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Towards A Real Business Model For Open-Source Software

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  • Apopas
    replied
    Originally posted by Sprewell View Post
    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

    Leave a comment:


  • ModplanMan
    replied
    *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

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  • kraftman
    replied
    @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.

    Leave a comment:


  • kraftman
    replied
    Originally posted by extofme View Post
    sure, your saying it's ok to make money, just not as much as you can, i.e. the bare minimum. waiting around/donations are not viable; they aren't project-able/forecast-able sources of income for a business that depends on a software products.
    That's probably true. However, like you mentioned later, maybe the ways Red Hat makes money on its products is viable?

    you said it yourself: "I believe the things which made an OS X popular (except marketing) are made by Apple.", and without protecting that IP Apple would have/be nothing.
    I said this, because I consider *BSD has nothing interesting to offer for users who decided to choose an OS X and I don't consider it's only related to license (which is still very important IMHO), but also for other things like available apps and techs - Apple made things which helped OS X gain some market share while *BSD guys didn't bother or they're lack of man power, have different goals etc. Linux is also loosing in some areas compared to OS X like video acceleration, sometimes graphic drivers, but it's catching up with current development model and its license. Afaik Apple, Microsoft, some companies etc. can't take the GPL code, so there's no need for using proprietary one, because GPL (unlike BSD, however there's no a single rule which will match everywhere) will allow you to compete. In contrary Linux outperforms OS X in other areas.


    i think you may need to research Red Hat's business model a little better, as i don't believe much, if any, of their income is directly from creating software (although it is in their interest to improve the stacks they use, which they employ developers to do). Canonical doesn't create anything; the only project they have ever done is Upstart. Nokia receives income from many other sources, and for a LONG time QT was not GPL compatible at all. you are taking some of the most successful examples and portraying them as common place... like those "get rich" infomercials try to do at 3am.
    Maybe I missed your points here. I thought about making money by selling support and maybe some other services.


    i'm not sure what you mean by this; yes my work is FOSS in every sense of the word, just not the parts i sell until i move on or decide to release them.
    Of course it's FOSS and maybe the way you're doing with parts you're selling is a good way to earn money? At least, maybe better then this way?

    bare minimum. waiting around/donations are not viable; they aren't project-able/forecast-able sources of income for a business that depends on a software products.
    @Sprewell

    kraftman, we all know libraries aren't whole OS's or applications, what's your point? If you think BSD sharing is stealing while GPL sharing isn't, I don't know what to tell you.
    Not exactly stealing (I just call it like this), because if someone decides to use BSD he actually agreed someone else or some company can just take his code. It's bad for competition with GPL and proprietary products (but like I mentioned license is not an only factor).

    True freedom is always called anarchy by those who want to steal power.
    True freedom is when there are rules and anarchy is were there are no rules. Anarchy is called true freedom by those who have some interests in doing so.

    You made a mistake: you said "companies which use" GPL code have to contribute back, that's not true. Companies use GPL code on the server all the time without contributing back.
    I probably said use/share, but it doesn't matter, because I meant what you said here

    only when you distribute a binary do you have to make your source modifications GPL also
    This is why the GPL rocks

    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.
    You probably have strange definition of freedom. However, we're talking about the applications code not about you. :> GPL is community friendly, not communism. Communism isn't community friendly. Btw. and you're propagating a business model for FOSS and appeared at Phoronix?! Bad

    Leave a comment:


  • Sprewell
    replied
    Some more responses:

    beniwtv, it's funny how dummies think that simply using the word fail is an argument. Obviously the older closed patches won't be as useful, but the idea is to fund development in the open source core using those closed-source patches to generate revenue. However, the fact that everything is opened up eventually is important to many customers.

    Xilanaz, Yes, you cannot build on the closed parts of a mixed-codebase, only the open parts. I don't understand your confusion about who will fix security flaws: both the hybrid source vendor and the original programmer of the compression scheme will have the source and will want to fix it since they're making money off it. As for when the security fix will be opened, it will be released 18 months after it is included in a build, so later than the original patch. Nothing stopping the vendor from releasing it earlier if they choose to though.

    Nighthog, there aren't closed and open branches, there's an open source core and closed-source patches on it. With modern SCM tools, it's actually fairly easy to maintain such co-development: I've been doing it for 7 months now. Pure open source may not jibe with profit but that's why it loses: that's why I'm suggesting a mix. As for your distribution copy idea, it's basically a cruder version of what I'm describing. I'm not worried about competition from free versions as they won't have the same money, but this model is a perfect testbed for open source proponents to prove their claimed superiority of open source. If their free, pure open source versions are so great at eating customers, they can prove it empirically in this model, by turning mixed codebases purely open. I'm pretty sure pure open source will lose, as it always has.

    it87k, if those models are so great, please use them and prove their superiority. I have seen them fail for decades at competing with closed-source software. 5-year old patches are very useful for slow-moving markets like medical software.

