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Wednesday, July 27, 2011

Standards as public goods-the case for free downloads.

In the good old days, only doctors, lawyers and accountants were considered professionals. Now, every service businessperson clamors to be recognized as a professionals. Right from actuaries, investment professionals, valuers, risk managers etc, associations of professionals establish institutes like CFA, FRM etc, and then attempt to get monopoly status for their members. Now, nothing per se is wrong with this attempt, though one can argue on how successful these 'professional associations' are in terms of value added to their members and society. After all, skilled work does benefit from licensing and discipline.

Now, professional standards not only propogate 'best practice' in the area, they also educate the users of what to expect from their licensed professional. So, charging a fee for those standards reduces the dissemination not only to members(unless purchasing them is tied in with the annual membership fee), but also to students and the laypersons(public/journalist). And this reduced circulation would impact analysis, dissemination and critiques by those not able to pay for them, especially in emerging economies.

Now, one may argue that nothing which comes free is ever valued. That is why one can follow the path of the international accounting standard setter(IASB, responsible for IFRS). It is a non profit organization dependent on its members for funding, but which aims to self sufficiency. Therefore, the standards themselves are free, but the value added guidance notes/interpretations are not free. The rationale being that only experts/professionals would require those, and can very well pay for them. There is special pricing for students and academics, while journalists have free access.

Or one can follow the path of the Indian accounting regulator(ICAI) with more than 10lakh students+members. It uploads all its publications in PDF format on its portal, thus allowing knowledge to spread freely. In a country like ours where knowledge is valued(but purchasing power is low), such a approach will work wonders in the years to come.

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