the commercial launch vehicle industry. And who would fund the construction of new cargo ships if you couldn't convince enough people to ship their precious goods? Insurance matters.

What A Breakup Would Look Like

Karl Dubost asked what a plan would look like for a W3C split along the lines I proposed in my last post. It's a fair question, so let me very quickly sketch out straw-men while noting that I would support many alternative plans as well. The shape of the details might matter, but not as much as movement in the right direction, and I have faith that the W3C members and staff would do a good job of executing on any such plan. Here are some general forms it could take, both of which seem workable to me:

Spin-Off With Cross-licensing

Taking many of the W3C's activities to a different organization might be traumatic for some members due to IPR concerns. If the members agree that this is the most important consideration, a pure split could be effected, leaving smaller, parallel organizations with identical legal arrangements and identical IPR policies in place. Member organizations would, in a transition period, decide to move their membership to the spin-off, stay with the W3C, or join both (perhaps at a discount?). A contract between the new organizations would allow perpetual cross-licensing of applicable patent rights.

The risk to this plan is that it may not be clear that one new organization would be appropriate -- remember, we're talking about many strange bedfellows under the current W3C umbrella -- so perhaps this may only work for whatever center of gravity exists in the spun-off concerns. Smaller efforts (Java-centric APIs, etc.) may want to find other homes.


One or more of the sub-efforts on the block may wish to find a new home in an existing standards organization. For these efforts there is likely to be larger mismatch between processes, IPR policies, etc. than a spin-off would entail, but the benefits to both receivers and members are clear: a viable home for the long term is hard to build, but coming home to "your people" isn't nearly as difficult. XML standards, for instance, have a long history at OASIS and it's unlikely that many members who care primarily about XML at the W3C aren't also active there. Transfer of IPR in this case is likely to be more fraught, so contracts which stipulate license from the W3C to these new organizations would also need to include clauses which cause the receiving orgs to exercise similar processes to the ones currently in place for the standards which they receive ownership of. The contract would also need to stipulate that RF never be endangered for new versions of divested specs. I haven't thought hard about transfer of membership under this scenario, but pro-rated and discounted membership terms at all merging organizations -- but only for divested activities -- might work.

Whatever path a breakup takes, the W3C should listen to each of the non-web communities it's spinning off and work to ensure that their needs are met in the process. There are lots of details I don't have time to think through right now, but none of the ones I can identify seem like deal-breakers. The biggest missing piece is the political will to make something happen in the first place.

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