
The strange economics of open-source software - otoolep
http://www.philipotoole.com/the-strange-economics-of-open-source-software/
======
brc
I don't find it strange at all, and looking at a proper classical economist -
they would have no trouble explaining it.

Most people, when understanding economics tend to make the jump directly to
money/cash when explaining prices and market action.

But to be correct you have to look at utility. There's little question as to
why companies install open source software - the TCO can be lower. But why do
people contribute their time in building it?

The answer is that the reward of being part of an OSS team brings great
utility to a developer, and this is true even for marginally successful OSS
projects. So people exchange their time for intangibles like reputation,
credibility markers ( the author casually drops in which projects he is
involved in) as well as the ability to leverage involvement into actual cash
like well paid consultant gigs, books or successful blogs.

So there isn't any strangeness going on at all. OSS makes sense from a company
point of view, and it makes sense from an individual developer point of view.

~~~
ksk
>But why do people contribute their time in building it?

Because they get paid a salary to do so. Because commercial companies poured
millions of dollars into the OSS projects. Specifically, the projects that
people actually think about when they talk about successful Open Source
Software - Linux, Firefox, Chrome, etc.

>as well as the ability to leverage involvement into actual cash like well
paid consultant gigs, books or successful blogs.

That only applies if your project is already successful. And if its already
successful, chances are high that you're already drawing a decent salary. And,
books... Err.. Do you have any idea how little money authors make on those?

[http://www.techrepublic.com/article/for-50-percent-of-
develo...](http://www.techrepublic.com/article/for-50-percent-of-developers-
open-source-is-a-9-to-5-job/)

The vast vast majority of Open Source projects are just that - Source Code. No
chance of money. No chance of glory. An itch was scratched. Someone just
pasted a bunch of source code onto the Internet. And there is nothing wrong
with that whatsoever. However, painting the entire OSS landscape with the
success of the extreme minority distorts the picture.

~~~
gaius
The point of books is to leverage the reputation into high paying consulting
gigs. Same with conference speaking.

~~~
xchaotic
So it all boils down to high paying gigs then, which you can wing without
contributing to OSS

~~~
mseebach
No, "you" can't wing them in any generalizable manner (why isn't everyone
doing it, then?). For high paying gigs (not merely well-paid ones), you need a
reputation. There are several ways to build a reputation, and contributing to
a popular OSS project is one such way.

An interesting, tangential point is that OSS is probably the most pure
meritocratic way to build a reputation -- it does not rely on gaining access
to a powerful network (which relies on gaining access to a slightly less
powerful network, which relies on ...) or other variations of more-or-less
controlled luck.

~~~
gaius
I wonder how true that ia - you could just get hired by a powerful company and
sidestep all that. Pottering would be a classic example of this.

~~~
jononor
I'm fairly sure L.Poettering got hired by RedHat several years after starting
to write Avahi+PulseAudio.

------
dfc
Wow, I was expecting a little more economics in a post titled "the strange
economics of OSS." It is too bad the post makes such grand claims without any
modicum of effort to back them up with data; these are very interesting
research questions. The two most hand wavy claims have to be "it is almost
taken for granted that the source code for most software is freely available"
and " it is at larger, older firms, that the least amount of open-source
software is written." As far as the former goes you really have to ignore
Apple's ecosystem, video games and anything related to industrial automation
or espionage in order to make such a claim. As far as the latter claim goes
IBM, Intel, Oracle, HP, Texas Instruments etc are often at the top of
contributions to the Linux kernel by company. To be honest thee latter claim
is rather empty without some methodological framework that defines "older
company" and "most open source software."

~~~
bduerst
Right? They could have at least gone into detail about how businesses now
follow the model of open-sourcing the software and then making revenue on the
implementation fees.

Or they could have talked about how open sourcing is part of a race to the
bottom. They mention some SQL-like databases, which is a tech that started out
as proprietary. How much tech starts immediately as open source?

~~~
uxcn
Or even just Redhat and where the majority of their revenue comes from. I'm
actually angry I clicked on this link.

------
erikpukinskis
I think it's important to note the strange duality of this moment:

1\. This is a cambrian explosion of open-source infrastructure tools

2\. This is the dark ages of open-source UI

I think it's important to be aware that on this front the Open Source movement
has completely stalled. When I was in College, I used Abiword, Evolution, and
Rhythmbox. Now those things have been replaced for me with Google Docs, Gmail,
and Amazon Music.

I love the web, it's incomparable for convenience, data protection, and access
on multiple devices. But it is fundamentally at odds with Open Source
software. Back in the day of desktop software, you could throw a tarball on
the web and people could use your stuff without any real handholding. In order
for people to use a web service you write, you have to maintain a server
instance. It's just not worth it for me, random open source web service
author, to maintain a server for millions of you, random open source software
users. It's time and it's money for very little direct benefit to me.