    crazycheese, I see, so closed BSDs don't count? Nice way to rationalize your stats, but the BSD parts of Mac OS X are mostly kept open, as KAMiKAZOW notes. GPL doesn't protect anything, all it does is force everyone else to use a consulting or service model. You think Google or Yahoo or IBM are paying GPL devs adequately for all the GPL code they're using? Maybe they sponsor some work or devs here and there to keep the chumps hopeful, but they're using the same amount of code without paying for it, just in a different way than BSD allows. BSD programmers allow others the true freedom to do whatever they want with their work, that's why it will win out over the GPL. How is IBM's GPL work not "stolen" if someone uses it outside IBM? Wikipedia is always down on money and that's why it's always doing fund-raising drives: your point is? Who said anything about only using the BSD license? A mixed source codebase is based on the BSD license but obviously it's something new, as some source is kept closed for a limited time.

    waucka, cut MS revenues by half or two-thirds then, it's still 20-40 times Red Hat's paltry revenues.

    JeanPaul145, 5 years is for medical software, it depends on the market. 18 months for web browsers is a very reasonable time limit. I don't know why you think a new license is needed when the hybrid source vendors already contract a time limit with their customers. I did think of going the licensing route by creating a completely new license like the CDDL, but I think the contract route is better: new software licenses are a PITA and even popular ones like the GPLv2 are badly written. Good points responding to the others.

    kraftman, we all know libraries aren't whole OS's or applications, what's your point? If you think BSD sharing is stealing while GPL sharing isn't, I don't know what to tell you. True freedom is always called anarchy by those who want to steal power. You made a mistake: you said "companies which use" GPL code have to contribute back, that's not true. Companies use GPL code on the server all the time without contributing back, only when you distribute a binary do you have to make your source modifications GPL also.

    sal-e, calling people's comments misguided is an insult? You're being too sensitive. If you're referring to my responses to some others, if someone's going to spread ignorant FUD, I have no problem responding with the derision that deserves. Hybrid source won't save your program from Microsoft, just like being pure closed source won't, as you noted. What's your point: nobody can compete with Microsoft? Many can and do. Sun didn't go under cuz of a lawsuit, it's because they listened to all the open source zealots and open sourced all their code, with no idea how they'd monetize it. If they'd used my model, they might still be around as an independent company. If you think this hybrid model has failed before against MS, please cite an example.

    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.

    extofme, some excellent points. I hope your upcoming product works out well, let us know more about it sometime. The whole reason I wrote this essay is to encourage others to use this hybrid model, I'm confident it will work well for you. Excellent point about open and closed source coexisting.

    My whole point in writing the original essay was to publicize a model where open and closed source could coexist and compete side by side, with the mix of the two models producing something much better. I think this model will lead to a lot more open source code being produced, once such open source work can be funded by closed-source modules. If you're an open source zealot, you believe that mixing code is always a bad idea, that it must be pure open source or nothing. However, if you're a true open source proponent, you should welcome this idea, as it's likely to lead to ten times more open source code being written and used, although accompanied by closed-source modules that drive funding. Instead, purist open source zealots make the perfect the enemy of the good. This hybrid model mixes the best aspects of two competing models, so that they work together to produce something even better.

    Leave a comment:


  • extofme
    replied
    Originally posted by kraftman View Post
    I suppose nobody has problems with understanding this. People who write software need money too. However, there are many ways they can get it like paypal or they set a minimum funds required and then software is released or being worked on (afaik Amarok team is doing something like this).
    sure, your saying it's ok to make money, just not as much as you can, i.e. the bare minimum. waiting around/donations are not viable; they aren't project-able/forecast-able sources of income for a business that depends on a software products.

    Originally posted by kraftman View Post
    And what are you according to? Linux - Linus is an author and have rights to project he created, it's probably the same about any other GPL application and Linux distributions. If someone makes a fork then it's a different project.
    Linus is a copyright holder along with hundreds of others... the copyright was not moved to FSF like they recommend. my point was that some people may not way you to be ABLE to fork their work, for a variety of good reasons.

    Originally posted by kraftman View Post
    Like what? It seems it's exactly opposite and it seems it's total bull - FOSS projects just rule many areas and they started to conquer others like desktops.
    it's not the opposite else Apple would release Cocoa and their other GUI libraries, along with every other software company that makes direct end user products. you said it yourself: "I believe the things which made an OS X popular (except marketing) are made by Apple.", and without protecting that IP Apple would have/be nothing.

    Originally posted by kraftman View Post
    This is bull. It's probably enough if some FOSS developers/companies which develop FOSS will be earning money on products they create like Red Hat on RHEL, Canonical on Ubuntu, Nokia on QT etc.. FOSS doesn't mean no earning money on products.
    i think you may need to research Red Hat's business model a little better, as i don't believe much, if any, of their income is directly from creating software (although it is in their interest to improve the stacks they use, which they employ developers to do). Canonical doesn't create anything; the only project they have ever done is Upstart. Nokia receives income from many other sources, and for a LONG time QT was not GPL compatible at all. you are taking some of the most successful examples and portraying them as common place... like those "get rich" infomercials try to do at 3am.

