Towards A Real Business Model For Open-Source Software

[kraftman]

@Sprewell

True freedom is always called anarchy by those who want to steal power.

Apopas, To me, the BSD is true freedom, while the GPL is communism. I think I can justify that claim more than you can yours.

What you're propagating is freedom for companies like Microsoft and Apple and not for the FOSS community.

[ModplanMan]

*sigh*

Open source inherently lowers cost of development and distribution by distributing those costs amongst outside companies and individuals. Open source is a more efficient system - by allowing outside contribution and distributing costs you create less pressure on any one component and reduce the need for expenditure.

Because the costs are reduced it becomes economical to allow software to be distributed. Failing to understand open source as a business fails to understand basic economics. Software doesn't just serve a demand, it creates it. In the same way paper becoming a commodity facilitated other markets like printing and art tools, software increases demand for developer time and expertise. Companies like Red Hat, Novell, Canonical etc. create models that work with these advantages, not against. They build models where software given away freely acts as input to demand for services, whether they be integration, customisation, storage or bundled with hardware. A cheaply reproducible good created with a cheaper, more efficient system is used to generate more value to genuinely scarce, hard to reproduce goods.

Saying open source and proprietary can coexist as part of a single model is an oxymoron. They are two fundamentally different systems that rely on different sets of assumptions about what is economically viable to give away and distribute. One takes advantage of modern technology to spread out and reduce cost and increase efficiency, the other places all burdern on a comparatively small group and assumes there is a cost in reproduction.

Not to mention the stupidity in the idea of calling one business model real due to simply an attempt to recreate old conditions whilst the other fake as it makes use of new conditions and continues to be successful for various companies that implement it.

In other words, companies look to add some value to the goods that makes their goods better than the competition in some way -- and that unique value helps them command a profit. But, the nature of the competitive market is that it's always shifting, so that everyone needs to keep on innovating, or any innovation will be matched (and usually surpassed) by competitors. That's good for everyone. It keeps a market dynamic and growing and helps out everyone.

So, let's go back to the "can't compete with free" statement. Anyone who says that is effectively saying that they can't figure out a way to add value that will make someone buy something above marginal cost -- but it's no different if the good is free or at a cost. Let's take a simple example. Say I own a factory that cost me $100 million to build (fixed cost) and it produces cars that each cost $20,000 to build (marginal cost). If the market is perfectly competitive, then eventually I'm going to be forced to sell those cars at $20,000 -- leaving no profit. Now, let's look at a different situation. Let's say that I want to make a movie. It costs me $100 million to make the movie (fixed cost) and copies of that movie each cost me $0 (marginal cost -- assuming digital distribution and that bandwidth and computing power are also fixed costs). Now, again, if the market is competitive and I'm forced to price at marginal cost, then the scenario is identical to the automobile factory. My net outlay is $100 million. My profit is zero. Every new item I make brings back in cash exactly what it costs to make the copy -- so the net result is the same. It's no different that the good is priced at $0 or $20,000 -- so long as the market is competitive.

Saying you can't compete with free is saying you can't compete period

However, the mistake here is to look at the market in a manner that is way too simplified. Markets aren't just dynamic things that constantly change, but they also impact other markets. Any good that is a component of another good may be a finished good for the seller, but for the buyer it's a resource that has a cost. The more costly that resource is, the more expensive it is to make that other good. The impact flows throughout the economy. If the inputs get cheaper, that makes the finished goods cheaper, which open up more opportunities for greater economic development. That means that even if you have an infinite good in one market, not all the markets it touches on are also infinite. However, the infinite good suddenly becomes a really useful and cheap resource in all those other markets.

So the trick to embracing infinite goods isn't in limiting the infinite nature of them, but in rethinking how you view them. Instead of looking at them as goods to sell, look at them as inputs into something else. In other words, rather than thinking of them as a product the market is pressuring you to price at $0, recognize they're an infinite resource that is available for you to use freely in other products and markets. When looked at that way, the infinite nature of the goods is no longer a problem, but a tremendous resource to be exploited. It almost becomes difficult to believe that people would actively try to limit an infinitely exploitable resource, but they do so because they don't understand infinity and don't look at the good as a resource.

Infinity is your friend in economics

[Apopas]

Apopas, To me, the BSD is true freedom, while the GPL is communism. I think I can justify that claim more than you can yours.

Obviously you understood very quickly my capabilities and your superiority over me.
And you think after that statement that you are capable of making profitable conversations.

heh

[yotambien]

Actually, for the sake of the quality of the discussion I think you guys would be better off if you refrained from making that sort of comparisons when talking about software licenses. It can't do anything but harm, or at the very least distract you (us) from the actual issues at hand.

[o0max0o]

Ok, I'm another one that made an account just for this interesting thread.

I hope my comment is read two or three times before actually getting replies.

