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The Economics of Open Source

Jason Kau writes " is a working paper on the economics of open source software from the Nation Bureau of Economic Research entitled "The Simple Economics of Open Source". Focuses primarily on Apache, Perl, and Sendmail but mentions Linux, Debian, VA Linux, etc. It's a 40 page PDF document. Some background in Economics would probably be helpful."

27 of 115 comments (clear)

  1. Re:A worthwhile read by joey · · Score: 2

    I'm pleased to see him mention Debian's Social Contract and the Debian Free Software Guidelines as well. It's a shame though, that he compeletly misunderstands these documents, and depicts them as free software licenses. The DFSG is not a license, it is a way to categorize licenses.

    --

    --
    see shy jo
  2. Re:A worthwhile read by Kip · · Score: 2

    This is an oft-recited mantra, but it makes little sense. Either you have a license to load the program and use it or you don't.

    So either we are all pirates, or there is at least an implied license to use. That license is found in the right to make copies in Section 1.


    Actually, Section 0 states:
    Activities other than copying, distribution and modification are not covered by this License; they are outside its scope. The act of running the Program is not restricted...

    PS. I've been made aware of my error in using Sendmail as a GPL use example. Sendmail is under a BSD-style license.

  3. Re:All that VA Money.... by elflord · · Score: 2
    So Open Source is connected with the repression of free speech and the mass murder of millions. Idiot.

    He didn't in any way infer such a connection. Read Marx ( start with the communist manifesto ), then talk. In particular, tell us where it says anything about "repression of free speech" and "mass murder of millions".

    Oh, by the way, none of this alters the fact that he is completely wrong.

  4. Re:All that VA Money.... by elflord · · Score: 2
    So Open Source is connected with the repression of free speech and the mass murder of millions. Idiot.

    He didn't in any way infer such a connection. Read Marx ( start with the communist manifesto ), then talk. In particular, tell us where it says anything about "repression of free speech" and "mass murder of millions".

    Oh, by the way, none of this alters the fact that he is completely wrong. The Open Source philosophy works just fine for capitalists, democrats, republicans, communists, and socialists.

  5. Re:I give it score +3 (educational) by finkployd · · Score: 2

    What seperates this from any other hobby (from an economics standpoint) is what people do after coding. Sure it's concievable that some wierdos will actually LIKE writing programs and debugging and all that fun stuff. What economists cannot understand is why they then take all the "product" they have created, and give it out to the world. Not only that, but give it out to the work and the world free reign to do whatever they want with it, including using it for their own works. Strange group, those open source guys :)

    Seriously, I'd imagine the only reason they are so shocked at the concept of open source is because programming is something they consider very difficult. They also realise that programmers make more then they do (the average economy major that is, which is why I'm a systems programmer) and cannot understand why anyone would do it for free.

    Finkployd

  6. Offtopic by finkployd · · Score: 2

    Not that I really care about karma, but it's annoying when a moderator mods down a message that is in a thread as offtopic. You know, sometimes people go off on a tangent in a discussion, it's not your job to make sure they do not go off topic. I understand if this was the first message in a thread, but come on.

    Finkployd

  7. Re:I give it score +3 (educational) by Arandir · · Score: 2

    If Open Source remains purely voluntary, I will be unabashedly in favor of it. But I dread the day when the religion of free software succeeds in removing the choice of free software and making it mandatory.

    --
    A Government Is a Body of People, Usually Notably Ungoverned
  8. Re:I give it score +3 (educational) by Arandir · · Score: 2

    As the open source software world slides further into the capitalist world, where immediate material gain is the pinnacle of sucess, it will find money vs. community gain to be a compelling battle.

    An economist will make no distinction between the value of money and the value of community. They are both equally valuable. Economically speaking, someone who forgoes a $90,000 job for the pleasure of working with the community as a volunteer receives just as much value and contributes just as much to society. But before you start condemning the capitalists, the converse is equally true. It is one's individual choices that matter.

    Economists seem to focus more on money for two reasons. First, money is easier to measure than good will or community spirit. Second, most people confuse financial analysts who call themselves economists with actual economists, and thus think economics is all about financing and interest rates and stuff.

