OECD - Session 2, Stream A

Ottawa, ON

--- Upon commencing on Wednesday, October 3, 2007 at 11:24 a.m.

MR. OXLEY: Without further ado it's my pleasure to introduce to you David Crane. He is going to be leading a session on Business 2.0 and innovation: Business use of the participative Web.

David is the global issues columnist at the Toronto Star so not a better person to lead us off.

Thanks, David.

MR. CRANE: I want to welcome everybody to this session, which I think you will find follows very nicely on the first session we had. So I think there is a nice fit there.

We have asked each panellist to speak for about 10 minutes. That should allow for a healthy kind of discussion afterwards.

We hope to create a few waves. There's an old Chinese saying: In order to have a wave you have to have a stir of the wind. So maybe we will get some stirring from our panellists. I hope so.

It's a very exciting time. You heard this morning that we have about a billion-odd Internet users around the world and now we are thinking, as we look into the future, the next billion is going to be coming along and this is just part of the compounding effect of the Internet.

We are at a very exciting time because we have now had a decade of learning curve. We have now had a period in which an Internet generation has started to emerge, so this is a very nice time to be talking about some of these issues.

Our focus is going to be on the business side, which is very important because in the rich countries of the world we are facing this great challenge of adjustment, where do the new jobs come from, what are going to be the new activities that we will create to provide a decent standard of living in our own societies to replace those activities we lose. So how do we create new businesses.

We are confronted with a major challenge of aging societies, so how do we improve productivity? We know that the main driver of productivity growth comes from innovation.

So I would like to start our session going with Anthony Williams who will be our first panellist.

--- Pause

MR. WILLIAMS: Thank you very much.

I wanted to start with a couple of reflections.

First of all, over the past, I think five years, I have engaged with a company called New Paradigm doing large syndicated research studies. Our focus has been on the impact of technology on business innovation and new models of wealth creation in the economy.

One of the things we started to observe is that there was a fundamental shift in technology around 2005, a kind of rethinking of the way that you build successful web-based communities and platforms and services.

Part of that was technological, but I think an increasingly important part of it was a new business philosophy about what it takes to build a successful online community or a successful Web service.

Now, the technology part was largely about the usability and accessibility of Web technologies. If you think about it, even with the birth of the Internet there was still -- for the most part people were passively conceiving or receiving information. Increasingly today we have tools that increase access, that increase usability that allow ordinary people to become programmers on the Internet.

So every time, for instance, an individual updates an entry on Wikipedia, every time you tag a photo on Flickr or upload a video to YouTube, or perhaps modify your profile and Facebook, you are effectively helping to build this global Web tapestry. You are effectively programming the Internet.

That's a fundamental change in the way that the Internet works today, I think in the way that people enjoy and use it.

But, as I said, I think this is also about a broader business philosophy, the way that companies, say like YouTube and Flickr and Wikipedia, and so forth, thought about the way that they build a successful Web service.

In the first generation of the Internet it was largely about creating a web site and pushing out and publishing information.

Increasingly today companies that are successful want to create platforms where individuals can co-create services and products and services or information, and so forth. I think that's a fundamental change.

The other thing that has changed is the way that -- the economics of the business. So rather then create a walled garden where people pay for access, they increasingly create an open space, a public square if you will, where individuals get access to free content and they find new business models to support that content creation or that content delivery.

Those business models today have largely focused on advertising, but I think, increasingly, they will find new and creative ways to create business models to support content creation on the Internet.

I think the other thing that's fundamentally changed is that there's a new approach to intellectual property and thinking about the way that companies leverage their internal sources of data and their software interfaces and so forth.

You know, initially, people jealously guarded that intellectual property and they jealously guarded the data and the software interfaces and so forth. Increasingly, today, you see companies opening up those software interfaces through application programming interfaces.

Amazon is a good example. We may hear a little bit about that in the future. But other companies, too, have found that by providing open access to the data and the software interfaces they can actually create a large community of external developers, and increasingly, users, who help build functionality on their platforms.

So one example would be Flickr, you know, where people not only upload their own photos, they tag them. Increasingly, you have seen individuals going on Flickr and actually building new ways to upload photos via mobile phone. A lot of the actual functionality on the Flickr platform was created by users and external developers, and I think the same is true of many of the most successful web services that we have seen evolving today.

The broader point I wanted to make, though, the implication for business are not confined simply to web services or online communities, but increasingly to a broader change in the economics of business.

I mean, what we are witnessing today is that some of the most exciting products and services are created not necessarily just by large, vertically integrated firms, but by teams numbering in the thousands, and sometimes even millions of individuals.

That's a pretty profound change, if you think about it. I think it's largely driven by the shift in the critical resources shifting from physical and financial assets to, increasingly, knowledge assets, and that's driven to profound changes.

One is that the barriers to entry in the economy have fallen dramatically. Because when you have a knowledged-based economy, effectively, the means of production, if you will, are largely a computer and Internet connection and a bright spark of creativity, so that individuals can participate in economic value creation in ways that were previously impossible.

The other change that is significant is the declining cost of collaborating, so that many of the activities that previously would have taken place inside the boundaries of a vertically integrated firm increasingly take place across large networks of partners and suppliers, and increasingly customers and other key stakeholders.

Because these costs are now lower, it's actually advantageous for companies who can find ways to leverage external knowledge, external skills, external sources of value, and build that into their value proposition that they deliver to customers.

So I think over time we have seen a shift from this large industrial corporation, which created most of the products and services that we enjoy today, to an extended enterprise, where the large, vertically integrated corporations started to extend globally and build, essentially, you know, replications of itself in other geographic markets.

In the 1990s, we saw the rise of business webs. Cisco was an interesting example, where it really said, We are going to focus on our core competency, which is in marketing and providing service and so forth, so we are going to build a large, vast, dynamic business web that involves hundreds of individual suppliers and partners that do everything else, and these business webs were increasingly enabled over the Internet.

I think what we are seeing today is the rise of something even different, what we called "mass collaboration" in our book Wikinomics. This is where you invite not just partners and suppliers, but a large external community of thousands, sometimes even millions of individuals, who find ways to contribute to the company.

In some cases, these things don't even involve companies. If you look at the Linux operating system, if you look at Wikipedia, these are products and services that are created almost entirely by large networks of individuals with no real central leadership, although -- I will get to this point in a second -- leadership is important.

The ability to filter, to set the values, to set the norms and so forth is important, but it operates on a different principle. Rather than having top-down hierarchical control, increasingly you see individuals who sort of rise through the ranks of the leadership on a mericratic basis. So it's a meritocracy, rather than just a hierarchy.