You probably have strange definition of freedom. However, we're talking about the applications code not about you. :> GPL is community friendly, not communism.

I believe you have a strange concept of freedom. I will use the definition of "freedom" given by Wikipedia, the free encyclopedia: "Freedom is the state of not being imprisoned, enslaved, or otherwise constrained".

This is why I don't like Stallman and the FSF saying that they defend software freedom: they defend Stallman's definition of it.

In simple words (and using an extreme example): you are free to kill, if you do you pay the consequences according to the law (but there might actually exists a place, somewhere, where killing is legally allowed). What Stallman and the FSF take away is your freedom to kill. Whether this is good or bad it's not up to me to decide (although I believe my idea on the matter is pretty clear).

The GPL constrains developers that want to use certain software released under that license to do so as well. How is this freedom for the developers? All it cares about is what I like to call "end user freedom". I understand why GPL was created, I understand it is part of the success of the Linux kernel (the rest being that it totally rocks!) and the GNU ecosystem, still I find it very far from the idea of freedom, especially the GPLv3 which tries to impose restrictions on hardware too (ever wondered why Linus doesn't like it?).

An example of a perfectly FOSS (as per FSF definition) piece of software that never really grew, despite the GPL license: HURD. It's just crap compared to other projects. So, yes: licensing is not everything.

There are also some interesting, different point of view on the whole open source development model as it is nowadays (the advent of the internet has made it easier for anyone willing to learn to join a development team), for example that of the Ogre3D engine developers (LGPL to MIT license switch):

Why are we doing this?
The MIT license is short, easy to understand, requiring only that you include (simple) copyright & license declarations in your final applications. We hope using it will make it an even easier choice for people to use OGRE in their projects in future, thus driving even greater adoption of OGRE.

Won?t this mean people can ?rip off? OGRE in proprietary software?
The LGPL already allowed OGRE to be used in proprietary software, and this is something we?ve always encouraged. The main difference between the LGPL and the MIT License is that there is no requirement to release modified source code; only to include our copyright and the MIT license text in the final product.

While not requiring modified source to be released might initially seem like giving up an important motivator to contribute code back to the community, we?ve noticed something in recent years: 99% of useful code contributions come from people who are motivated to participate in the project regardless of what the license tells them they have to do. It?s our experience that a certain percentage of the user community will always participate and contribute back, and therefore encouraging adoption via simpler licensing is likely to result in more contributions overall than coersion via complex and restrictive licensing does. In addition, people who are internally motivated to participate tend to provide much higher quality and more usable contributions than those who only do it because they are forced to.

Just my two cents (Euro cents... shit, Euro is f***** up these days!)

[o0max0o]

What Stallman and the FSF take away is your freedom to kill

should read as: "What Stallman and the FSF do is take away your freedom to kill"

[Sprewell]

kraftman, "true freedom" has rules? What a joke, that's what those who are trying to steal power by setting those "rules" always say. The GPL and communism may not be exactly the same, but both disallow private ownership and both fail for that same reason. What's wrong with writing about a business model for open source on Phoronix? Obviously Mike thought it was worth publishing, whether you like it or not. I don't know how you brought Microsoft and Apple into this dicussion, but I bet they are very happy that a whole bunch of programmers have been infected by purist FOSS nonsense instead of competing with them.

ModplanMan, a little knowledge of economics is a dangerous thing. If the complementary model of services such as integration or customization is so efficient, why do proprietary software companies like Microsoft or Oracle dominate to this day? I'll tell you why: because the economics of actually selling a good that scales is much more powerful than the distributed efficiencies of open source. Saying a mixed model is an oxymoron is as silly as saying a mule is an oxymoron: it is almost always possible to mate different ideas and use different portions of each. No closed source developer says that there is a cost to reproduction, instead they understand that the fixed costs have to be repaid, which you and your guy Masnick don't seem to understand. It is funny how you call open source new and closed source old, when I pointed out in my essay that open source came first, so it is actually older. Masnick doesn't seem to understand that it's only an approximation to say that price approaches marginal cost, which is only true when fixed costs are low and there's lots of competition. However, price will never equal marginal cost, or you'd never pay back your fixed costs and you would lose money.

What the dummies who talk about free this and free that, such as Chris Anderson with his silly Free book or Masnick in the posts you linked to, do is take that common approximation and apply it to a completely different situation, where fixed costs to make software or movies are very high and marginal costs are almost non-existent. However, they show their economic ignorance by doing so, as you always have to pay back those fixed costs. It is true that you can sometimes be successful by giving one good away to sell another complementary good: those are called razor-blade models, named after companies that gave shaving razors away for free and then charged for the blades. Google does this with their search results, giving search results away for free in order to put lucrative advertising next to it. However, because the open source/consulting razor/blade model doesn't scale, it has now been empirically proven to have lost to closed source, in the last decade or so. As for Masnick's blathering about infinity and infinite supply, a little mathematical knowledge is a dangerous thing too.

