First Monday

Managing Risk and Oppourtunity in Creative Commons Enterprises by Andrew Rens

An eclectic mix of entities: businesses, educational institutions, non-profits and government departments make use of creative commons works to achieve their goals. Among these are newly emerging “commons enterprises”. Unlike entities which simply deploy creative commons as a tool in carrying out their ordinary activities, “commons enterprises” are structured around creative commons licensed works. This choice gives rise to unique opportunities and risks. What practical strategies can commons enterprises adopt to manage legal risk?


Introduction: Commons Enterprise?
Discussion: Managing Risks and Opportunities in Commons Enterprises



Introduction: Commons Enterprise?

What risks and opportunities face commons enterprises? This article examines some of the challenges facing emerging commons enterprises, and lists some of the strategies emerging to manage the risks.

Creative Commons and other alternative licensing schemes have succeeded in creating useful tools for open collaborative knowledge generation. Commons enterprises include new businesses, government initiatives and non-profit projects. Commons enterprises are distinguished by a strategic choice: to organize the enterprise around an open collaborative knowledge creation model supported by creative commons licensing. Some commons enterprises are ordered by revenue generation models. Other commons enterprises realize non profit cultural, educational and development objectives.

Creative commons licenses, and thus commons enterprises, are founded on copyright law. As a result many of the risks facing commons enterprises at this stage of development are legal risks, particularly of copyright infringement.

Artists, educators and entrepreneurs are deploying a number of legal and economic strategies to manage the risks endemic to commons enterprises.

This article briefly examines the notions of commons, creative commons and commons enterprises. The article then touches equally briefly on commons economics, which informs a discussion of revenue generation. Enterprise commons can be categorized in two broad categories; revenue generation models and non-revenue focused models. Emerging models in both categories are described. Because these models are based on licenses based on copyright law most of these risks are risks of legal liability. The article inventories some of the strategies that are for dealing with these risks.



Discussion: Managing Risks and Opportunities in Commons Enterprises

What do I mean by ‘commons enterprise’? What is a ‘commons’? Historically the word “commons” has been used in English to denote ‘land belonging to a community’ (Fowler and Allen, 1984, Oxford English Dictionary, Clarendon Press, Oxford). The city of Boston in Massachusetts has this type of commons (Boston commons), as does Cape Town in South Africa (Rondebosch commons).There is a similar concept in Bantu speaking societies in Southern Africa. Grazing land used in common by the community is known as idlelo in Zulu.

More recently ‘commons’ has come to refer to collection of creative work, licensed so that people have permission to copy one another’s work, and usually to modify and build on it. That’s what this article means by a ‘commons’.

Commons in this sense make use of alternative licensing. One example of alternative license are the GNU Licenses (General Public Licenses) used by the Open Source software community. Another example is the Creative Commons licenses[1]. This article focuses mainly on creative commons licensed work. Some of the ideas can be applied to other alternative licensing schemes and the commons they support.

Creative Commons
Creative commons licensing was launched on 16 December 2002. Since then, according to Wikipedia[2], millions of works have been licensed under creative commons licenses.

What is Creative Commons? Professor Lawrence Lessig, co-founder of Creative Commons offers this description:

“The idea (again, stolen from the FSF) was to produce copyright licenses that artists, authors, educators, and researchers could use to announce to the world the freedoms that they want their creative work to carry. If the default rule of copyright is "all rights reserved," the express meaning of a Creative Commons license is that only "some rights [are] reserved." For example, copyright law gives the copyright holder the exclusive right to make "copies" of his or her work. A Creative Commons license could, in effect, announce that this exclusive right was given to the public.” [3]

How do creative commons licenses operate?

An author of a work makes choices about license elements in an automated on-line process. The element of Attribution is automatically included in all licenses. The author must choose whether to allow others to use the work for commercial purposes or not. The author must also choose whether to allow others to make derivative works or not. If derivative works are allowed the author must consider whether to incorporate a share-alike provision which requires that derivative works may be distributed only under a license identical to the license governing the first work.