I wanted to provide a couple of examples. And I realize that the time is fairly tight here, but one of the interesting conversations that we had was with Procter & Gamble, and I think this puts the whole picture in context.

In 2000, they had what they called a "near death experience". Their stock price was declining, they were finding that their innovation success rates were also declining. The whole prospect of putting more money into their internal innovation processes was increasingly less and less attractive, so they said, We are going to source 50 percent of our products from outside of the boundaries of our company.

That was a fairly radical proposition and few companies had even contemplated something as dramatic as sourcing 50 percent of all their innovations for products and services from outside the company.

To put this into perspective, Larry Houston said, Look, we have got 9,000 world-class chemists inside of our company, they are at the top of their field, they are producing great products and services, but for every one of the 9,000, there are 200 that we know of who are just as good.

If you do the quick math, that's 1.8 million whose talents they think they could tap into. So a lot of what Procter & Gamble has done over the past few years is building that external network so that they can instantly tap into that wealth of 1.8 million people.

There was a gentleman who mentioned Innocentive, a network of 120,000 scientists, in 175 countries around the world, and this is one of the venus that Procter & Gamble uses to source external innovations. If there's a problem that the 9,000 people internally can't solve, there's a good chance that the 120,000 scientists in Innocentive can solve it.

So Procter & Gamble can post that challenge in Innocentive, and then hope that one of those people can solve it and, if they can solve it, they will get a cash reward.

There's many other examples that we could talk about, but I think I will just point out that for companies, if you think about the traditional product lifecycle, there is an enormous range of opportunities to get customers and other partners involved in the value creation process, everything from design of the actual product itself to testing.

Testing is an interesting thing. Mozilla Firefox, probably a few users in the room, have a network of tens of thousands of people who help test new iterations of the software. SecondLife, we heard about that fact that 99 percent of the value creation within SecondLife is done by the users.

Customization is an important role for customers.

Distribution, we have seen the rise of new distribution mechanisms for content. Napster was an early example, uTube, of course, is one of the most popular examples today.

The role of customers in marketing has become increasingly exciting. We once talked to Harley Davidson. They said the measure of customer loyalty for Harley Davidson is actually dermatological: it's the number of people who tattoo the Harley logo on their bodies.

And increasingly what you find is that, you know, people are expressing their enthusiasm for products and services over the Internet.

I will just conclude with one last thought, and perhaps we can talk about this a little bit during the discussion. One of the key challenges here are two things: one, the InnoCentive systems; and two, the intellectual property models.

The InnoCentive systems for most of the peer collaboration systems that we have seen, the InnoCentive systems have been mostly based around personal interest and fulfilment, things that all personally benefit from by collaborating with this particular community.

Increasingly, as companies move into this space, we are going to have to find new InnoCentive systems that actually reward people monetarily for their contributions, because if a company is going to make $1 billion off a product and service that customers contributed to, you better be sure that they can find some way to compensate the people who have contributed to that product.

So we have seen two models. One is contents. I think contests is a fairly week mechanism because, at the end of the day, only one person wins a contest, and perhaps thousands have contributed. The most important thing is what we might call the long tale -- and I think Bob may talk about this -- the fact that, you know, individuals can find ways to actual monetize their individual contributions.

And uTube is an interesting example because they have said, We are going to share revenue with the contributors of the most popular video. So I think that's a very promising development.

I think I'm out of time, so we can talk about intellectual property during the discussion.

Thank you.

--- Applause

MR. CRANE: Thanks, Anthony.

I think this whole world of open innovation and involvement with the Internet and enabling that kind of business model would be something we can discussion in our questions and answers afterwards. It's very exciting.

It's also an area of priority for the OECD as a big project on globalization and open innovation.

Our next speaker is Shenja van der Graaf.

MS VAN DER GRAAF: Thank you. Well, thank you for a very good first introduction of our business, 2.0.

What I would actually want to start with is actually with the whole idea that mass collaboration and communal activity defines the way people will work and live in the future. That’s a big claim that we’re all making here today that it will spur innovation and growth.

We heard that, during our first sessions that all users supposedly contribute content out of a basic human need, so to speak, to communicate or to gather knowledge and information or to express oneself creatively.

As such, users can create value for shareholders and firms in general and the firm can provide the platform for people who like to share and create content.

I think as most of us know, is that not all users do this and actually only a very small percentage of users currently are doing this. But there is a big differentiation as well among what people create. So, we’ve heard a little bit about lead edge users and people who just like to be in SecondLife and just have an avatar to people who just comment on someone’s Flickr pictures.

So, another thing that I would like to say is that the whole idea of everything being collective and goal driven is maybe quite misleading. As research done at the LSE and also others like Forrester Research has come with results that a lot of individuals who do create and who are online, they’re, a lot of them are actually individual driven. And they only like to collaborate to the extent if they gain something out of it or if they don’t know exactly what they’re supposed to be doing.

Like for instance, my focus has focused extensively on SecondLife and other virtual worlds, gaming, like Valve who made Counter-Strike and Half-Life, is that a lot of users who go into these kind of environments have particular needs. And they like to develop them and they like to create them. And these are really the most innovative kind of user you can actually think of.

What they do a lot of times is use their skills. But not everybody has all the skills if you want to come up with a -- to create a completely new first person shooter. You may only be able to program particular parts. So, you need the help of other people.

And this actually means that in the case of SecondLife or in the case of Valve or even Phillips Electronics who is experimenting in SecondLife and I work with them as well, is that they offer tool kits for user creation or co-creation.

So, the firm, whether that’s Linden Lab, whether that’s Valve or whether that’s Phillips in this case, they can actually provide the kind of instruments for the users to play with and to develop particular types of content. And what this means for the firm, as we’ve heard, is value but especially a lot of knowledge.

And this kind of knowledge can help these companies to become maybe more efficient. Also they learn a lot about -- they reduce and eliminate the costly exchange of need information between the users and the firm. So the firm actually has a relatively low cost means to access information and search functions that are provided by users about issues such as problem solving, idea generation, idea value.

So, the firm gets information about what users are of interest to them. And they are alerted to new tendencies. They can build (inaudible) in this way and so forth.

Obviously a lot of users are not necessarily aware of what this means for them because when consumers articulate their particular niches there are all kinds of issues regarding privacy, security. So the whole idea of being able to participate in this new environment, firms can collect a lot of data. And we may hear about this a little bit more.

But I think from a policy perspective we need to start thinking about what this actually means for users when they are unaware about obviously this kind of information that’s being collected.

