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Open SourceIBM 11 Jan 2008 5:22 PM
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Interesting Open Source Business Model Debate by billm

Savio Rodrigues, who is a product manager with IBM's WebSphere Software division, writes for the Infoworld Open Source blog. Savio has been carrying out a debate about his perceived flaws in current commercial open source business models that has included comments many of the commercial open source community's luminaries.

I have added my comments to this debate on two ocassions. Savio responded to some of my earlier comments.

I have added another comment to the debate, responding to Savio's recent "Clearing Up My Views on OSS 2 of 2 " that I wanted to share here:

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I have been following the ongoing debate, thinking very carefully about the validity of Savio's arguments. His core premise is based on "free riders". Savio argues that OSS free riders make up a very large percentage of those who use and derive value from open source software, yet contribute nothing back.

These free riders do not participate in the community and contribute to quality or innovation. They do not tell others about the software and contribute to awareness and distribution. They do not value support and will not pay for it. They have no aversion to using software under a copyleft license and may even cheat on its terms by not opening dependent code they create. They are shortsighted and narrow minded enough to fail to recognize that not paying for code or support and not contributing to the community deprives everyone, including themselves of continued and potential innovation of the software.

That is probably true.

Savio argues that the commercial software license model is better because it eliminates these free riders' access to software.

It is true that the commercial software model protects against free riders, but not true that this is necessarily better - it is a matter of perspective.

If there is some very large demand for software, possibly demand that is currently being fulfilled by some companies offering commercially licensed software, and then some competitive company determines to enter this market by offering open source software - fully recognizing that it will disrupt the market, create free riders and reducing the total amount of revenue that can be extracted from the existing demand - and yet determining that this situation is of great value to them because a smaller slice of the existing pie is large enough to be appealing to them. A smaller market with a bunch of free riders in which the new entrant gets to participate is potentially better than a bigger market without free riders in which this potential new entrant cannot economically enter. Said another way, I would rather have a small pie than let you have a big pie which you will not share with me!

The willingness to shrink the software pie so that the new little guy can get a piece of it is good for software consumers and for this new competitor in the marke while it is clearly bad for the exiting market participants.

Open source software models may not be as effective as commercial license models at extracting money from potential free riders, but may still offer good and lucrative opportunities for new market entrants using commercial open source models - especially those entering, disrupting, and taking market share from commercial license competitors. This is simply the free market at work. Welcome Savio to the free market!

I grew up in the rust belt (outside Chicago) during the time when US manufacturing industry was being disrupted by less expensive overseas labor. It was painful for highly paid US manufacturing workers, but greatly benefited global consumers of manufactured products, not to mention willing workers in lesser developed countries and their families. Savio's lament about the disruptive economic effects sounds a lot like the lament of those displaced manufacturing workers and their unions.

Bil Miller, XAware, www.xaware.org

Posted by: Bill Miller at January 11, 2008 04:20 PM

 

 



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