When these choices are made, the automated system expresses the licenses in three ways:

  1. “Commons Deed. A simple, plain-language summary of the license, complete with the relevant icons.
  2. Legal Code. The fine print that you need to be sure the license will stand up in court.
  3. Digital Code. A machine-readable translation of the license that helps search engines and other applications identify your work by its terms of use.”[4]

Creative Commons licensing has seen rapid growth, one measure of growth is 50,000,000 link-backs to the licenses in the first two years and ten months. [5] Amongst the diverse users of creative commons works are commons enterprises.

Commons Enterprise
Why commons enterprise? A number of different entities; businesses, non-profits and governments make use of creative commons works to achieve their goals. Businesses, non-profits and the public sector are all looking for new ways to generate and deliver content. Creative Commons licensing offers a new way, especially when it is combined with digital technology that makes the creation of identical multiple copies fast, cheap and easy. The strategies of these commons enterprises is to make or distribute content but without the traditional “all rights reserved” approach to copyright.

Commons enterprise refers to an enterprise, which mainly uses creative commons works to achieve its goals. A commons enterprise is a business unit, government initiave or non profit structured around the use of creative commons works. One of the uses of creative commons works is to generate revenue.

Whether they are profit motivated or not commons enterprises face many of the same challenges because they make use of creative commons works. These challenges include:

An important aspect of designing self sustaining enterprises is generating revenue from the work. Managing potential liability requires guarding against infringement of other people’s work;

Uncommon Commons Economics
The economics of Commons Enterprise is based on the uncommon economics of commons production. These economics challenge some traditional economic assumptions about economic incentives and organization; ‘its central characteristic is that groups of individuals successfully collaborate on large-scale projects following a diverse cluster of motivational drives and social signals, rather than either market prices or managerial commands.’ (Benkler, 2002).[6]

If a commons means something held in common how can it be a basis to generate revenue? Can commons based enterprises generate sufficient revenue to be self sustaining? Will any use of the commons which result in revenue generation necessarily erode the value of the commons?

The literature on the economies of Free Libre and Open Source software (FLOSS) enterprises suggests that a commons can be the basis of thriving businesses and other revenue generating enterprises[7]. The study of FLOSS is itself a growth industry. Benkler offers a useful description of commons from an economic perspective.

‘The salient characteristic of commons, as opposed to property, is that no single person has exclusive control over the use and disposition of any particular resource in the commons. Instead, resources governed by commons may be used or disposed of by anyone among some (more or less well-defined) number of persons, under rules that may range from “anything goes” to quite crisply articulated formal rules that are effectively enforced.’[8]

Working examples of businesses making use of creative commons works include Magnatune, an on-line music publisher. Magnatune allows consumers to listen to music without charge, other uses, such as in advertising or movies can be licensed for a fee through an on-line automated process.[9]

A number of different enterprise models are emerging. Some models have proven success stories. Other models are still being tested. The successes show that there is no principle that any revenue generation from commons will always destroy the commons. Suitable uses of a commons are generally non appropriative uses. These uses result in mutually beneficial relationships.

How is it possible for people to make money from a commons? It seems as if one of the factors is the concept of increasing returns. Increasing returns is an economic concept that in certain circumstances the more something is used, the more valuable it becomes.[10]

One phenomenon which leads to increasing returns is the network effect. The more people belong to a network the more connections are available in the network. Therefore the more people join a network the more useful it becomes to join that particular network. The same applies to a common standard, the more people use a standard, the greater the incentive to use that standard. Increasing returns may apply to all rights reserved works or commons licensed works.

People might have a number of different reasons to contribute to a commons. Some people might act from ideological motives, others act from utilitarian motives. In some cases the benefit an author derives from a growing commons is greater than the benefit that author could gain by trying to create or use an all rights reserved work.