So, the control is limited because the traffic is strictly regulated by the technological platforms and the social protocols. And whether that’s in a wiki, which the advertising is a lot of time, most of it is coming from Google, you can question actually how collaborative and how free we really are and about the democratic tendencies.

Not that I want to be negative because there’s a lot of good about it. But I think these are issues that we really need to think about, about how open this is.

And especially if you start thinking about our younger people coming online, the so-called digital natives which actually has a really cool stand here at the OECD (laughter) -- I’m promoting it. It’s really -- we really need to start thinking about education, about media literacy and all these policy issues that are derived from these thinkings of converging (inaudible) of participation and also that this whole idea of participation may not be a one to one copy to and apply to the business structure.

But I can talk about that during the discussion a little bit later. I want to give the word to the next speaker.

--- Applause

MR. CRANE: Thank you. I think that this reinforces what Anthony had to say, that we’re creating a whole variety of conditions which can only accelerate innovation which is going to be very good for all of us I hope.

Our next panellist is Daniel Bretons who will continue. I think it’s been so far a very interesting panel.

MR. BRETONS: Hello and good morning. I try to speak a few words in English and then I keep on going in French as I feel easier in my native language. So for those who want to activate your translation systems, I would give you some time to activate those systems. Just telling history before you implement and activate the system.

So, I’m a professor of information systems management at the ESCEM School of Business in France who are located in both places (inaudible) Poitiers cities. And for those who don’t know those cities, if you draw a line between Paris and Bordeaux -- Paris everyone knows, Bordeaux many people know for another good reason. Okay, so you have two major cities, one is 200 kilometres from Paris and the other is closer to Bordeaux, 300 kilometres from Paris to Poitiers. This is where I’m teaching.

Okay. I think now I can keep on going in French. Thank you.

MS VAN DER GRAAF: Thank you. Well, thank you for a very good first introduction of our Business 2.0.

What I would actually want to start with is actually with the whole idea that mass collaboration and communal activity defines the way people will work and live in the future. That is a big claim that we are all making here today, that it will spur innovation and growth.

We heard during our first sessions that all users supposedly contribute content out of a basic human need, so to speak, to communicate or to gather knowledge and information or to express oneself creatively.

As such, users can create value for shareholders and firms in general and the firm can provide the platform for people who like to share and create content.

I think, as most of us know, is that not all users do this and actually only a very small percentage of users currently are doing this. But there is a big differentiation as well among what people create.

So we have heard a little bit about lead edge users and people who just like to be in SecondLife and just have an avatar, to people who just comment on someone’s Flickr pictures.

Another thing that I would like to say is that the whole idea of everything being collective and goal driven is maybe quite misleading.

As research done at the LSE and also others like Forrester Research has come with results that a lot of individuals who do create and who are online, a lot of them are actually individual driven and they only like to collaborate to the extent if they gain something out of it or if they don’t know exactly what they are supposed to be doing.

For instance, my focus has focused extensively on SecondLife and other virtual worlds, gaming like Valve who made Counter-Strike and Half-Life, is that a lot of users who go into these kinds of environments have particular needs and they like to develop them and they like to create them and these are really the most innovative kind of user you can actually think of.

What they do a lot of times is use their skills but not everybody has all the skills. If you want to create a completely new first person shooter, you may only be able to program particular parts. So you need the help of other people.

This actually means that in the case of SecondLife or in the case of Valve or even Phillips Electronics, who is experimenting in SecondLife, and I work with them as well, is that they offer toolkits for user creation or co‑creation.

So the firm, whether that is Linden Lab, whether that is Valve or whether that is Phillips in this case, they can actually provide the kind of instruments for the users to play with and to develop particular types of content.

What this means for the firm, as we have heard, is value but especially a lot of knowledge and this kind of knowledge can help these companies to become maybe more efficient. Also, they learn a lot about -- they reduce and eliminate the costly exchange of need information between the users and the firm.

So the firm actually has a relatively low‑cost means to access information and search functions that are provided by users about issues such as problem solving, idea generation, idea value.

So the firm gets information about what users are interested in and they are alerted to new tendencies. They can build brands in this way and so forth.

Obviously, a lot of users are not necessarily aware of what this means for them because when consumers articulate their particular niches there are all kinds of issues regarding privacy, security. So the whole idea of being able to participate in this new environment, firms can collect a lot of data.

We may hear about this a little bit more but I think from a policy perspective we need to start thinking about what this actually means for users when they are unaware about obviously this kind of information that is being collected.

So the control is limited because the traffic is strictly regulated by the technological platforms and the social protocols.

Whether that is in a wiki, which the advertising is a lot of times, most of it is coming from Google, you can question actually how collaborative and how free we really are and about the democratic tendencies, not that I want to be negative because there is a lot of good about it but I think these are issues that we really need to think about, about how open this is.

Especially if you start thinking about our younger people coming online, the so‑called digital natives, which actually has a really cool stand here at the OECD (laughter) -- I’m promoting it -- we really need to start thinking about education, about media literacy and all these policy issues that are derived from these thinkings of convergence culture, of participation, and also that this whole idea of participation may not be a one-to-one copy to and apply to the business structure.

But I can talk about that during the discussion a little bit later. I want to give the word to the next speaker.

--- Applause

MR. CRANE: Thank you, Shenja.

I think that this reinforces what Anthony had to say, that we are creating a whole variety of conditions which can only accelerate innovation, which is going to be very good for all of us, I hope.

Our next panellist is Daniel Bretonès who will continue. I think it’s been so far a very interesting panel.

MR. BRETONÈS: Hello and good morning.

I will try to speak a few words in English and then I will keep on going in French because it is, I feel, easier in my native language.

So for those who want to activate your translation systems, I will give you some time to activate those systems.

I will just tell some history before you implement and activate the system.

So I am a professor of information systems management at the ESCEM School of Business in France, who are located in both places, Tours and Poitiers cities.

For those who don’t know those cities, if you draw a line between Paris and Bordeaux -- Paris everyone knows, Bordeaux, many people know for another good reason. So you have two major cities, one is 200 kilometres from Paris and the other is closer to Bordeaux, 300 kilometres from Paris to Poitiers. This is where I am teaching.

Okay, I think now I can keep on going in French. Thank you.

Je voudrais commencer, en fait, par une petite histoire pour vous dire que, pour les écoles de commerce, pour les business schools, le Web 2.0, ce n’est pas tout à fait virtuel, et pour les étudiants, ça peut être très réel.