    Originally posted by kraftman View Post
    So, your released work won't magically became FOSS just because you get paid? ;>
    i'm not sure what you mean by this; yes my work is FOSS in every sense of the word, just not the parts i sell until i move on or decide to release them.

    i think you and many others are looking at this too black and white, good vs. evil; simply not the way it is. there are a myriad of factors that play into the game:

    how big am i?
    who are my competitors?
    what other revenue streams do i have?
    is this product critical to my success?
    who is my target market?
    does my market care about being able to modify my source?
    do i want them/is it safe for them to modify it?
    how large is my codebase?
    how long will it take others to learn it?
    is the code in a quality state?
    ...
    ...

    and many other examples better than the above. Apple contributes to LLVM because no matter what, it helps them. that is why the library/compiler/toolkit/platform type stuff is a more natural fit for FOSS. it doesn't mean that end-user products can't exist as FOSS, because obviously they do. i gave the NX example because that is their PRIMARY product... yet they still find a way to share it without threatening their livelihood. some startups may not want to take that chance though, and that's ok too.

    i develop software to provide for my family, and i want to provide the best life i can. if that means closing up and protecting a relatively SMALL amount of my overall work, then by damn that's what i'm going to do. if you follow/contrib to various FOSS projects as i do, you will find that most contributers develop for the FOSS application as a PLATFORM to another product they are creating; the example i think of here is Pyjamas, a python-to-javascript compiler + GWT port that i've begun to use heavily in my web based projects. i think about how to improve it for my own products, but hey if it helps you too then right on.

    i assure you, closed/open source software can/will find a way to coexist peacefully and beneficially. instead of being upset, we need to embrace this fact and find creative ways to implement it.

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  • kraftman
    replied
    Damn, I forget Windows is a bsd too, because MS took some bsd part

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  • kraftman
    replied
    Originally posted by KAMiKAZOW View Post
    Ah, now popularity is the defining factor of a BSD... I see... makes sense, because in the mind of trolls like you by definition BSD is unpopular and since Mac OS X, iPhones, iPads, and iPods are popular, OSX can't be a BSD....

    Great conclusion is a retarded way...
    Wrong. Apple products aren't popular thanks to *BSD and It's just not sane to call an OS X another BSD, just because OS X took some BSD parts. How OS X, which is a different product, can be *BSD same time? However, maybe some bsd fanboys wants to valor their poor system this way? Since iPhones, iPads. iPods and OS X aren't *BSD how can they be *BSD?

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  • KAMiKAZOW
    replied
    Originally posted by kraftman View Post
    @KAMiKAZOW

    Let me explain this. Nothing interesting will remain, because everything what will remain is already freely available. I believe the things which made an OS X popular (except marketing) are made by Apple.
    Ah, now popularity is the defining factor of a BSD... I see... makes sense, because in the mind of trolls like you by definition BSD is unpopular and since Mac OS X, iPhones, iPads, and iPods are popular, OSX can't be a BSD....

    Great conclusion is a retarded way...

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  • kraftman
    replied
    Originally posted by extofme View Post
    the bottom line: it requires an experienced developer/team many person-months to create a quality product; time=money. the feel i get after reading 5 pages worth of comments, is that few have written a line of code in any language, let alone professionally for a company or themselves. if you want the best, latest, and absolute greatest that a development team has to offer, then offer some compensation for their energy. isn't that fair? don't we exchange money for everything else in our lives? software isn't any different.
    I suppose nobody has problems with understanding this. People who write software need money too. However, there are many ways they can get it like paypal or they set a minimum funds required and then software is released or being worked on (afaik Amarok team is doing something like this).

    i enjoy spreading the good word to others. however, i believe in the rights of a person/group to assert ownership over something they've created.
    And what are you according to? Linux - Linus is an author and have rights to project he created, it's probably the same about any other GPL application and Linux distributions. If someone makes a fork then it's a different project.

    FOSS (in the modern economic/social/governance paradigm) simply doesn't fit very well for certain categories of software, especially direct, end-user consumables.
    Like what? It seems it's exactly opposite and it seems it's total bull - FOSS projects just rule many areas and they started to conquer others like desktops.

    there are several ways for closed and open source software to work TOGETHER, to create higher quality products on both sides of the fence, without being greedy and still being fair to all parties. a purely FOSS software industry is an unimplementable pipedream.
    This is bull. It's probably enough if some FOSS developers/companies which develop FOSS will be earning money on products they create like Red Hat on RHEL, Canonical on Ubuntu, Nokia on QT etc.. FOSS doesn't mean no earning money on products.

    i have developed professionally for several years, and am now a self employed developer. i am considering a similar process for an upcoming product of mine: the core product will be open, but some of the heavy lifting modules that do the really interesting stuff will not be open... at first anyway. similar to the author, i will release the modules after i've had a chance to recoup the costs by licencing it to companies.
    So, your released work won't magically became FOSS just because you get paid? ;>

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