Home > Open Source > The Emerging Economic Paradigm of Open Source The Emerging Economic Paradigm of Open Source Submitted by Anonymous Reader 2005-02-11 Open Source 15 Comments Bruce Perens has written an article titled “The Emerging Economic Paradigm of Open Source”. About The Author Eugenia Loli Ex-programmer, ex-editor in chief at OSNews.com, now a visual artist/filmmaker. Follow me on Twitter @EugeniaLoli 15 Comments 2005-02-12 1:29 am If your going to start an open source software company you ought to read this. 2005-02-12 2:41 am it will allso silence or atleast reduce in volume those that scream about open source killing the jobs of programmers. i just skimmed most of it but the part about only 30% of the software made being shirnkwrapped is interesting to say the least. the reason is that the other 70% of the software is either written inhouse or by hired coders working as electronic carpenters. and those 30% is what open source replaces. and the workers there can then move on over to the 70% area where there will never be to many workers given the growth rate in use of electronics. 2005-02-12 2:26 pm “overhead such as advertising, the design and manufacture of an attractive package that is discarded after the sale, payment to the retailer for shelf space upon which the product is displayed”. Yes, it is inefficient. In the Soviet Union, leaders knew that, too. But once, as an experiment, in one of the cities, there was a butter sold in very attractive packages, along with the butter sold in something like paper: a usual package. To the great surprise of many intelligent Soviet people most customers preferred butter attractively packed. That experiment didn’t last long: Soviet people should not choose a package over the substance. Bruce goes the same way: a substance is all that matters. Sorry, Bruce- it ain’t true even for the Soviet people. “One telling example of the failure of the retail paradigm to innovate is the fact that the most important innovation in the last decade of global computer business, the web server and browser, had to be developed as an Open Source product at a federally-funded university research laboratory.” But, Bruce, only retail paradigm (Netscape) brought that innovation to the masses. Example: what if a cure of cancer is available today in some laboratory, what good it does to humanity without “retail paradigm” bringing it to the mass market, making it affordable and available to everyone? “In the case of a business that wishes to produce software for sale, rather than sell the service of programming or training, Open Source will be a difficult product to monetize.” I bought QuickTax to help me file taxes. I paid for it. I did not need “service of programming” or “training”- all I wanted a tool for the fair price to do the job. According to Bruce, 30% of software is following this “retail paradigm.” So, about 30% of software should better not go “Open Source” way. Thanks for clarifying it. “If Open Source Works, Why Don’t We All Build Our Own Cars?” “The Open Source paradigm works well for many products where the major value of the product is its design.” If I am not mistaken, a lion share of a car cost is design. A lion share of airplane cost is R&D, so how about opensourcing design of cars and airplanes for everyone to copy? After all, the Soviet Union was running very efficient economy by cutting costs of design of many products: from computers to spaceships. They just copied “capitalist” design. That was very efficient. Lets do it again. “Open Source is self-sustaining, with an economic foundation that operates in a capitalistic manner.” Except it either kills or not applicable to 30% of all software currently known. How would you like a flu shot that is not protecting 30% of people who had it, or kills 30% of them? “It is an extremely beneficial component of a free-market economy, because of the very many people and businesses that it enables to make their own economic contribution.” When I buy software I am making an economic contribution. I may be the dumbest or the brightest person in the world, but my $20 I paid for software are the same in both cases. I believe that money is more efficient contribution that exchanging your goods for my services. “And finally, users are the people whom we recruit to become more active participants in an Open Source project” I am the user- and you get lost. I have more interesting things to do in my life than to be your guinea pig. “Examples of this sort of company are IBM and HP. Hardware is a great product to sell along with Open Source software.” So why is IBM offloaded its PC division to China? ++++++++++++++++++++++++++++++ I feel like I am back in the U.S.S.R. when reading such papers. 2005-02-12 2:34 pm This article will take longer to read and digest. The important thing is that there is a coherent, non-philosoiphical argument put forth. In thinking about some code I would like to inflict upon the world, I asked a question of one of the PostgreSQL developer’s, whose personal site reflected some personal convictions. How did he felt his, my, and Larry Wall’s mutual boss would view the GPL? The response was “the GPL judges, in advance, other peoples’ motives”. (I’m paraphrasing a private communication from memory here.) I’ve got the utmost respect for RMS. I think history will sort him rather high, perhaps almost a geekish MLK. However, I think my “Greatest Thing Since Sliced Bread” project will have to be dual-licensed, GPL and (boost|python), because I grasp the FSF theology about as well as I grasp Calvinism, which is rather loosly. 2005-02-12 3:38 pm I agree with Russian Guy. That article introduces very weak theories without showing sources for his analysis. He presents data without telling where he got such data. Many of his conclusions are weak and some have been proven false by events, as RG stated. Most of all, I again found a sort of analysis which would like to show you that software market is different than any other market on Earth, kind of God-elected one. So rules other fields follow can’t be considered valid for software market. This is something that you can find in RMS words too. This very concept is totally wrong. OSS gurus would like to make us accept that you need to consider software different thank making dishwashers or cars or tyres. Reasons are unknown. C’me on, let’s be serious: we already have a way where people collaborate with each other to elevate their souls, knowledge and ethic reasons and they don’t care about profits. That’s called Socialism. I wish we had that but we don’t (yet). If you wish to play Capitalism instead (sigh), you have to play it like others do. OSS economy? You mean IBM, Novell, SUN economy, maybe? Results are that Torvalds works for money and other works for nothing. Clever, uh? 2005-02-12 5:47 pm people will select a pretty package over a grey box if they are presented with both and told the content is the same, and for the same price. but if the gray box is cheaper people will get the gray box. basicly, if there is nothing obviusly negative connected to the more attractive item, one will go for it. the strange