In situations where co-operation can benefit everyone economists are concerned with defectors. Defectors, also called free riders are people who make use of a resource without contributing. An example would be someone who rides on public transport without paying, either through city taxes or through a ticket. If there is a large enough number of free riders they can make an activity unsustainable. An activity can become unsustainable when contributions from co-operative people are consumed by the free riders. If the co-operative people no longer benefit from their co-operation then they lose their incentive to co-operate. This problem is somewhat resolved in creative commons by the phenomenon of increasing returns. If simply using a resource increases its value then strictly speaking no-one can be described as a free rider. Cory Doctorow refers to commons in which users contribute to the resource even as they use it as “sheep that shit grass”.[11]

The nature of intellectual property contributes to the likelihood of increasing returns; one person’s use of a work does not deprive another person of the work. For example if you copy my song I can keep my copy. If you listen to a copy of a song a 1000 times a day I can still listen to it. Economists term this quality of intellectual property work non-rivalrousness. Digital technology also contributes making the cost of making many copies of a work very low. The more easily copies are available the more likely it is that large numbers of people will use that work.

Creative Commons licenses are designed to enhance the network effect, those uses which add rather than remove value such as creating derivatives are the possible uses permitted by the licenses.

The attraction of commons enterprises for non-profits engaged in disseminating information is obvious. I have also referred to businesses engaging in commons enterprise. What is the attraction of commons enterprises for governments?

There is an old saying “he who pays the piper calls the tune”. There is an increasing insistence from those who fund the creation of works that the works should be available as widely as possible. Creative commons and similar licensing coupled with the Internet is one way of distributing information widely.

Increasingly public sector patrons insist that the work that they pay for should be part of the commons. There is greater utility for the patron in accomplishing its non-profit mission. For example an education department which pays for textbooks to provide education, gains the greatest utility in having the material used as widely as possible. The utility is increased by lowering barriers to use as far as possible while preventing any exploitation contrary to the patron’s interests. This can be achieved through using a Creative Commons license, which allows the patron to specify how the work may be used.

Commons Enterprise Models
A number of commons enterprise models are either in operation or emerging. Enterprise models can be rather crudely divided into revenue generation models and non-revenue generation models. Not all revenue generating uses of works in the commons are profit driven. Many revenue generation commons enterprises models aim to be self sustaining enterprises run by the non-profit or even public sector.

Commons enterprises are not always aimed at revenue generation. Other objectives of commons enterprises are communication as an end in itself. This communication objective may be education, artistic expression or preservation of cultural heritage.

Revenue generation models
Most of these models make use of a works licensed under a creative commons non commercial license.[12]

Simple Commercial Licensing:
The author of the work distributes the work under a non-commercial model. She retains commercial rights which she licenses for license fees.

For example, a musician releases a song on-line for distribution. The song becomes popular and she licenses the song for use in an advertisement. In this example sharing the music freely through the Internet circumvents the gatekeepers of the recording industry. Sharing coupled with the ease and fidelity of on-line digital distribution allows an unknown artist to become well known without sponsorship by an investor who must recoup her expenditure.

In this model there are two sets of rights. There is a creative commons license which gives anyone some rights to use the work. There is an agreement in which the rights holder gives one other party the right to do something more than the license allows, such as use the work in a commercial.

Complex Commercial Licensing:
One variation on the simple commercial licensing model include distributing products in one format under a Creative Commons license while selling them under a standard all rights reserved license in a different format. An artist can release the song on-line under a creative commons license but also sell Compact Discs. Successful examples of this include Cory Doctorow’s novels; Down and Out in the Magic Kingdom and Eastern Standard Tribe[13] and Prof. Lessig’s book Free Culture.[14] In these examples a commercial publisher distributes the all rights reserved work, while the author makes the work available on-line for free download.