J’ai un de mes étudiants qui avait beaucoup de mal à avoir un stage, à trouver un internship, un placement dans une grande entreprise de conseil à Paris, et il n’arrivait pas à avoir l’entretien. C’était très, très difficile pour lui. Alors, il a trouvé une astuce. Il y avait un forum de recrutement sur SecondLife, et comme il était très débrouillard, il a réussi à aller sur le forum de recrutement de SecondLife, et ça lui a permis, cet entretien virtuel lui a permis d’avoir un entretien réel. Donc, à travers SecondLife, ça facilité sa vie de tous les jours. Il était très heureux, donc, d’avoir ce stage de haute qualité.

Je voudrais revenir, avant de parler des modèles économiques... et je dis pour la traduction, modèles économiques, c’est ce que vous appelez au Canada les modèles d’affaires. Pour qu’on soit totalement clair, je vous le dis dans le même sens.

Je voudrais revenir, en fait, sur le rôle, en fait, de l’évolution des entreprises au niveau mondial depuis 20 ans.

En fait, on a vu depuis 20 ans, et c’est principalement parti de l’Amérique du Nord, et ça s’est étendu en Europe puis au Japon, en fait, un transfert massif de la production d’un certain nombre d’entreprises, production physique vers l’Asie et, notamment, vers la Chine, et on a assisté, ensuite, à une délocalisation en ce qui concernait les systèmes d’information, principalement sur une autre destination, l’Inde.

En fait, cette réorganisation de l’économie au niveau mondial, alors, si on prend une entreprise comme HP, Hewlett Packard, qui avait des centres mondiaux de recherche à Grenoble en France, elle les a, en fait, transférés en Asie, parce qu’elle avait, effectivement, probablement autant de compétences, et peut-être plus, à un coût inférieur.

Donc, il y a une étape majeure dans les années ’80, et je pense qu’avec le Web 2.0, on arrive à une deuxième vague de mutations profondes.

Ces vagues de mutations profondes, par exemple, si je prends le cas de l’industrie pharmaceutique, c’est une industrie, effectivement, où le développement des produits est soumis à des contraintes réglementaires extrêmement fortes, pour les raisons qu’on imagine, et le coût des développements, qui était de 400 à 500 millions d’euros, est passé maintenant à 1 milliard ou à plus pour les nouvelles molécules, en sachant qu’on trouve de moins en moins de molécules innovantes et que les coûts augmentent de plus en plus.

Donc, qu’est-ce qui se passe? Je regardais les statistiques de l’OCDE en matière de R&D, il n’y a pas très longtemps, et je me suis aperçu de quoi, que, notamment, l’investissement privé en R&D des grandes firmes américaines qui sont leaders dans certains domaines, et en pharmacie, notamment, baisse, et à ce moment-là, on s’aperçoit que plutôt que de dépenser de l’argent sur des équipes qui n’arrivent pas à trouver de nouvelles molécules ou avec des résultats en terme d’innovation difficilement mesurables, il est extrêmement intéressant d’ouvrir une plate-forme Web 2.0 à tous les chercheurs du monde entier, de leur soumettre des appels à projet, et de stimuler, finalement, la créativité en essayant de développer des molécules de cette manière, en réduisant les forts de R&D en interne.

Donc, je crois que, effectivement, c’est peut-être un nouveau modèle qui s’applique à l’industrie pharmaceutique qui va probablement s’appliquer à d’autres industries. On va vers une deuxième vague de modifications massives ou de mutations accélérées.

Maintenant, je vais vous parler, effectivement, de ce que nous faisons en France pour essayer de développer le Web 2.0.

Alors, en France, il y a une association qui s’appelle le Club informatique des grandes entreprises françaises, avec lequel j’ai eu l’occasion de travailler, et je travaille, bien sûr, encore, et ce club regroupe à peu près les 120 plus grandes entreprises françaises. Il y a celles que l’on connaît, comme L’Oréal, Michelin, Peugeot, Renault, et toutes les autres, et, en fait, avant de venir ici, Sasha (ph) de l’OCDE m’a posé la question et m’a dit : Est-ce que tu peux regarder en France où est-ce qu’on en est par rapport au Web 2.0?

Alors, en fait, j’ai sollicité, donc, les gens de l’association, et un groupe qui travaille sur le sujet des petites communications et médias, et, en fait, la réponse, c’est que dans l’ensemble, ces groupes qui sont des multinationales qui agissent au niveau mondial ont bien intégré les technologies des réseaux et les technologies des webcams.

Par contre, en ce qui concerne le Web 2.0, c’est différent. On peut noter que les entreprises qui ont une culture industrielle sont plus hésitantes à passer au Web 2.0 parce qu’elles ont une tradition de secrets, de protection de la propriété intellectuelle. Ce sont peut-être des modèles plus hiérarchiques, et quand elles testent, par exemple, leurs produits sur des groupes de consommateurs, elles le font d’abord faire... elles passent pas des agences de service externes plutôt que de le faire directement parce qu’elles ont peur d’un effet retour négatif au cas où ça se passerait mal ou elles ne contrôleraient pas les rumeurs.

Par contre, on peut dire que les entreprises de média en France ont l’habitude de l’interactivité beaucoup plus forte puisqu’il y a déjà des sondages en ligne, à la télévision, on peut envoyer des SMS sur son téléphone, répondre, et que ces entreprises, elles mutent beaucoup plus vite, et c’est lié à leur culture, en fait, vers le Web 2.0.

Je vous dirais que, fondamentalement, la vitesse d’évolution dans le Web 2.0, elle est liée à un certain nombre de valeurs qui caractérisent les entreprises, de valeurs culturelles.

Alors, on va peut-être passer à la diapo suivante.

Le président de cette association des grandes entreprises françaises, du Club informatique des grandes entreprises françaises, est le directeur des systèmes d’information d’une entreprise qui est leader mondial dans son domaine. C’est Essilor, et c’est grâce à cette entreprise que je peux voir bien ce qui est écrit sur ma feuille de papier, et un certain nombre de vous utilisent peut-être des verres Essilor.

En fait, c’est un homme d’avant‑garde, et il a commencé à introduire, au niveau du CIGREF, il a commencé à introduire, donc, des wikis, des forums Web 2.0, à l’intérieur du CIGREF et dans son entreprise Essilor, ce qui veut dire que le mouvement vers le Web 2.0, il va se faire. Il va se faire lentement, mais il va se faire en France, en tout cas.

Maintenant, je vais vous parler, effectivement, d’une question qui m’a été envoyée, parce que nous avons des groupes de travail en interne en France.

On m’a dit : Tous ces gens qui participent au Web 2.0, ils passent du temps, ils dépensent de l’énergie. Dans certains cas, il y a une création de valeur au bout.