And on app stores, it's pretty bad too. Maintaining a reviewed and updated app
in an app store is a huge job, and not something a casual contributor to an
open source GUI is going to want to do, just to have access to their branch of
an app. And I'm not even sure Apple will let you submit an identical app with
just one little feature changed.

This will change... the endgame is something like Ethereum, and the
currentgame is maybe something like Heroku Button, but there is still a lot of
infrastructure to build to make it as easy to maintain an open source web app
as it is to maintain a desktop app.

And in the meantime, Open Source UI is just going to languish a bit. That's
OK, it's just where we are in the history of the web. But it's going to get a
lot better in the not too distant future.

~~~
bad_user
My desktop is Linux and I still use LibreOffice, VLC and Thunderbird. And I
also used Google's Docs, Calendar, Gmail and Music, but I've cut off my Gmail
/ Calendar usage due to their poor implementation for standards, having
migrated from Google Apps to FastMail. I'm also paying for a Dropbox
subscription because they are the only major cloud storage provider with
native support for Linux and even though some clients exist for Google Drive I
can't use a solution that doesn't want me as a customer; but enough ranting.

I don't agree with you because the browser is ubiquitous and the web is open
and based on standards. And you don't actually need a server to do interesting
things in the browser. Quite the contrary, because of modern browsers, a
majority of people with a PC have access to a potent development environment.
And then the difference between the web and app stores is like night and day.

~~~
erikpukinskis
It's true, you can do a lot without a server! And I think where we're headed
there's a _lot_ happening in-browser. But there are still parts of most
workflows where a _little_ server work makes sense, and that's the bottleneck.

We can't have an open source web app workflow until the _entire_
develop/deploy workflow can be forked with a couple button presses. As long as
there's one single part of that chain that needs to be done by hand, we won't
have a rich pool of open source web software users.

You're right though that if you're willing to use Desktop software there's
still a bunch of good software out there. I'm just not interested in desktop
software anymore.

------
chaconnewu
Most of widely popular open-source software are to empower developers, which
doesn't actually aim at creating end user experiences. Most end user software
(games for e.g.) are neither free nor open-sourced. So I wouldn't agree that
"Today it is almost taken for granted that the source code for most software
is freely available."

------
danso
It's always tough to explain to non-developers that the fact that they can, on
their own laptops, install roughly the same stack as a multi-million/billion
startup in a relatively instantaneous amount of time. And with one line of
HTML, include a design framework that came from the result of countless dev-
hours to refine. The software is indeed valuable, but it's not tangible or
immediately useful in the way that Formula One cars, if given away to everyone
from an infinite supply, would make people drive incredibly fast even if not
well enough to win a race.

Another factor is that much of the best open-source software is similar to the
best Unix tools: they do their one job very well. Being able to install all of
them at your leisure is not much more advantageous than having grep, curl, and
awk installed but no text files to work with or knowledge about how to use
pipes.

I was trying to think of closed-source, focused software that is most
definitely better than their open-source rivals. Not counting full-featured
suites such as MS Office/Google Drive versus LibreOffice, or GIMP vs
Photoshop...the first thing I can think of is ABBYY FineReader for OCR, which
I've never used but the results of which seem to blow Tesseract out of the
water, even though Tesseract is very good. But perhaps its niche is not broad
enough to attract the level of open-source development in the same way that
software and database architecture has.

------
nickpsecurity
I'm not sure I agree with the notion that OSS is where all the innovation is
happening. There's certainly plenty of innovation there. But most innovation
still seems to be privately funded developments (esp startups) which get open
sourced. Or not.

Has there been any empirical work on assessing it in recent times? Maybe post
2010?

~~~
jlarocco
I agree. Innovation in open source is all on commodity computer stuff that
developers understand, like operating systems, compilers, web browsers, and
databases.

For almost everything that requires other expertise the innovation is still
done in closed source software.

Stuff like photo editing (LightRoom, Photoshop, Capture One), video editing
(Premiere, Flame, DS), high end rendering (Renderman, 3Delight), CAD (Catia,
Solidworks, NX), embedded systems (almost anything in cars, airplanes,
appliances), and a million other areas are all still as closed as can be, and
open source isn't even competing, much less innovating.

~~~
teddyh
You list things which proprietary software does way better than free software.
I remember when the list was the other way around – i.e. people would list
_things that free software could now do_ , which were not very many at the
time. It’s interesting that this relationship has now been reversed, and
people, like yourself, now instead list the things which proprietary software
can do better.

~~~
jlarocco
I don't think the situation has reversed at all, and in fact open source has
grown tremendously. There's more open source and free software, of higher
quality, than any other time in the past. Commodity software like operating
systems and web browsers are now dominated by open source.

My point is that despite the growth, there are still many, many areas where
the open source offerings are pretty lame and noncompetitive (if they even
exist). Open source has never been very competitive in any of the areas I
mentioned.

