Classroom Companion: Business

7.4 
 Conclusions
The traditional production method is in-house production in which the entire pro-
duction of the good takes place within the company. This method is used for almost 
all physical products. This is also the dominating production method in the digital 
economy. Microsoft, Facebook, Google, Netflix, and all the other big companies in 
the digital economy base their production method on in-house production.
The Internet has created more flexible production methods based on collabora-
tion over the network. Commons-based peer production (CBPP) is founded on 
voluntary participation and takes place without (or with only little) central coordi-
nation. This has led to large projects such as Linux, digitization of books and 
documents, development of free and open-source software (FOSS), and produc-
tion of technical standards end recipes. CBPP has created vast amounts of freely 
available resources such as statistics, encyclopedia, software, and digital books and 
documents.
Crowdsourcing implies that a firm invites individuals to participate in the devel-
opment or production of a good. The project is managed by the firm, but the work 
is done by a group of arbitrary individuals. Crowdsourcing does not depend on the 
Internet but is facilitated by it.
Investments in and financing of new products also take place over the Internet 
in terms of crowdfunding and peer-to-peer lending by bypassing traditional bank-
ing and investment procedures.
7.4 · Conclusions

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Questions
1. Who owns a service produced using the CBPP model?
2. How can services produced using the CBBP model generate revenues?
3. What are the main challenges of the crowdsourcing production model?
4. Discuss whether the crowdsourcing production model can produce digital ser-
vices of the same quality as the in-house production model.