Another complex commercial licensing scheme is to release one version of a work under a Creative Commons license, while releasing a value added work under an all rights reserved license. One variation is to release a work under a creative commons license but also releasing it compiled together with some together with all rights reserved works. For instance a musician releases a song under a creative commons license on-line but releases an extended play or remix version through all rights reserved channels, on a Compact Disc with other songs or as part of a paid music inventory service.

Commercial Licensing Aggregator or Agent:
In this model an aggregator or agent distributes content released by others under Creative Common’s licenses. The aggregator or agent could be the operators of a website or an innovative record label. The aggregator has separate agreements with the content creators which appoint it to act as agent for the commercial licensing of the work. The aggregator charges a percentage of license fees earned for commercial uses, and passes the remainder to the artists.

For instance an aggregator could release music online made by a number of artists who have licensed the music under Creative Commons non-commercial licenses. The aggregator acts as an agent and collects license fees for inclusion of the music in compilations, on-line music services and use in movies or advertisements.

The advantages over the simple licensing model are that aggregation of content can increase distribution, and thus exposure of the work. Greater exposure increases the possibilities of revenue generation through licensing commercial use. An aggregator can also develop expertise and bargaining power in the commercial licensing process. An aggregator might automate the licensing process to reduce the transaction costs often involved in licensing copyright works.

In this model there are three sets of rights, the creative commons license gives anyone some rights to use the work. The agency agreement gives an agent the right to give others some additional rights. The rights which the agent can give to others are rights which were reserved by the license. The agent enters into two agreements, one with the rights holder and another with the person paying to use the work.

An author or aggregator releases content under a Creative Commons license for instance on a website. Revenue is derived from advertising, either from link backs to a website or from advertisements at the host website.

For example, a newspaper makes its on-line archive available for non-commercial use, but requires a link back to its site. The increased linkbacks increase the exposure of advertisements on the site and thus increase advertising revenue. The archived content could even be released under a simple attribution license, allowing other news source to reproduce the content but requiring them to link back to the source.

An alternative is simply selling advertising space on a website hosting creative commons work. This could be combined with the content aggregator model above.

Secondary Sources of Revenue:
This is the revenue generation model developed in the FLOSS communities. For instance a computer programmer creates an open source program, and distributes it for free. As a result she acquires expertise in the program reputation for expertise, and sells her service such as training in, consulting on and customizing the program.

Another example would be an educational model in which an educator or trainer distributes some material under a creative commons license but generates revenue from face to face training.

It is not necessary to use a non-commercial license for secondary income source models.

Non-revenue focused models
Artistic community investment:
In this model accomplished creators who wish to contribute to a particular community contribute work or certain uses of work to the commons. This is often motivated by a wish by established artists to give something back to a community, and to encourage a new generation of creators. For example musicians contributed work to ccMixter ( Their music is released under a special license which does not allow simple copying but allows sampling and mashing. The objective is accomplished when use of the existing donated work encourages the creation of new work, through transformative use of the prior work.

In this model the creation of works is sponsored by a patron. The work is licensed under a creative commons license. This model is suitable for use in education. Many educational institutions or government department of education spend large sums of money on textbooks. In this model the bulk purchaser becomes a patron, instead of only purchasing copies of a work. The patron either acquires the copyrights of a work, or determines the terms under which it is released. The work is released under a particular creative commons license either by agreement or by the patron as rights holder.

The creative commons licensed work becomes a far more useful resource to the education department than an all rights reserved work. Once the initial commission is paid no further copyright fees need be paid to a publisher. The book can be placed on-line for easy copying, modification and downloading. Educators are free to copy portions and even modify portions of the book. If a non-commercial license is used the work will be protected from appropriation by others who seek to use it and create a paid for version.

Different authors or editors can be paid to modify or update the book and it is not necessary to pay the original author or a publisher. A textbook could be developed according to the comments, additions and amendments of the educators and students who have used it. This could be managed fairly easily using the technology of the Internet to collate the proposed modifications, through wiki’s, discussion groups and listserv’s.