    --
    A Government Is a Body of People, Usually Notably Ungoverned
  9. Re:Use of Software, Legally Speaking, *IS* Copying by Wah · · Score: 2

    you're confusing reproduction with distribution. The GPL only comes into power when you distribute.
    And that's outside the organization, so RAM doesn't count.

    --
    ba-bu-ba-ba-baaa, da-da-dum. Re-boot the ser-ver.
    ba-bu-ba-ba-baaa, da-da-dum. Re-boot the ser-ver.

    --
    +&x
  10. Re:I give it score +3 (educational) by Foogle · · Score: 2
    Unexpected? Yeah, I'll buy that. But don't confuse "unexpected" with "unintentional". Lots of people worked their asses off getting those IPOs together and they didn't do it for the community.

    -----------

    "You can't shake the Devil's hand and say you're only kidding."

  11. Re:Use of Software, Legally Speaking, *IS* Copying by werdna · · Score: 2

    you're confusing reproduction with distribution. The GPL only comes into power when you distribute.
    And that's outside the organization, so RAM doesn't count.


    Your confusing my remarks entirely. To summarize:

    (i) use is reproduction (that's the legal word for copying) under the Act; (ii) if you aren't licensed to use it under GPL, then in the absence of some other license, the use is unconsented, and we are all pirates.

    Thus, the authority to make copies and derivative works for ourselves under Section 1 is a right to use. If it isn't, then shut down your computer, for your use is otherwise unlicensed.

  12. Re:A worthwhile read by werdna · · Score: 2

    The act of running the Program is not restricted

    And therefore licensed.

  13. You shouldn't try to practice the law at home by werdna · · Score: 2

    Congress *did* change the law

    Paraphrasing from "The Princess Bride," these words don't mean what you think they mean.

    No, all these cases followed adoption of Section 117. Interesting enough, Section 117 was recently changed to change the result in MAI, but solely in the context of running an operating system for the purpose of repairing a machine. Having made the change in this limited context, Congress ultimately ratified the 9th Circuit's holdings outside that context.

    EVERY ONE OF THE CASES CITED earlier distinguished Section 117(a), primarily on grounds of the definition of "essential step" and on grounds of the definition of "owner."

    I'm pleased to engage anyone on this subject in detail offline if you like. But this is a well-settled area of law, and you need to know a lot more before you start quoting excerpts out of context. In these cases, the Courts concluded that possession of a copy does not, by itself, constitute ownership of that copy. Section 117 raises issues of course, but on balance, it doesn't change the analysis substantially.

  14. Re:Section 117 is everything for GPL by werdna · · Score: 2

    Feel free to continue believing this is the case. Call a lawyer before relying on it.

  15. Re:A worthwhile read by werdna · · Score: 2

    The GPL doesn't preclude your USE of software. I can use Sendmail without having to give source to anyone. But if I modify and plan to distribute that modification, then the GPL comes into play.

    This is an oft-recited mantra, but it makes little sense. Either you have a license to load the program and use it or you don't. Under U.S. Copyright law, at least, unauthorized loading and execution of a computer program constitutes a "reproduction" under Section 106 of the Copyright Act.

    So either we are all pirates, or there is at least an implied license to use. That license is found in the right to make copies in Section 1. (If it weren't there, you COULDN'T use the code.)

    I understand that "common wisdom" is that the GPL does not "restrict" use. But mantras don't make law or legal relationships, licenses do. GPL either grants a right to use, or it does not. If it does not, its time to put away your copy of Linux until you get written permission to use it.

  16. Re:Use of Software, Legally Speaking, *IS* Copying by werdna · · Score: 2

    If your position is correct (that is not clear without talking to someone qualified) then you could be right about trouble with GPL in the us. I sure hope the free world doesn't take it's lead from the collective incompetence that is IP law in the states....

    Actually, I wasn't arguing that we are in trouble. The GPL expressly grants a right to make verbatim copies. No problem.

    We'd only be in trouble to the extent that the ideological lockstep legal analysis proffered in the root remarks of this thread were correct. Since they are not, we are not in trouble.