Alors, comment est-ce qu’on la mesure exactement?

Est-ce qu’elle est prise en compte dans les statistiques de l’OCDE, et effectivement, si le phénomène Web 2.0 se développe, avec toutes ces énergies qui vont participer, est-ce que l’OCDE pourra dire c’est des productions nationales ou des productions mondiales de création de valeur à la production qui va augmenter? Comment le mesura-t-on exactement?

Alors, cette question, elle m’a été posée par Gilbert Réveillon, qui est le directeur marketing d’une entreprise de service en France qui s’appelle Laser Marketing.

Voilà! C’est ce que j’avais à vous dire sur ce sujet. Donc, je vous remercie, et je répondrai avec plaisir à vos questions. Merci.

--- Applaudissements / Applause

MR. CRANE: Thank you, Daniel.

I think an interesting idea in the pharmaceutical industry, again a further elaboration and open innovation and what Anthony called the extended enterprise.

Our next speaker is Paul Misener from Amazon. I am in their computer and categorized in a certain way, because periodically I get e-mails telling me a new book on a certain subject.

MR. MISENER: Thank you, David. And thank you for being a customer. We need all of you.

Thanks also to Industry Canada, the OECD, for bringing this group together. It's an important conversation to have and we ought to all be grateful to the Government of Canada for pulling this together. I look forward to working with you all in leading up to next summer's meeting in Asia.

Also, I would like to commend Graham and Sacha's(ph) work in the OECD document that you may be aware of. It's a great survey. Although it's a bulky document, it is a quick read and so I do commend that to you.

I want to use my time this morning to talk about two things. One are some of the UCC, User Created Content services that Amazon helps support, and then I want to talk about some of the key public policy and policy-making challenges that are generated by the participative Web and UCC.

The first Amazon service is, 12 years ago when we opened our virtual doors we were a pure retailer. We bought goods wholesale and sold them off retail. But right now we have changed fairly dramatically and the key component of our business is serving as a platform and service provider. We provide goods and services to buyers and sellers on the Web.

A couple of those services I think you have all become accustomed to. One of them, one of the initial UCC services, is customer reviews. It was a very novel concept at the time, now accepted generally, but the novel concept was that a retailer selling a good actually allowed consumers to come on and criticized the good that is being sold. Imagine a brick-and-mortar store allowing someone to walk in off the street and say "This is a lousy piece of junk" and put a sign in front of it saying so. We did that and our customers have been the beneficiaries of it.

We have also provided this platform for sellers. We call this "marketplace" at Amazon, but it is doing what eBay and other companies do as well, allowing sellers to come on our site and sell their goods, which we never touch. We never see these goods.

In fact, we have well over a million sellers selling through Amazon.com today and competing directly with the things that we sell. So our retail business is but one of the many retailer sellers that operate using the Amazon platform.

There is something novel and sometimes misinterpreted news service that we provide called "Mechanical Turk". The concept is the selling of human intelligence from the providers of human intelligence to a central buyer of that intelligence.

For example, photographs are very difficult for machines to analyze and categorize and describe, but they are very easy for humans to do. So one of the tasks available through this service is for human beings to look at a set of photographs and categorize them, and these human beings are paid for it. This is all done through the Amazon platform in a marketplace fashion.

There are also some sort of seemingly mundane avenues of supporting UCC -- I'm sure Bob will discuss this a little bit more -- by providing for the long tail of, for example, the sale of books.

The largest brick-and-mortar on the planet. Maybe the ones in New York City, near Time Square, probably carry about 100,000, 120,000, maybe 150,000 different titles. Amazon carries millions. It's no fault of theirs. They have to support the shelf space, they have to air condition and light this building and pay Manhattan rents. We don't.

We even go further than just putting books in warehouses in obscure places, in deserts, and shipping them from there. We actually have now a thriving print-on-demand business, which means we only manufacture, actually press and bind a book, when it's been ordered. As a result, there is no upfront investment that is required, typically, of authors and small publishers.

So if you are not one of the best-selling authors, if you are not Margaret Atwood, you don't necessarily have access to the large publishing houses, this is a way that you, as a small or up-and-coming, soon-to-be-big author can start participating.

But I think there are really two principal public policy challenges that face governments around the world as a result of the participative web. The first, it seems to me, is balancing the responsibilities of UCC creators and UCC platforms.

The platform business that I describe to you is one that is different than having complete responsibility or complete control over a business, like we do for our mainstream retail business. The question is...well, obviously, I think I will start off with the obvious. The obvious is that providers of user created content ought to be held libel for damnation, for copyright infringement, for theft, fraud, counterfeiting, all those things. The difficulty is, of course, they are difficult to find. They may not be local, they may not identify themselves well, they may come and go quickly.

So the easy-to-find player in a possible transaction that involves, for example, copyrighted material or infringed copyrighted material is -- the easy player to find is the platform. So the question is: to what extent should the platform be responsible for combatting infringement or fraud or theft?

Should we require platforms, platform providers, to police their sites? Should they be required to actively seek out counterfeit materials, copyrighted goods, stolen goods?

Well, is that possible? I mean, when a third-party seller sells something through us -- and it could be a seller as large as Target or as small as you and me unloading a few items -- we never touch the item, itself.

So it may be fairly easy to tell that a new Canon EOS Rebel camera offer for $100 might not be legitimate, but it's difficult to say whether something that is priced fairly rationally, or perhaps not even rationally, maybe pennies on the dollar, if it's not a counterfeit product. It could just be something that was liquidated by the manufacturers. But if it is a counterfeit product, how can we possibly know? It's a tough one.

Also, is it fair? The question is would requiring platforms to police their sites, would that fair? The analogous off-line models, such as carriers or mall owners, they are not required to do the same thing. It really presents a difficult question to single out these providers of platform services.

So if mandatory policing doesn't make sense, perhaps just the market will solve this in a lot of respects.

We have instituted a lot of self-policing mechanisms simply because we want our customers to trust what they buy from us is legitimate or through us is legitimate. So maybe that is the best way to respond.

But if there is some sort of regime, like a "notice and take down" regime, applied to providers of platform services, who should the platform be responsible to? Just law enforcement? Just private entities that have some privity with the good in question, like the rightsholder for a pirated music CD? Or could it just be someone complaining about the low price of an item and claiming that if it's that low a price, it must be fraudulent or stolen?

So the second question, and I want to move through this quickly, the second question, I think, the major policy challenge facing governments around the world as a result of UCC and the participative web are the effects of borders -- the effects of borders.