Payment for a work can be made directly to the author of the work. This model eliminates the need for a publisher, an intermediary who acquires the copyright in the work for profit. On the other hand publishers could develop innovative business models for managing the publication of creative commons works on commission from patrons. Publishers could also add value in managing the ongoing modification of the work.

The customer has been called the patron in this example. The difference for the customer is that no longer is she tied to the original publisher or author for modifications of the work. Instead competition is introduced. If a different publisher or author is cheaper, more efficient or produces a better quality derivative work then the customer is free to choose those works. While the work may not generate revenue for the customer there are sound financial reasons for customers to make use of this model.

Risk in commons enterprise models
Some potential risks affect most commons enterprise models. Most of the risks to commons enterprises identified at the time of writing this article, February 2006, are legal risks. Risks including the possibility of other people infringing the copyright of a commons work in a way which reduces the value of the work and risks to the enterprise though liability which it might incur.

To fully understand these risks it is useful to briefly revisit the economics of copyright. Modern economics of intellectual property are based upon the scarcity created by the provisions of intellectual property law. As explained in the section on commons economics intellectual property works are non-rivalrous. In the world of material goods if one person has something another person cannot use it at the same time. If I lend you my backpack then I can’t use it at the same time.

If I am reading a copy of a book you can read another copy, because the literary work is non-rivalrous. We can’t share the same copy of the book at the same time. But even when there is more than one material copy of the work, the literary work itself, the contents of the book is the same. In order to create a market in works like the literary work the law gives the author of the literary work an exclusive right, called copyright. That right results in scarcity with regard to some uses of the work. Just reading the book doesn’t fall inside the exclusive right, unless it’s a public performance.

Commons enterprises use creative commons licenses. These reduce the number of activities of a work that only the author can do. The author gives permission in the license for the work to be used widely, and keeps fewer rights for herself. The economies of commons enterprises rely on an inversion of the usual economies of intellectual property. Generally the more people who use something without paying the better it is. Creative commons licenses are however still based on copyright law. As a result the risks to commons enterprises are, at this stage of development primarily risks of legal liability and the violation of license conditions. As commons enterprise markets and models mature other risks may become more important.

Infringement of Creative Commons licensed work
All infringements of copyright in Creative Commons works are usually violations of the license. The license stipulates that a breach of the license terms cancels the license to use the work. Strictly speaking the license to use the work is cancelled but certain provisions such as the disclaimers and general provisions remain in force. Clause 7 of Creative Commons Universal License 2.5 states:


  1. This License and the rights granted hereunder will terminate automatically upon any breach by You of the terms of this License. Individuals or entities who have received Derivative Works or Collective Works from You under this License, however, will not have their licenses terminated provided such individuals or entities remain in full compliance with those licenses. Sections 1, 2, 5, 6, 7, and 8 will survive any termination of this License. "[15]

If someone breaches the terms of the license then the author or her agent can demand that that person stop using the work altogether. If someone has violated the license then the license states that she no longer has any permission to use the work at all. Continued use of the work after breach constitutes copyright infringement, which can lead to legal action against the infringer. Most jurisdictions impose civil penalties such as a damages award, and some impose criminal penalties for infringement.

In an infringement dispute the author or copyright holder or her agent will have to prove that the copyright holder is the author or author’s successor. She will also have to prove that the work meets the criteria for copyright. There is some variation in different jurisdictions but generally a work must be reduced to a material form, and be ‘original’. Original means it is the author’s own work and not a copy of another’s work.

To receive protection in a country other than its country of origin a work must be made an in country that is a signatory to the Berne Convention. Almost every country in the world is a signatory to the Berne Convention.

