December 17, 2007

Moral Hazard 2.0

Brian Kelly has just posted on The Demise of Eduspaces, picking up on the email announcement that went out over the weekend that the elgg/eduspaces service was being shut down early in the new year. This service offered free accounts to users on the open source elgg platform that was developed by the EduSpaces team.

In a comment to the post, John Haccket of The Learning Landscape for Schools writes:

The Learning Landscape for Schools is a recently launched elgg installation for schools.
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We are supported by E2BN - one of the RBCs responsible for supplying internet services to schools and Local Authorites in the East of England
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As the demise of eduspaces has happened so fast LL4S is not really in a position to offer space to all the current account holders - many will probably fall outside the remit of our site. However, if there are now homeless blogging teachers out there that are keen to use elgg with their students we would happy to accept any existing data they have so they can continue their own blogs and bring a safe, global social network into their classroom.
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LL4S is not a free service as costs must be recuperated, expansion planned for and subscriptions are our only source of income. But I think we are great value!
I think my first observation here would be - if EduSpaces had been running under a subscription model, would they be shutting the service down in this way?

That said, this does demonstrate an opportunity for sites that do have resources to pick up subscribers en masse if an open source hosted application venture fails, by quickly setting up a 'disaster recovery', contingency or resilience migration service into an installation of the same open source application.

In his post, Brian writes: "So did those of us who signed up to the service (including myself) fail in our responsibilities to our communities by not expressing concerns over the bluntness of the statement that 'We reserve the right to modify or terminate the EduSpaces service for any reason, without notice at any time'? "

Maybe...

In another comment to the post, Alan Cann writes: "When I was a young man, I thought new year resolutions were naff, but I've made (and mostly kept) one for the past few years now. You just helped me decide what next year's resolution is going to be: work out my strategy for surviving the bubble burst which is surely coming in 2008 and will result in multiple sites/services disappearing."

I can't help thinking that there should be some mileage in tracking the consequences of the EduSpaces announcement, not just from the point of view of users as users and how they cope with the loss of this service, but also from the point of view of "policy" with regard to insitutions recommending (or not) the use of third party services.

As a starting point, I wonder if the following idea, from The Observer Leader on Sunday ("A very British bubble for Mr Brown") is of any use? The piece opened with the following paragraph:

The buzz words in the world of finance these days are 'moral hazard'. That is economist-speak for what happens when people who have engaged in risky business and fallen foul of market forces are let off the hook. It is the recognition that when you give dodgy lenders and borrowers an inch, they recklessly gamble for another mile
Wikipedia (all hail...!;-) defines moral hazard thus: "Moral hazard is the prospect that a party insulated from risk may behave differently than it would if it were fully exposed to the risk. For example, an insured party's behaviour might be more risky than it would have been without the insurance. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions."

In terms of our actual use of services, and the expectations we have about their longevity, maybe informed by announcements from those companies themselves (Brian again: "as the service was relaunched on 8 October 2007 as 'the world's largest social network for education and educational technology' users of the service might be surprised at the sudden demise of the service."), what is our actual or implied 'moral hazard' position as applied to "free" third party web apps?

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Posted by ajh59 at December 17, 2007 09:04 AM
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