  17. Re:Section 117 is everything for GPL by werdna · · Score: 2

    After doing some more research I must reluctantly conclude that you are correct with regard to Section 117.

    I actually wish it weren't so. It doesn't make much difference for the GPL (only in the way some people like to think about it, since GPL *DOES* grant a right to copy), but it makes a great deal of difference in most commercial software cases.

    I seems that Section 117 has been vitiated by some rather questionable reasoning in the courts. It is quite remarkable that Congress has not corrected this rather drastic rewriting of the copyright law in the courts, but it has not.

    Significantly, the Congress took up precisely this question along with the DMCA, and opted not to change "owner" to "owner or licensee," but instead limited the change to use of software in connection with the repair of computer hardware. Thus, the holding of MAI on its facts was reversed without changing the impact of MAI for the rest of us.

    Thanks for your courtesies. Best, A

  18. What they seem to have missed... by adubey · · Score: 2

    Another poster hinted at this, but I feel like the authors walked into a slaughterhouse and can't smell the stink. Besides stature in the community, there is another benefit to Open Source programming - it's fun. It is widely beleived that most "new" economic theories will come from the crossover of economics to psyhchology, so the authors would be wise to consult (the now-popularized) psych. concept of "flow" and how this relates to Open Source programming.

  19. I prefer it by Money__ · · Score: 2
    It's a cross-platform and solid-formating, small file size, rich document model, portable and self contained, direct-to-printer format.

    I agree that HTML should be used where and when ever posible, but PDF fills a need nothing else can.
    _________________________

  20. Re:Open Source == (quick) QUALITY CONTROL by Carnage4Life · · Score: 2

    *sigh*
    Do you even know what Open Source means?
    Here's a definition to help you on your way.
    Now to comment on your post first of all you just compared a mis-typed character in an HTML page to what is probably the biggest software engineering project ever embarked upon. What kind of comparison can you make with this that doesn't make you sound like an illogical, fanatical, anti-Microsoft, Open Source apologist?
    Secondly Cmdr Taco viewing the bad HTML page in his browser, opening a text editor and changing it in the time it took you to reload your page has NOTHING to do with Open Source. After all I've never such bad HTML on any corporate website, does this suddenly mean that corporate software development practices are somehow better than Open Source ones?
    Please think before you post next time, posts like this are why lots of people refuse to take Open Source and linux in particular seriously when people like you project yourselves as our advocates

  21. Servelets are for morons. by rambone · · Score: 2
    I used to ask Malda to implement a java servel/java 1.2 client codebase

    Sounds like he had the common sense to flatly refuse wasting his time on moronic and inefficient approaches to web publishing.

    Without a doubt, every advocate of servelets I have met works on a site that gets fewer than 100k hits a day. News flash folks - you can serve 100k hits with smoke signals...which is about the capacity of servelets in any case.

  22. Open Source == (quick) QUALITY CONTROL by gilroy · · Score: 2
    Oh, yes. I'm glad that the commercial houses never release a product that has a glitch. All that time and money spent on management sure pays off ... wait? What's that about a release of a major commercial OS with an estimated 63,000 known bugs in it?

    The issue is not bug-avoidance -- which is essentially an impossible dream -- but bug-correction. In the Open Source world that happens much more quickly than in Corporate Drone Land. Point in fact -- this messed-up page was corrected in the time it took me to hit "reload". That would never happen in the land of corporate drones.

  23. Impact that Open-Source Products Might Have by sifta · · Score: 2
    Last year, I put together a model upon a more focused question which is "What is the impact that mature open-source products on an existing commercial market"?

    This is a more technical question of market dynamics (where I think that I can contribute something) rather than an explanation of the motivating factors associated with the open-source development process.

    Although this particular question sidesteps many of the interesting issues (of why folks would want to do this), it makes a mathematical model of the dynamics plausible.

    Since the model is framed in the context of autonomous agents, I presented it at an AI conference workshop (GECCO-99). However, I wouldn't mind getting some thoughtful feedback from folks who are more interested in the open-source economics side of things, rather than in the autonomous agents.