The author will then have to prove that the infringer used the work. The burden will then be on the infringer to prove that she had permission to use the work. The infringer may claim that the creative commons license gives her permission to use the work. If an infringer makes that claim she will have to show that her particular use is permitted by the license. If some of her use was not permitted by the license then she has violated the license. If the infringer does not claim that she has permission under the license then she will have to show some other basis on which she could lawfully use the work. Most jurisdictions impose civil penalties such as a damages award, and some impose criminal penalties for infringement.

Creative Commons copyright licensing has an advantage over conventional ‘all rights reserved’ approaches to copyright in dealing with infringement. This advantage is especially strong in respect of works made available on the Internet. Whenever an ‘all rights reserved’ work is available over the Internet the rights holder encounters problems of uncertainty and enforcement.

Uncertainty arises because in order for anyone to read, watch or listen to a work transmitted over the Internet the technology must make several copies. Copying is one of the exclusive rights reserved for authors. Some but not all legislation extends this to digital copies.

In the analogue world it is not necessary to make a copy of a work just to read it.

The right to read a work has never required authorisation. The right to read hasn’t received much attention from lawyers, it is an unregulated use. Digital technology makes a copy or several copies of a work whenever it is transmitted over the Internet. Just reading a work that is stored on a hard drive or disc creates a copy. Does this mean that every time a person reads a work on the Internet without express permission that person is in violation of the copyright?

Creative Commons licensing avoids this uncertainty by allowing copying, and thus browsing or reading but with certain restrictions, such as that the work must be attributed, or in some circumstances not used for commercial purposes.

Because ‘all rights reserved’ affects so many different uses of a work the right holder is faced with multiple often petty violations. However for creative commons licensors it is only necessary to deal with serious infringements of their copyright. Most uses which would be minor infringements of copyright are allowed by the Creative Commons license.

Copyright holders who want to enforce their rights against copying over the Internet face very difficult problems. The problems include anonymity of copiers, cross border copying and the relative invulnerability of copiers. Anonymity refers to the problem of tracing and identifying people who copy work over the Internet. Cross border enforcement is complicated by jurisdiction issues, and differing legal rules. The relative invulnerability of copiers is a consequence of technology. Digital technology allows people with relatively small resources to make and distribute multiple copies. A copier might in theory be liable for multiple copies but have no money to pay compensation for the damages awarded against her.

Creative Commons licensing reduces these problems. For instance a breach of a non commercial license is most likely to be by someone who profits from the infringement and therefore has resources to meet a claim. Infringement of creative commons licenses is likely to have a high profile since most low profile uses are already permitted by the license. A Creative Commons licensed work helps manage the risk of infringement by ensuring that the license or the link to the license is properly displayed or associated with the work…and so?

It is not possible to release a work on the Internet and at the same time ensure complete non-infringement. Copyright holders can however manage the risk of infringement.

It is important that author ensure that she had adequate proof of authorship. If someone other than the author is the rights holder then it is important for that person to be able to prove that transfer of copyright from the author to the current rightholder. Many countries have non compulsory registration systems for some types of work. For instance South Africa has a registration system for cinematographic films.[16]

Liability for Infringement:
Another potential legal risk for commons enterprises is liability for infringement of someone else’s copyright.

Direct infringement:
Liability for direct infringement takes place when the creative commons Licensor includes someone else’s copyright work in her work. An infringing copy is made when a person copies a substantial portion of a copyright work belonging to someone else, without authority from the author or rightsholder, and that copying is not justified by an exception to copyright.

One way to minimize this risk is to limit use of copyrighted works to insubstantial or exceptional uses. Exceptional uses are uses that are authorized by law, such as ‘fair use’ or ‘fair dealing’. Fair dealing is the Anglophone law equivalent to the US concept of ‘fair use’. Fair dealing and fair use are roughly approximate and not precisely equivalent to each other. Some works display a copyright notice that claims that no part of a work may be reproduced without permission. These notices do not affect the legal rights to make insubstantial and exceptional uses of the work.