Now, there are different kinds of borders. There are technical borders, and you will hear at lunch today about open-sourced standards. That's probably the easiest kind of a border to get around, to circumvent. And I mean "circumvent" in a good way. There ought not to be these sorts of borders. Thankfully, open standards have helped thwart that kind of a technical border.

There are also business borders, of course, walled gardens being an option. But if it's a competitive market, well, consumers can choose to be in our out of the garden. The only difficulty, the only time this arises as a policy problem is when consumers don't have the choice.

This is the fundamental concern at the heart of network neutrality, where there's a concern where the market power that exists among network operators could somehow be extended from market power over the network to market power over content. That certainly would be untoward, in our view.

Lastly, there are legal borders. Right now, there are overlapping jurisdictions and rules applied to online behaviour and, in particular, the operation of platforms.

There are geographical and substantive conflicts. Oftentimes even in the same country there are conflicting rules because there are conflicting agencies, either geographically based, like in a federal system, like in the United States or in Germany, or where substantive agencies have grown up in regulatory silos and our business models all of a sudden start to transcend the silos.

These kinds of challenges, it seems to me, these two policy-making challenges, balancing the responsibilities of the creators and the platforms, on one hand, and secondly, dealing with the effects of borders on the participative web, I think, are the ones that are best addressed by groups like this.

And I'm delighted that this kind of conversation is taking place because they are tough questions.

Thanks very much.

--- Applause

MR. CRANE: Thank you very much, Paul.

Two things. One is that I think you have reminded us, as we need to be reminded, that the Internet is not just about technology, it's about institutional and organizational arrangements in our society and law and Canadian newspapers, newspapers responsible for whatever is said in a Letter to the Editor that is published and have to verify that the person sending the letter actually exists and actually wrote it.

So you have described something at a different, but that is the same thing, the responsibility for assuring somehow the voracity or the genuine nature of what you are putting on your place, which in the newspaper is on the letters' page, and also making sure that it does not break some law in the content. Interesting.

Our final panellist is Bob Young, and he has, I think, some exciting things to tell us, as well.

MR. YOUNG: Thank you, David.

I just wanted to echo Paul's comment, which is to thank all of you for coming out to the conference and for working hard at understanding these issues.

You know, there's a reason I didn't go into government, and I think it's because I'm not smart enough. So let me leave you with sort of three thoughts from how I see the world, and I see the world from an entrepreneurial businessman's perspective.

Keep in mind, you know how monopolies are supposedly bad things and even all businessmen will tell you that the evil guy in, you know, pick a place, Redman, Washington, has to be evil because he owns a monopoly, the reality is every single one of us businessmen, when we get out of bed first thing in the morning we dream about owning a monopoly. We go to work and we work as hard as we can in order to achieve a monopoly. That's the Holy Grail of being an entrepreneurial businessman.

So the role of government, at the end of the day, is to foster freedom, but to foster freedom to protect us from guys like me who are trying to build monopolies, so the structure.

Larry Lessick speaks very well on this topic of old eastern Europe, after the Berlin Wall fell. The politicians there for a while all equated constitution and equated laws with oppression, so they all had this default saying, Oh, we don't need laws, we don't need constitution, because that's the evil Soviets.

Larry had to explain to them that, no, actually, America works precisely because we have a set of laws that work and he had to re-educate these guys, that, no, it wasn't laws and structure that's bad, it's the wrong laws and structure that's bad.

Our goal of laws is to maximize freedom, so here's the three thoughts. One is, what's the unique value of the Internet? What is the one thing?

You know, again, I’m not a smart guy which is why I appreciate you guys working on this stuff. So, I try and simplify everything down to one idea that I can understand and that I can act on.

The unique value of the internet is it connects everyone on the planet with everyone else on the planet. And so it’s astounding. You know, we talk about Amazon, we talk about Google. You know, we think of these guys as great gateways to the internet but the beauty of the internet is they aren’t.

They are simply service providers on an internet where you can do remarkable things without ever using SecondLife or Amazon or Google or Lulu for that matter. It’s this phenomenon of connecting every consumer to every other consumer that does things like create the opportunity for radically new business models.

So here’s the second thought for you. And this is a prediction that I’ve been expanding on for the last, well, five or six years. And I still believe it to be true, which is that ten years from now the top ten internet sites that you can name, you know how we think of Google and Amazon and Facebook and you know, whatever the other top ten are, five of those top ten are not in the top ten today is my prediction five years from now which means the laws you have to come up with are not to cater to me or to Amazon or to, you know, the guys at Google, it’s to create an environment where, you know, the guy in his garage in Kanata has every bit the opportunity that I do to be successful.

And so then let me talk briefly about Lulu and The Long Tail. Because here’s the key concept, again, this idea that if the internet connects everyone to everyone else, we got 6 billion people on the planet, we have the potential of connecting all 6 billion people to all the other 6 billion people, the idea is, and this is Chris Anderson who wrote the book, The Long Tail, talked to guys like Amazon and in particular NetFlix.

And the numbers, I don’t actually have them off the top of my head but the fascinating thing about NetFlix, this is the video rental, DVD rental company who stock a vast number of titles, they rent, more of their titles rent, something like 60 percent of their titles are made up of rentals of titles that are not in their 10,000 most popular titles.

Paul, do you know that number? Is it 10,000? It’s some huge number like that. Okay.

The point being, they rent more titles that are on a list -- if you and I sat down and tried to think of all the videos, all the movies, you know, Pirates of the Caribbean, Star Wars, that we could think of, we’d spend all day coming up with a list of 10,000 and we wouldn’t have a single title that makes up 60 percent of Netflix viewing.

And that’s the definition of long Tail. What Netflix actually benefits from are markets of a huge number of small markets. So, they are people who watch Quebec films, they are people who watch films on fly fishing, on drilling for oil in Iraq, specialized film that there are only 100 or 1,000 people on the planet who care about.

Okay. So, armed with these three thoughts -- two thoughts, something like that, a couple of years ago I wanted to start the next Red Hat. I built a company called Red Hat. It was in the Linux business. It’s going on doing extremely well. But I’m an entrepreneur. I’ve never worked for a company as big as Red Hat is today, much less tried to manage one. So, of course my colleagues at Red Hat kicked me out which just goes to show that they’re really smart.

And so I was looking for the next interesting thing to do. And what I stumbled across was if I believed in these three things, if I believed that the internet’s unique feature is it connects everyone to everyone else, that the established players are not established, the internet is still the Wild West -- there is no measurement, there’s a huge amount of lawlessness, there’s no police forces, it’s the Wild West.

So, it’s an area of huge opportunity. And if it creates an opportunity to not create large markets but create a large number of small markets, then what business should I start in? The one that we stumbled into is a print on demand publishing business where we are not the publishers, you are.