    A web-page on the paper is located here, and the paper itself can be found here (PDF format).

  24. I give it score +3 (educational) by finkployd · · Score: 3

    My first impression of this paper is that it is pretty well written for the audience it was intended for. As an Economics major (who is also a full time mainframe system's programmer, wierd huh?) I have run into some strange attempts by my professors and others to try to explain open source in economic terms.

    Most of them get it wrong, assuming that there has to be some form of tangible gain from contributing code. The very science of economics tells us that basically there is no free lunch, and that people will not give up resources (in this case free time) when they do not recieve something of value in return. The recent rash of IPO wealth has sort of supported this belief, despite the fact that it was unexpected (unless this whole thing has been a clever ploy of Linus and ESR's to get rich slow)

    While yes, they did get some aspects wrong (what do you expect, they are economists :), the general gist of the paper captures the economic implications of open source pretty well. The section on corporate reactions to open source is very interesting, presents it pretty well.

    Finkployd

  25. Open Source and Economics by Arandir · · Score: 3

    Because of the current economic disinformation campaign (also known as the US Presidential Primaries), I decided to hit some of my old econ texts. I was quickly reminded that all of economics can be distilled down into a few simple premises (with extremely complex interactions).

    One of the basic premises is that a voluntary transaction will not occur unless both sides benefit. Apache itself is not sold but can be obtained for gratuis because it is worth more for the Apache developers not to charge for it. If it were worth more to them to sell it for $50 a copy, they would do so. Since they don't, it isn't.

    The reason that it is more valuable for the Apache developers to release Apache at zero monetary cost is because they receive other values for it instead. Another economic principle is that costs and benefits are not limited to money. The various benefits that ESR lists for open sourcing a project, ego stroking, good will, sense of community, etc., are just as economically valuable as monetary payments.

    The last point is very important, and one that some people completely over look. If money is less valuable than "good will" or any other ephemeral payment, then neither are these ephemeral payments any more valuable than money. We cannot economically judge one to be more important than another. Thus, to deny a corporation the ability to sell its software products, which is what it wants to do, is to create an economic loss for society. Note that when I say "sell software", I mean in the copyright sense of selling rights to it or selling undistributable copies.

    Some folks in this community hold that it is morally wrong to sell software (see above note). Economics cannot judge whether something is moral or not, that is left to other professions. But it can say whether some policy creates losses in value to individuals or society. A mandatory open sourcing of software (whether by government decree or societal pressure) will create net economic losses. Economically, it will become more valuable to a developer to forgo opportunities to create new software in favor of waiting on tables instead.

    --
    A Government Is a Body of People, Usually Notably Ungoverned
  26. Use of Software, Legally Speaking, *IS* Copying by werdna · · Score: 4

    Actually the 'common wisdom' seems to be correct here. You have to remember that GPL operates under *copyright* law. Thus if you are not copying ... there is no restriction at all

    That's the thing about common wisdom, it *ALWAYS* seems correct. It this case, however, it is not even a close question:

    If you use computer software, you are copying. Three Circuit Courts cases have held unequivocally (MAI, Southeastern and Apple) that the loading of a computer program from any media into RAM, and the subsequent execution of that program from constitutes reproduction under 35 U.S.C. s. 106. There exists no cases holding to the contrary.

    Until the Congress changes the law, or the Supreme Court opines otherwise, unlicensed use of software constitutes Copyright infringement.

    Copyright has nothing to say about what you do with your copies

    You can't imagine how badly mistaken is this view. Copyright law provides specific exclusive rights in Section 106. Unless you are granted consent, or can find an exception in sections 107 through 120, you are infringing. This is true even if you are the owner of a copy. Ownership of a copy (which is distinct from possession of a copy) does grant certain rights set forth in Section 109 and in the case of software section 117 of the Act. Neither provides a general right to reproduce, and hence, to use, the software.

    The common wisdom, as you have stated it, is clearly in error. See a lawyer before you rely on it.

  27. URL for legitimate free download by bugger · · Score: 5


    Try

    http://www.people.hbs.edu/jlerner/publications.h tml

    for the free download of the working paper.