An author can also lawfully make use of other creative commons licensed works according to the terms of their licenses. An author can also freely use public domain works. Works are in the public domain if the copyright has ended or if they have been dedicated to the public domain.

Indirect infringement:
This takes place whenever a person distributes an infringing copy of a work made by someone else. This category will apply when someone hosts infringing content.

For instance if an online music aggregator allowed people to upload music under Creative Commons licenses, but one of the tracks contained music that infringed another person’s copyright then the aggregator might be liable for indirect copyright infringement. Liability would only arise if the aggregator knows or should know that the music is infringing.

One strategy to reduce this risk is making it a term of uploading the work that the person uploading should warrant the title of the work. This means that the uploader agrees to only upload non-infringing work. This constitutes an agreement altering the normal licensing conditions of a Creative Commons license. In the Creative Commons license the licensor of the work does not warrant the title of the work. This agreement applies only between the parties. This kind of additional agreement just between the parties is authorised by Clause 8.of the Creative Commons licenses (2.5 at the time of writing) provide:

“This License constitutes the entire agreement between the parties with respect to the Work Licensed here. There are no understandings, agreements or representations with respect to the Work not specified here. Licensor shall not be bound by any additional provisions that may appear in any communication from You. This License may not be modified without the mutual written agreement of the Licensor and You.”[17]

It is important that there be written consent by both parties. Written consent by the aggregator is evidenced by the Terms imposed by the aggregator while written consent of the Licensor is established by written agreement. Ways of showing this an on-line environment is include typing, ticking a box or clicking a “yes” button. Probably the best on-line evidence of written agreement is an electronic signature.

Another strategy in managing the risk of indirect infringement for distributing content is to monitor the content. However this is costly, difficult, and probably won’t prevent all potential infringements.

In some countries, information distributors are offered immunity from liability for indirect infringement if they meet certain conditions. The conditions usually require the distributor to comply with notice and take down provisions.

For instance in South Africa a distributor could register as an Internet Service Provider to obtain the statutory protection of Chapter IX of the Electronic Communications and Transactions Act 2000.[18]

The Digital Millennium Copyright Act 1998 also has notice and take down provisions.[19] Complying with the notice and take down provisions of the DMCA might give an information distributor immunity from liability for distributing infringing content in the United States. The distributor must provide contact details. A person who claims that her copyright is has been infringed by work distributed by the information distributor can give notice, and the distributor must then removes the work from the site.

Contractual Risk
If the contractual rights between artists, aggregators and others involved in commons enterprises are not clear they may become involved in costly litigation. This can be prevented at least to some extent by clear contracts setting out the rights between the parties.

Asset Risk
There is risk to authors or rights holders of works who appoint an agent such as an aggregator to negotiate commercial rights for them, that the agent might cease functioning. If the author has ceded the copyright to the agent or giving the agent an exclusive license for commercial use, if the agent ceases functioning, the author will no longer benefit from the work.

If the aggregator ceases to trade or becomes bankrupt and the copyright is ceded the author cannot make use of it. The copyright is considered part of the assets of the bankrupt company and cannot be used until it is sold off by the liquidator of the company.

If a bankrupt company holds an exclusive license for commercial use then there is still a risk. Other agents will be reluctant to use the work because there might be a claim from the first (bankrupt) agent. Similar issues arise if an aggregator who is a natural person dies or is declared bankrupt.

This risk can be reduced by ensuring that the agreement between the parties does not cede the copyright.

Tools for managing many of these risks are available from the Business Commons Project. Both contract and assets risks can be managed using a variation of the Model Agreement for Business Commons.[20]

E-Commerce Challenges
There are a number of further risks and obstacles which impact on enterprise commons models, especially those online being deployed in the developing world.

These include issues of payment mechanisms, trust, security, identity and dispute resolution. These issues affect transactions over the Internet generally, sometimes referred to as e-commerce. They are well beyond the scope of this article. They are however particularly acute in many developing countries which lack the infrastructure to address the issues.