So, we just looked at the fact that most authors who send their manuscript to a publisher get rejection slips, something like 9 out of 10, something greater than 9 out of 10 of authors who write a book and send it to a publisher never get published.

The reason they don’t get published, in some cases it’s because these are really bad books. And one of Lulu’s claim -- you know we don’t have, you know we’re still growing. We’re quite large; we’re signing up 34,000 new authors a month now. We’re selling about a quarter of a million books a month that we print on print runs of less than 2. So, we print them one at a time as the customer buys them.

But the idea was that we’re not the publisher. The idea is most of these books that get rejected by the publishing industry get rejected not because they aren’t good or don’t have some value to them, it’s because they aren’t going to sell more than a thousand or 2,000 or 3,000 in a year.

But yet the people who were going to buy the 1,000 books on, I don’t know, some specific form of genetic research into some weird toe cancer -- so, no one wants to buy the thing except for the doctors who specialize in toe cancer -- now have a venue. They can publish the books themselves. We’re in effect eliminating the gateway.

So, our goal is not to compete with the publishing industry. It is to serve the needs of the long tail. It’s to serve the fact that of the 6 billion people connected to the internet, we all want to watch Pirates of the Caribbean, but equally we all have some area of interest that we share with only a few other people. And that’s the concept of businesses that are catering to the long tail.

Anyways, just the last thought on, again, an internet made up of billions of people talking to billions of people: intellectual property protections are of huge value and are very important for people who produce multi million dollar works of art like Pirates of the Caribbean.

In case you haven’t picked up on it, I like Pirates of the Caribbean. Maybe it’s because all entrepreneurs identify with pirates and I’m not sure of the connection. They deserve real protection for their investment of that work of art.

But the fact is, even their work of art is built on public domain knowledge. It’s built on the whole concept of pirates and swashbuckling which goes back hundreds of years.

So, we’ve got to get that balance right. We’ve got to get fair use right. We have to allow the next generation of creators to be able to build on what has gone before.

Thank you.

--- Applause

MR. CRANE: Bob, thank you. When I’m filling in my tax return next year I’m going to feel a lot better because I’ll be able to think of the government as a freedom fighter for trying to (inaudible).

You raised the point that five years from now that five of the top ten internet players will be those not on the list today. Do you think any of them will be from China or India or another part of the world or will they all be basically or largely based in North America or in Europe?

MR. YOUNG: Do these things work or --

MR. CRANE: Yes.

MR. YOUNG: Okay. The one thing I have learned in my career on the internet is not to make predictions (laughter). But I would say that would be a safe bet; but I’m not going to predict it.

MR. CRANE: Okay. Because you did make a prediction that five of the ten would be new players, so...

MR. YOUNG: I guess I did.

MR. CRANE: Yeah.

MR. YOUNG: Okay. I stand corrected.

MR. CRANE: I think we have time for not as many questions as we would like but about 15 minutes. So, I’d like to invite those who have had the benefit of listening to some very interesting presentations now to ask their questions or challenge what was being said or offer an alternative view of the world.

We have mikes spread all the way around the room and this is a chance. We have about 10 to 15 minutes, so don’t be shy.

We’ll start, mike 58, Michael Binder and then we’ll go over to the other corner.

Okay, Michael.

MR. BINDER: I’m from the government and what I’m interested in knowing is you keep talking about the kind of rules that we put in place do not interfere with this entrepreneurial spirit. What I want to know is: Are you talking about a global set of rules or every country come up with their own entrepreneurial set of rules so we win. So being selfish Canadians, and you know us a little bit, particularly you Bob, what's your advice for the Government of Canada in what kind of rules we set up to succeed in getting some of those fives coming on?

MR. YOUNG: I'm a huge fan of competition, whether it's competition in the marketplace or, in this case, competition among governments.

So, as you know, within Canada we have different tax jurisdictions as our Canadian governments compete to try and attract businesses into their jurisdiction. I think that's actually healthy to have that debate.

So there has to be some international coordination, but there's a lot of dangers. As you guys I'm sure know and struggle with every day, with international legislation, which is that the parties who have the strongest, what, political power internationally tend to get their agenda listened to.

The one we are all very aware of, let me talk a specific example. In media creation the U.S. -- it's a huge export industry for the U.S., so the U.S. would love it if everyone would impose the strongest possible intellectual property protections around content because that benefits their media export industries.

But in Canada, where we are trying to compete, we don't have yet a really strong media industry, suddenly being more innovative, not necessarily following the rules that work in the U.S. but coming up with a set of rules that allow Canada to create a content industry that's viable, might require a different set of rules, but yet if we coordinate these internationally we will be forced to adopt rules that might not suit the Canadian industry simply because everyone else is adopting the rules.

So this is why you guys are the smart guys and I'm happy that you're here.

MR. CRANE: Okay. Thanks.

Did anybody else want to say anything on that point or should we go to the next question?

Okay. A question over here now.

QUESTION: Thanks. My name is Michael Geist. I'm a Law Professor at the University of Ottawa.

Thanks to all the panels for some really interesting remarks. It's only to make a small remark to Paul.

I appreciated you raising the notion of balancing responsibilities between UCC creators and UCC platforms and it's only to remind people that particularly in a participative world that the creators are themselves platforms in many respects. The individual blogger who ensures or allows people to comment -- and of course many do -- faces precisely the same kinds of questions that those very large platforms do and oftentimes don't have the resources to try to ferret out whether or not something is infringing or defamatory and the like.

So when we are talking about the balance one of the interesting aspects I think is that the creators are themselves using your platforms to create their own platforms and face exactly the same kinds of questions.

MR. CRANE: Paul, did you want to say anything?

MR. MISENER: It's a good point, Michael. Thanks.

MR. CRANE: Questions?

Could you just identify itself at the start?

QUESTION: It's Jay Thompson from Ellis(ph), a carrier here in Canada.

I was at a Web 2.0 conference a couple of weeks ago in Washington and one of the panels there on innovation suggested that companies like Facebook, Amazon, and so on, would not have been able to develop and innovate to the extent they have if it hadn't been for, in the U.S., section 230 of the CDA, which protects them from liability as a publisher, and protections against liability on conduits against copyright liability, in the States being a notice and takedown regime, in other jurisdictions perhaps something else such as notice and notice regime.

Absent either or both of those laws, which is the case we have currently in Canada, what is the future for innovation by Canadian companies who want to get into the 2.0 space?

MR. MISENER: I will take a stab at it. Thanks for the question.

