Final obsequies for MediaLab Europe

iCom, a system that connected several sites at Media Lab Europe and the MIT Media Lab 24 hours a day.

But by the middle of the year things began to go sour, and Media Lab Europe (MLE) was to spend the rest of its five short years under a cloud of recriminations. After various attempts to turn things around and save this prestigious project – and €50 million had been spent – the Irish government signalled no more money would be forthcoming, and the company went into liquidation in 2005.

Earlier this month the Public Accounts Committee (PAC) of the Dail, the Irish parliament, published the result of its investigation into the whole affair, concluding, (pretty mildly) that, “There were inadequate structures to provide for meaningful State influence in the affairs of MLE bearing in mind the scale of public investment,” and “The appointed liaison committee was not effective as a communication channel between the State, MLE and MIT.”

The risk of going global

The committee’s conclusions – widely reported already in Ireland but less-noticed abroad – could be viewed as just the endnote to an unhappy story. But it has far wider significance, given current moves by academic institutions and technology companies of every description to go where government grants are biggest and scientific salaries are lowest, to set up R&D operations around the globe. Can research be commoditised in this way, while preserving the intangible attributes that make the parent body what it is?

MIT may be a premier technology brand, but many other academic and commercial entities are putting their reputations on the line in the globalisation of R&D. Texas A&M, Johns Hopkins University, Imperial College London – all are among a crowd of universities that have formed ventures abroad, mostly in R&D but a few, such as the Singapore campus of French business school INSEAD, in the core business of conferring degrees. The universities do it to grow – attract new students, faculty, research funding and corporate friends. But every one of them, in embarking on these foreign sorties, has fretted internally about the risks to their reputations if anything goes wrong.

For MIT, to have a parliamentary committee air all the linen from the failed Irish venture amounts to a nightmare The appendices to the report consist of three representations by MIT to the committee, in which the institute makes point-by-point rebuttals of all charges against it. The most recent was submitted in December 2006 after the PAC sent MIT a draft copy of its report.

A silver lining. Somewhere

In broad terms, the committee attributed MLE’s failure to the severe downturn in information technology markets, which meant the anticipated corporate sponsorship of research was not achieved. It concluded that “MIT fulfilled all of its legal and contractual obligations under the agreements entered into with the government in the formation of MediaLab Europe.”

And the PAC acknowledges that attracting MIT to Ireland made a significant contribution to the development of the country’s IT sector, helping it to recover from the dotcom bust.

"Many companies which set up in Ireland visited the MLE premises, including Yahoo, Google and others,” says the PAC’s report. “The founders of Google cited MLE as one of the reasons their company came to Ireland.”

But it also notes that MLE wasn’t MIT’s only overseas venture to meet difficultues. The Cambridge-MIT Institute, a joint venture with the University of Cambridge, didn’t get renewed UK government funding last year after ploughing its way through £65 million of taxpayers’ money. And then there was Media Lab Asia, based in Mumbai, India. The Indian government set up the lab as a one year pilot. At the end of the year the venture did not go forward, though, as MIT pointed out to the Irish Public Affairs Committee, the company formed to run the pilot still exists.

The fine print

But consider some of the fine print of who-did-what-to-whom as purveyed in the Irish Public Accounts Committee report. By late 2001, just over one year into MLE's operations, the government liaison committee noted that the company was not achieving its funding targets and expressed concerns about the finances of MLE.

By 2003 it was clear that MLE was significantly under-performing, with corporate income significantly below projections. “MLE appeared not to display the ability to work its way quickly enough through the difficult environment,” says the PAC, adding, “This would have meant a re-evaluation of the basic business model of the organisation and probably a new strategic direction,” says the PAC.

By the end of 2003 serious questions were being asked about the financial sustainability of the company and these led to a demand for a strategic plan. The government appointed financial consultants to review this strategic plan in May 2004, and later commissioned an expert in the field to carry out an assessment of the company's performance against its funding objectives.

“The financial review confirmed that the company would be unable to implement a strategic plan without significant further funding from the state, was highly critical of the company's performance and very pessimistic about its prospects,” recounts the PAC. For example, the strategic plan included an assumption for revenue growth in the order of 32 percent, a rate that had never been achieved previously.

Trying to become viable

This new strategic plan required €9 million over three years in government funding. MIT would receive payments of more than €11 million in the period 2004 to 2010, having already received almost €22 million since the foundation of MLE.

Towards the end of 2004 the Irish government attempted to negotiate a restructuring of MLE, “to place it on a long-term viable path”.

But says the report, “[It] was disappointed with the level of MIT's commitment to MLE, particularly its unwillingness to agree to commercially driven research, or to commit finances to a restructured company.”

In its defence, MIT said it was unable to commit its faculty to the pursuit of commercially-driven research in view of its mission to focus on education and basic research to increase knowledge for the public good. Also, as a charitable educational research university, which primarily depends on endowments to pursue research activities for the public good, it could not commit funding.

And so finally, to the point: MIT may be a world leader in terms of generating commercialisable research, but that – as most academic institutions around the globe would claim – is not its raison d’être.

Counting the results

Whatever the economic backdrop, and despite the PAC’s view that MIT met its obligations, the failure of the MLE is an embarrassment all round. For example, one of the main findings of the PAC was that, “There was very little interest in applications for patents resulting from MLE research.”

“In the liquidation of MLE, one patent was sold for a nominal consideration of €20 while the others were sold for €40,000, to a group headed by a former employee who had been engaged by the liquidator to provide technical assistance and to protect the patent applications.”

Similarly, there was a difference of opinion between the Irish government and MIT on developing degree programmes and links with Irish universities. “No real progress was made in this regard,” says the PAC.

At the same time there was little academic output from the lab, according to government-appointed consultants, who concluded MLE had mustered just 24 publications in international scientific literature since its establishment.

“Assuming MLE was not motivated towards publication of its work, it was difficult to see what alternative path was available, or was being pursued by it, towards international recognition in the world of science and technology,” says the PAC’s report.

The MIT disputed the number of refereed papers MLE produced, claiming 21 refereed journal articles, 59 refereed full papers for conferences, and 62 refereed shorter papers, giving a total of 142 refereed works.