They arise from structural issues not specific to commons enterprises. Nevertheless they are critical issues which must be resolved before certain kinds of commons enterprises can operate successfully in many developing countries.




Commons entrepreneurs cannot completely avoid all risks. Because commons enterprise models are based on licenses based in turn on copyright law most of these risks are risks of legal liability, at least at present, are legal risks. These risks can be managed. This article outlines various strategies to manage and reduce the risks.

Commons enterprises also present opportunities; opportunities to share creative work, for innovative revenue generation models. The full potential of these opportunities are unknown. Although this article has listed a number of different commons enterprise models this is not meant to be a complete list, simply an attempt to describe and organize some of the strategies which can be employed to manage these risks.

Commons production relationships can be likened to mutualistic symbiosis, a biological phenomenon in which both participants benefit from the relationship. A cultural environment in which such relationships are able to thrive is healthier than a cultural environment in which such relationships are suppressed, for example through legislation imposing burdens on peer to peer communication.

Future analysis of the risks and opportunities of commons enterprises will depend on an emerging behavioral economics of collaborative knowledge production. Creative commons licensing and commons enterprises are however still based on copyright law, currently premised on economics of scarcity. End of article


About the author

Andrew Rens is the Legal Lead for Creative Commons South Africa (, a co-founder of The African Commons Project ( and moderator of the cc-enterprise discussion list. As a fellow at the Stanford Center for Internet and Society ( his research focuses on access to knowledge, collaborative creative works and the legal issues of the Digital Divide. After qualifying as an attorney Andrew Rens taught law and practiced human rights litigation at the Wits Law Clinic ( He subsequently taught Master’s courses in Intellectual Property, Telecommunications, Broadcasting, Space and Satellite, and Media Law and pioneered a course in Information Technology Law at Wits Law School ( He is currently based in Johannesburg, South Africa where he consults on ITC and IP.



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9. Magnatune at accessed on 29 April 2006

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11. Katherine Macdonald (2003) “Interview: Cory Doctorow” Strange Horizons (31 March 2003) at accessed 30 April

12. Creative Commons at accessed 28 April 2006

13. Cory Doctorow, Down and Out in the Magic Kingdom Tor Books (2003), and Eastern Standard Tribe Tor Books (2004) available for free download at accessed 1 May 2006

14. Lawrence Lessig (2004) Free Culture How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity Penguin Press accessed 17 April 2006

15. Creative Commons at accessed 30 April 2006

16. South African Companies and Intellectual Property Office accessed 1 May 2006

17. Creative Commons at accessed 30 April 2006

18. South Africa Government Gazette accessed 28 April

19. Public Law: Pub. L. 105-304 U.S. Statutes at Large: 112 Stat. 2860 (1998), Title 17 United States Code

20. Open Business Project accessed 1 May 2006, drafted by Andrew Rens



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Cory Doctorow (2003) Down and Out in the Magic Kingdom Tor Books

Cory Doctorow (2004) Eastern Standard Tribe Tor Books

First Monday Special: “Open Source” First Monday Special Issue #2 (3 October 2005) at accessed 29 April 2006

Lawrence Lessig (2004) Free Culture How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity Penguin Press

Katherine Macdonald “Interview: Cory Doctorow” Strange Horizons (31 March 2003) at accessed 30 April

Magnatune at accessed on 29 April 2006

Open Business Project accessed 1 May 2006

South African Companies and Intellectual Property Office at accessed 1 May 2006

South Africa Government Gazette at accessed 28 April

Wikipedia, The Free Encyclopedia, accessed 28 April 2006


Editorial history

Paper received 5 May 2006; accepted 17 May 2006.

Contents Index

Creative Commons License
This paper is licensed under a Creative Commons Attribution-NonCommercial 2.5 License.

Managing Risk and Opportunity in Creative Commons Enterprises by Andrew Rens
First Monday, volume 11, number 6 (June 2006),