thing is that if it looks good it may even counter some of the negatives about it. i wonder what wireing from natures side this comes from… still, the article stated that 70% of the software is made to order rather then premade and sold in boxes. i just wonder if those 30% counts games or not. and given the looks of a nice setup of gnome or kde, combined with a nicely designed laptop or desktop box set up and running on display, what will the person select? and for what reason? this is how most computers are sold these days. set up and and displaying windows or similar when people walk by. presintalled, nice to look at, able to handle most or all of the tasks you want it for and at the same price. what will people select? most likely windows if they are looking for a replacement system. maybe linux if they are a bit geek. god knows what when they are buying their first system, a that point feedback from sellers and other people are just as important as whats on display. so yes, nice looks can have a effect if thats the only diffrence found. but the full image isnt that simple. oh and netscape didnt just sell the webbrowser, they allso sold (and maybe still sell) one of the first publicy available webservers. the question is, what was their main income? the sales of servers, or the sales of browser? and could have have given away their browser to spike the sale of servers? most likely they could have but before ms did so they didnt have to. if nothing else is available then people dont complain as they dont know of anything else. 2005-02-12 10:35 pm “oh and netscape didnt just sell the webbrowser, they allso sold (and maybe still sell) one of the first publicy available webservers. the question is, what was their main income? the sales of servers, or the sales of browser? and could have have given away their browser to spike the sale of servers? most likely they could have but before ms did so they didnt have to. if nothing else is available then people dont complain as they dont know of anything else.” I believe Netscape never made *that* much money from their browser sales in comparison to what they were making from server sales. Their browser was freeware from day one, I’d be surprised if selling the browser was ever in their business plan. 2005-02-12 10:48 pm i seems to recall my first interaction with netscaps browser, in shareware form. but when ms released its internet explorer it turned freeware (and then open source). still, one could say that ms released ie as freeware to leverage its activex abilitys and iis (and therefor windows nt servers). what platform(s) did the netscape server run on? 2005-02-12 11:04 pm My opinion isn’t based on my own experience with Netscape’s browser, but on to the original press release for said browser. http://wp.netscape.com/newsref/pr/newsrelease1.html “Making Netscape freely available to Internet users is Netscape Communications’ way of contributing to the explosive growth of innovative information applications on global networks”. I don’t know which platforms their server ran on. 2005-02-13 12:14 am I perfectly remember that Netscape browser was a shareware software, though it wasn’t (probably) crippled to stop working after trial period. When MS released IE (if I remember well, it was IE 2.x or earlier 3 for Windows95), Netscape switched to a weird “free as long as IE is free” license (yes, they wrote that way). I remember me and some other co-workers had a discussion about this and complaining about such way to release software. We were working for a programming magazine so this was part of our job. I also remember that we had a discussion (and more complaining) about Netscape introducing new and non-standard tags with almost every release of their browser. Funny, uh? It was Netscape to start this war… I believe that they made big money with their browser in the very first beginning of Internet era. Later, mostly because of IE, they started to loose ground. But I think they did big money with both browser and server at first. I have no figures, however. 2005-02-13 12:56 am we must not forget that netscape have allways been a corporation. that mozilla is open source now have is more that they got squashed by the ms elephant rather then anything else. still, i think that some sites still run the netscape server. yes netscape pulled a nasty one with the proprietary tags but that does not say that ms then had green light to do the same. still they did… point is, netscape isnt a posterboy for open source, they just tryed to leverage its appeal when everything else had failed. makes me wonder what sun is up to with their opensolaris move… 2005-02-13 8:32 am There _is_ an open source car project running. Just ask google for “open source car”. 2005-02-13 10:55 am sveasoft takes money for a subscription of “developer snapshots binaries” and releases the source with their product. there is war about if it is in compliance of the GPL (http://slashdot.org/~TheIndividual/journal). 2005-02-14 12:33 am This article is the best explanation to date for business people and outsiders when they ask if Open Source is sustainable and why it works. Even friends and family ask me about who contributes and why. The chart is a nice summary. Frankly, I’d like to a much shorter version of this document, netting out all of the “my place in history” meta-stuff that Joe Investment Fund Mananger just doesn’t care about. I want the version for people who have never heard of “The Cathedral”. Also, Bruce, if you’re reading this, “Dubious” is an ineffective word in its context (because it’s merely opinion, and is inflammatory, iMho). 2005-02-14 9:00 pm because I grasp the FSF theology about as well as I grasp Calvinism, which is rather loosly. It’s not theology. It’s a very simple set of rules (the four freedoms) that are intended to improve society through balancing the needs of creators and recipients of software. Painting it like some kind of religion just misses the entire point. (The St. Ignucious act is a joke, in case you missed that.) OSS gurus would like to make us accept that you need to consider software different thank making dishwashers or cars or tyres. Reasons are unknown. No, the reasons are very well known and some people refuse to join reality. Software (like any intangible good) can be infinitely copied at zero cost by its nature. Putting controls on its distribution is counterproductive, except when those controls are serving innovation and R&D. It is highly suspected that the current climate in the commercial software development industry is not one that is maximizing innovation, because the companies rely on proprietary code and patents to recoup their development investments, and spend lots of time and money fighting each other while the user is stuck waiting for the next upgrade because he has no freedom nor the source code to hire someone else to maintain. GPL removes this inefficiency by allowing the user to do business with another vendor, protecting his infrastructure investment, while protecting the interests of the author of the code as much as possible by leveling the playing field for all involved parties.