Apopas, my only point was that your claim was weak while my claim had a lot more rationale behind it. If you want to make it about who's more capable instead, feel free.

yotambien, I was careful to avoid mentioning the GPL in my original essay, except obliquely through the failure of desktop linux. However, if the GPL/FOSS zealots are going to keep bringing it up, I have no problem bashing their silly arguments.

o0max0o, that was exactly my point in the essay: that pure open source gives all the freedom and power to the end user, with no thought to the developer. Perhaps this is understandable given how much power closed-source licensing has given to developers, but I find it strange that open source zealots keep talking about how open source is winning, despite the demonstrated failure of open source to break out of the consulting/server ghetto. Hell, it can't even win that niche. Thanks for the Ogre3D link, I hadn't heard about that.

[kraftman]

I believe you have a strange concept of freedom. I will use the definition of "freedom" given by Wikipedia, the free encyclopedia: "Freedom is the state of not being imprisoned, enslaved, or otherwise constrained".

I believe I do not. While in someones logic true freedom doesn't have rules what anarchy is?

In simple words (and using an extreme example): you are free to kill, if you do you pay the consequences according to the law (but there might actually exists a place, somewhere, where killing is legally allowed). What Stallman and the FSF take away is your freedom to kill. Whether this is good or bad it's not up to me to decide (although I believe my idea on the matter is pretty clear).

True freedom is also when you do not interfere in someone else freedom.

The GPL constrains developers that want to use certain software released under that license to do so as well. How is this freedom for the developers?

I'm talking about freedom for the code. In contrary the BSD allow others to take developers code and if developers don't want this how is this freedom for the developers?

All it cares about is what I like to call "end user freedom"

And I'm talking about such freedom Didn't I mention replying to Sprewell I'm talking about the code? :>

despite the GPL license: HURD. It's just crap compared to other projects. So, yes: licensing is not everything.

Couldn't agree more! :P

@Sprewell

kraftman, "true freedom" has rules? What a joke, that's what those who are trying to steal power by setting those "rules" always say.

If something you're calling "true freedom" doesn't have rules it's anarchy.

The GPL and communism may not be exactly the same, but both disallow private ownership and both fail for that same reason.

The GPL doesn't fail for the same reason, because it's not the same what communism was. If someone chooses GPL it's his will to do so and he has rights for the original name of the project. If someone takes his code and add some new things and shares it the original author even gets those new features.

What's wrong with writing about a business model for open source on Phoronix? Obviously Mike thought it was worth publishing, whether you like it or not. I don't know how you brought Microsoft and Apple into this dicussion, but I bet they are very happy that a whole bunch of programmers have been infected by purist FOSS nonsense instead of competing with them.

I'm just wondering why something like this appeared here. MS and Apple are happy there are maggots who develop for them for free (in anarchic way)

[o0max0o]

True freedom is also when you do not interfere in someone else freedom.

This is a rather poor rhetorical argument that I used to be fond of, but it really means nothing.
Freedom is just being free to do what you want, with no bounds (except the physical ones that are proper of your form, I guess) the rest is part of the "rules of society".

I'm talking about freedom for the code. In contrary the BSD allow others to take developers code and if developers don't want this how is this freedom for the developers?

Ok, then please explain in which way did TiVo break the code freedom. I am talking about TiVo because it is probably the biggest case that brought on the proposal of GPLv3. The code developed by TiVo was available, compilable and executable, and the contributions were given back to the community with the same license.

If something you're calling "true freedom" doesn't have rules it's anarchy.

I am sorry, but anarchy is a kind of social pact/organization (or rather lack of it), it has nothing to do with freedom.
For example take the Ogre3D engine dev team: it is far from being anarchic, yet it has made its code entirely free (even more free than what the FSF believes to be free).

I'm just wondering why something like this appeared here. MS and Apple are happy there are maggots who develop for them for free (in anarchic way)

Well, then you may wonder why a long and "boring" flame about GPLv2 vs GPLv3 appeared on the Linux kernel mailing list: isn't it GPL anyway? It actually is so different that v3 is not adopted by the kernel mainline.

The point is that this is a Website that talks about technology and in particular technology and software (not only Free Software, but also Open Source software or even Closed Source software), and the point proposed was worthy of a read/discussion in the Forum.

[o0max0o]

o0max0o, that was exactly my point in the essay: that pure open source gives all the freedom and power to the end user, with no thought to the developer. ... but I find it strange that open source zealots keep talking about how open source is winning, despite the demonstrated failure of open source to break out of the consulting/server ghetto.

I believe you are making a little of confusion between Free Software (as intended by the FSF) and Open Source. Open Source just means that the source code is available to the public (and I said available, since there might be licensing restrictions about it).

I also don't agree with your statement that Open Source software cannot even break the server/consulting ghetto. I'll make just one name to prove you wrong: Mozilla.