~~~
teddyh
I think you completely misread my comment.

------
hodgesrm
It's a bit hard to argue that infrastructure software is dominated by open
source. The stack behind Amazon Web Services is almost 100% closed. It's not
just closed source--Amazon rarely even comments about how services like S3,
EBS, and Redshift work except when they fail. All of the DBMS they have
developed are closed source as well. Closed source database innovation is
alive and well.

~~~
nickpsecurity
Most innovation in databases is either proprietary companies or small teams of
academics. Of the proprietary companies, some choose to open source their
work. Yet, it's still done in a proprietary style of one, paid team building
it. Add in the fact that many OSS projects have paid or sponsored developers.

All together, leads me to wonder whether most OSS should be considered
proprietary development or how much community-driven efforts actually
accomplish.

------
crimsonalucard
There is one thing about open source that needs to be known. It is not self
sustainable. It requires external factors for support. Allow me to elucidate.

The software engineer occupation is a highly specialized role. A software
engineer alone does not have the ability to survive, hunt food, or build
shelter. Instead the software engineer must trade his skill for the services
of other experts.

In short, a software engineer who only gives away his work to the open source
community basically can't pay the bills. He needs to sell his work. Although
open source is built off of the leisure time of programmers that leisure time
must be bought and paid for by an external factor. More often than not, that
external factor is Closed source.

Ironically, open source only exists because of closed sourced apps or web
services.

~~~
logn
I think the trend is that closed source software is increasingly becoming the
highly customized last-mile code that runs a specific business which sells
services, curated information, or physical products.

I also think this is why jobs involving OSS development are increasingly
attractive to candidates. Do you want to spend your time building what amounts
to a one-off solution to duck tape some wonky IT-department components, or do
you want to work on well-engineered projects that are generalized solutions?

So I think closed source software is basically the last layer that integrates
open source software. Which ever side you view as bringing in the sales and
money is really just a matter of perspective.

------
Touche
It's shifted towards consulting. You build great OS projects and people pay
you to make it work for their company correctly.

------
vonnik
Great piece. Our startup supports
[http://deeplearning4j.org](http://deeplearning4j.org) and
[http://nd4j.org](http://nd4j.org), and it's a great feeling having the open-
source wind at your back. Talented strangers helping to fix and grow your
project.

To use a couple economists' terms, positive externalities are generated when
code is open-sourced, and the beneficiaries are the companies contributing,
because together they're making something greater than any one firm could
build alone.

Our software is orders of magnitude better simply for having been opened to
hundreds of pairs of eyes. The QA is intense.

Engineers at closed-source deep-learning startups chafe under their gag
orders, especially since so much of what's closed quickly becomes outdated.
Lack of transparency can easily hide lack of competence.

------
amirouche
To the contrary. I think the _perceived_ success of FLOSS is mainly due to the
fact that there is more big companies with the incentive to make __big
softwares __free. This is not what OP says.

I don't say it's not progress. But if we end up doing all the same things the
same way, the prize is not that bright.

------
justizin
"Behind all the REST endpoints, the AWS ELBs, and the HAProxy systems, sits
some of most closely-guarded software in the world."

I'm not sure, "closely-guarded" is the term I would use.

------
EGreg
This explains it:
[http://m.youtube.com/watch?v=u6XAPnuFjJc](http://m.youtube.com/watch?v=u6XAPnuFjJc)

Open source is a gift economy, like science without patents!

------
ekianjo
> I always use the names of economists for my machines’ hostnames. keynes,
> friedman, marx, fisher, ricardo.

Where is Mises and Hayek ?

~~~
danharaj
In the garbage bin.

~~~
ekianjo
Keynes should rather be there, with his stupid Stimulus theory that has been
proven to be detrimental over and over again, on every single occasion.

------
elektromekatron
I know that this will annoy some people, and believe me, I mean this with a
very small 'c', however I think that the open source movement is far and away
the most successful communist experiment in history.

~~~
amatic
IP communism is not in conflict with belief in private property rights. The
trick is in denying IP the status of property, because you cannot own ideas in
the same sense you can own a car. Cars are fundamentaly scarce, two people
can't use the same car at the same time. Ideas can be copied and improved
upon, they don't go away when somebody steals them. Anyway, there would
certainly be successfull business models in absence of software patents. Not
saying 'we should abolish software patents', we are probably too invested in
this model.

~~~
pki
I thought in some places (France?) software patents were unenforceable/not
legal/not a thing

~~~
gruez
correct.

[https://en.wikipedia.org/wiki/Software_patents_under_the_Eur...](https://en.wikipedia.org/wiki/Software_patents_under_the_European_Patent_Convention)

