Free Riders and the Participation Bonus.
Free riders have been defined in wikipedia as
In economics, collective bargaining, psychology, and political science, "free riders" are those who consume more than their fair share of a public resource, or shoulder less than a fair share of the costs of its production. Free riding is usually considered to be an economic "problem" only when it leads to the non-production or under-production of a public good (and thus to Pareto inefficiency), or when it leads to the excessive use of a common property resource. The free rider problem is the question of how to limit free riding (or its negative effects) in these situations.For the purpose of People, Ideas & Objects “free riders” is a serious problem that we have chosen to deal with in our Revenue Model. Simply our free rider problem is that many producer firms would feel their best approach to supporting People, Ideas & Objects would be to abstain from actively participating, particularly financially, and leave the burden to other producers to carry the weight of building the application without their direct participation. Applications such as People, Ideas & Objects can not be built with that method of participation.
The manner in which we solve this free rider problem is by assessing a late fee of 300% on top of our annual subscription fee. The annual subscription fees are due and payable on January 1 of the current year and need to be paid in full prior to the participation in the communities or prospective use of any software. Late fees are assessed on any outstanding annual subscription fees as of March 31, of the calendar year in which the fees were assessed. 2010 subscription fees were assessed at $1.00. 2011 subscription fees will also be assessed at $1.00. All fees, subscription and late, for all years, 2010 forward are to be paid before participation in communities can commence or prospectively use any software. Fees are assessed on the producers annual barrel of oil per equivalent production. (Eg. a producer currently producing 1 million boe / day would owe $1 million 2010 subscription fees and $3 million late fees, and $1 million 2011 subscription fees.)
The participation bonus is related to the late fee in that as firms that may have chosen to wait or hold back their participation in developing People, Ideas & Objects applications. That may have subsequently decide to join the development or begin using the application. Are then required to pay the subscription and late fees back to 2010 to the current date. As these lump sum payments are received by People, Ideas & Objects they offset the current years budgetary revenue requirements of the firm, therefore reducing the current years budget subscription fee value and therefore reducing those subscribing producers annual subscription fees for the subsequent subscription year. That’s the participation bonus.
It’s necessary that a project such as this deals with the free rider problem and at the same time reward those producers that participate early. For the industry to successfully provide for the consumers energy demands, it’s necessary to build the systems that identify and support the Joint Operating Committee. Building the Preliminary Specification is the focus of People, Ideas & Objects. Producers are encouraged to contact me in order to support our Revenue Model and begin their participation in these communities. Those individuals that are interested in joining People, Ideas & Objects can join me here and begin building the software necessary for the successful and innovative oil and gas industry.