I think the future for Canadian innovation is very bright for a lot of reasons, not the least of which is an educational system which is excellent. and I think you have a government, as witnessed by this conference, that is very interested getting things right.

You know, I don't feel a political agenda here. I grasp a sense of urgency in learning what's actually going on, the facts should lead to inform to policy-making. So I think the future is very bright.

Your specific question had to do with save harbours, I will just kind of characterize it that way. Those safe harbours have been important in the States and elsewhere around the world to protect platforms from immediate liability. But there are attempts all around the world, including in B.C., to chip away at those kinds of protections simply because, as I mentioned in my remarks, it's easy to find the platforms and sometimes difficult to find, as Professor Geist would say, the smaller platforms that use a bigger platforms.

So I would just urge any movement in that direction be checked until we get to the real facts of the matter, which is that it would be extraordinarily difficult, if not impossible, for a distant, remote platform provider to do the sorts of policing that some people seek us to do.

MR. WILLIAMS: I think in addition to that, I mean the safe harbour to me seems to be fundamentally important because it enables a much more fluid and open approach to content creation that would be completely disabled if platforms like Facebook or Amazon or YouTube had to screen in advance every piece of content that came onto the system.

The other thing that will help of course would be some sort of technological screenings capabilities that have been put in place, but I think fundamentally you should allow people to contribute content and then not hold up the platform necessarily liable but find ways to then provide the right intellectual property rights, a system that can enable that kind of content creation.

MR. YOUNG: Yes. If I can comment on the second part of the question simply of is Canada good place to build a technology company.

I work mostly down in Raleigh, North Carolina and the Government of North Carolina are constantly worried about this themselves because they have the same sort of sense of inferiority relative to California where it seems all the cool stuff is happening.

And I'm having to reassure the Government of North Carolina and I will do the same for the Government of Canada, the amount of exciting stuff that goes on in Canada, the amount of innovation that I just bump into literally at any industry conference up here, you don't have to worry about the health of innovation in Canada. This is a very exciting place to do business.

MR. CRANE: It's a nice note to hear.

We will have one more question. The lady a microphone 58.

Then I will do a very fast sum up, and then I think, John, you want to talk about lunch.

Is that correct?

MR. OXLEY: Yes.

QUESTION: Thank you.

I'm Katarina Labrisis(ph). I come from the Government of Norway.

I have a question about this problem of sorting out the liabilities between the platform and the users. In order to sort out liabilities you have to know the identity of the users and it differs across different platforms that are being available on the Internet for collaborative use of the Web whether the user is actually operating under there or an identity or not.

Do you see the problem of managing identities as something that may have some kind of impact on this business and, if so, what kind of impact? Thank you.

MR. CRANE: You, Paul.

--- Laughter

MR. MISENER: I'm happy to let someone else answer that.

Just quickly, it's easier for us simply because we are in a buying and selling -- we are in a marketplace environment and so at some point everybody has to be identified because we are either getting money or sending money and that requires a modicum of identification that we can rely on.

I think it's much tougher for the businesses that are social networking sites where you can be an imaginary person, but you can't be imaginary and use a credit card.

MR. YOUNG: Yes. I tend to agree.

But I think we have to think of the Internet a little bit the way we think of Speakers' Corner in London in Hyde Park, is you can get up and say whatever you want but you are a real, physical person and if you incite people to riot the Bobbies can come along and throw you in jail. So society has to protect ourselves from people who might otherwise damage our society.

True anonymity, as some of the more radical Internet enthusiasts would have you believe, is probably not healthy, but neither would it be healthy to provide pure, what, transparency to who everyone is and what they say at all times. So, again, this another one of those gnarly problems that governments around the world are going to get to wrestle with as to what the correct balance is between privacy and anonymity and accountability, on the other hand.

MR. OXLEY: Did anybody else want to talk on that before I conclude or...?

Mr. Crane.

MR. CRANE: Well, first of all, I would like to thank our panel. I think they have done a superb job, raised a lot of very interesting points.

I think coming out of this, perhaps the overriding message is, of course, that technological innovation requires institutional, legal and organizational innovation, it doesn't happen in isolation, and therefore governments and entrepreneurs need each other and they have to work together. I think that came through.

I think, also, this whole idea on public policy, where the public policy side plays in, it's not only in the laws and InnoCentives that we have governing things like privacy and access, but, in a broader sense, the InnoCentive systems and our tax policy and matters of that sort.

I think that Bob made a very interesting point that one of the roles of government is there to be the freedom fighter, to make sure that on these principles which we value in our society of fairness and competition and proper access, and these matters that we sought, these can only be carried out and the institutions and laws can only be put in place by smart governments to do that. The private sector needs government to do this well if people are going to trust the systems that they want to offer for sale.

I think the other thing which to my mind was very interesting, which came out at the beginning and which was addressed by quite a few of our panellists, that's this whole idea of open innovation, the extended enterprise, that we are moving from one kind of way of doing business to a totally different way of doing business.

Procter & Gamble was mentioned by several panellists on the connect and develop strategy which they are following. This is an example, actually, Daniel, of an industrial company which has gone the open innovation route. You mentioned that they tend to have a different culture, but there's nothing much more industrial than making soaps and products of this sort. So I think that was very important.

And it is an aspect of globalization that's very interesting because open innovation leads to much greater opportunity for all kinds of suppliers and people to start businesses and jobs by feeding into these open networks of design, research, production and so forth.

The final point is that, with the web and open innovation, we have the prospect for accelerating the rate of innovation and bringing on new things at a much faster pace.

So I would like to, on your behalf, thank all our panellists, I think, for advancing our understanding and helping advance our thinking on this very important subject. And as a last point, just mention, as I did earlier, that this is one of the areas of research at the OECD now, the whole program dealing with globalization and open innovation, and what this means to the structure of how ideas and innovation occurs around the world in the years ahead.

So thank you very much.

--- Applause

MR. OXLEY: Well, thank you, David. And, wow, that was a powerful morning.

I stand between you and lunch, so I'm going to be very, very brief.

IBM's going to be speaking in the main hall here at 1:15, so please go grab your lunch and make sure that you have set aside some time for that. As well, the demos are in the back, take some time out there.

We are going to be starting right away at 1:45, as much as possible, to make sure we get you out of the food area into the different rooms. In this room, Michael LeBlanc is going to be leading a panel on user content creation, and in the Sussex Room, in the back, we are going to have Government 2.0, Government 2.0 and -- just let me get this right here -- Government 4.1, it went up earlier today, Government 2.0, by Hugh Stevenson.

So thank you, let's go have some lunch.

--- Whereupon the session concluded at 1234