The Simple Economics of Open Source
Gordon McMillan
gmcm at hypernet.com
Thu Apr 27 11:42:16 EDT 2000
Raffael Cavallaro wrote:
> In article <vndya62ykbi.fsf at camelot-new.ccs.neu.edu>, Justin
> Sheehy <dworkin at ccs.neu.edu> wrote:
>
> >You mean like BSD/OS, from BSDI?
> >
> >It happened 9 years ago, and they've been selling it ever since.
>
> Yeah, and BSDI is just tearing up the software world. BSDI sells
> *support* not software, because the software they sell is
> essentially interchangable with the free BSD variants. BSDI have
> *themselves* recognized this fact by merging with Walnut Creek.
> In future, they'll be merging the code of FreeBSD and BSD/OS.
I guess you missed ESR's talk at IPC7. Software company
sells package for $500, street price is $400. Software
company goes broke. What's the street price now? If software
were a product, it would be, say $300. But the street price is
$50. Software *is* a service, the price is a reflection of
expected future support.
Other counter-examples: you can pay thousands for your web
server, or get it for free. You can pay hundreds for your office
suite, or get it for free. You can pay hundreds to thousands for
your compiler or get it for free. (You're stuck with Python - that
only comes for free). Even where the closed source package
has technical advantages, it does not support the price
differential.
Closed source protecting an original piece of intellectual
property is actually quite rare (and where it exists, it's quite
short-lived). Normally it "protects" an investment of money and
effort. And actually it reflects what consumers are willing to
pay for utility and (quite probably deluded notions of) future
support, upgrades and porting.
The closed source world is based on a diseased model
(pretending software is a product). The open source world is
currently in large part shaped by being a reaction to the
closed source model. Thus, it too is deformed.
One of those open source delusions is that being open source
somehow makes a difference to the end consumer. Bunk. End
users don't read code, and never will. Opening the source
benefits other developers, who in turn will almost certainly
benefit you by making the code better, or integrating with
other software - thus indirectly benefitting users.
Consumers benefit directly because the "product" price is
based on the marginal costs of production (near $0), and
support costs are based on reality.
Back to your art world analogy - how much would still be true
if you considered only the sub-market of unlimited production
prints with trivial reproduction costs?
Scarcity of an intellectual secret may make a software
package containing that secret more valuable, but scarcity of
a software package is likely to make it less valuable (since
support will be hard to find, and upgrades unlikely). OTOH it's
scarcity of a piece of artwork that makes it valuable.
- Gordon
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