Economic Slump hits Open Source

adamjone writes: "C|NET and Yahoo! are running a story about the hit that open source software is taking during this economic slump. Open source development is a hobby for me, not my full-time job. I find that I have more time to work on my project during times when my full-time job is slow, or we don't have enough work. Is open source truly being driven by those who make it their full-time occupation? If so, is there a happy medium for keeping bread on the table and still working within the open source community?" At least Microsoft is doing well.

Comments

Economic slump?

[alen]

It can't be. Has any open source company ever turned an actuall profit? GAAP or pro forma? Truth is it's like any other new business. 95% of the new companies will close their doors within the first three years and the survivors will probably survive for a while because they have good management and a real business model.

Economics of Open Source

[under_score]

There are two fundamentally different approaches to Open Source: capitalistic and communal. In the capitalistic approach, people and companies attempt to earn money by using open source software. The "traditional" model has been to sell value-added services while providing the open source software for free or minimal price. In the capitalistic approach, of course an economic slowdown will be reflected in the open source business sector - just like almost any other sector. On the other side represented by the communal approach, participating in open source projects provides intangible or non-monetary benefits. There is the traditional "itch" factor: you work on an open source project to scratch an itch. There is also the motivation of gaining community recognition. These aspects will not be slowed by an economic slowdown. In fact, they might become even more important: there is not as much cash moving around so a more barter-oriented approach is viable. Corporations not actually involved in developing open source may start to turn more to open source as a solution to their financial constraints. I know that the company I work for does so. They may not directly contribute to the code base, but they certainly are taking advantage of it and therefore increasing the legitimacy of open source. Again, this process is accellerated by an economic slowdown.

Re:Economics of Open Source

[wytcld]

There are two fundamentally different approaches to Open Source: capitalistic and communal.

Are the capitalistic and communal fundamentally different, or aspects of a common creature? Consider our current 'capitalist' president. How did he get there? By being a part of three groups - the Yale-Harvard axis, the Texas-oil axis, and the Connecticut old-money WASP contingent - which look out for their communal interests. Those with wealth and power in our society generally get there by being communal with some significant group of their counterparts. It's how the capital is accumulated to allow for capitalism in the first place.

So the question for those of us in the computer trades is whether we can achieve a quality of communalism among ourselves that will make us a true center of economic and political power. In the 90s we were getting there, centered largely on new West Coast elites. Wall Street was threatened by this, so it blew it into a bubble in order to (1) take East Coast profits on it and (2) make it go away.

If we quit being communalist now we're being penny wise and pound foolish. Do we want real power down the line, or do we want to be the sadder sort of "honest tradesmen" who have to rent their basic tools before they go out to the jobsite?

Remember, capitalism isn't about being some mean-ass son-of-a-hound to all and sundry, capitalism is about accumulating capital. Tools are a form of capital, productive of future earnings. Sharing capital within your communal group is the proven method by which Bush gained shares in several oil companies and a baseball team. And it's why he will be so good at paying back his friends - these values run deep enough in his character that his friends were comfortable sharing their monetary piles with his campaign.

The bottom line is that computers can do tremendously productive work. Those who can make the computers do that work can always get a cut of it. We individually have more capital if our tools are better - and the more we can share this capital as a group, the more politically and economically powerful we become.

In the old European empires knowledge of trade routes was capital, to be merged with the monetary capital of those who'd - largely out of pursuing the communal interests of their class - collected and preserved it. In the new empires knowledge of computer routing is capital....

Linux, for example

[k98sven]

..started during the early nineties, during which Finland was in it's deepest depression since the '30s. Didn't stop Linus. And it won't stop scores of other hobby OSS developers either.

However, less corperate funding may retard development, but hey: in a recession everything else slows down too.

Open-source is parasitic

[Eloquence]

Currently, open source is used by many people who never give anything back, although they would be able to financially support development. The reason for this is not that people are malicious or exploitative, but simply that it's not convenient enough. Some sites have small "donate" buttons, but these give little feedback (a la Penny Arcade, only more detailed) and do not allow subscriptions or feature requests. The best implementation I've seen so far is Freenet, except that people only donate when they have a reason to visit the frontpage, which is not updated very frequently.

A sophisticated donation/subscription/feature request system which automatically suppports several payment methods should really be part of a collaborative development site like SourceForge. For using Amazon's Honor-System, which is very feature-poor, 15% of any donation go to Amazon. This would be an adequate level for something like SourceForge, and here people would gladly pay the 15% because they would know that they support important infrastructure. I really can't understand why SourceForge isn't trying anything of the sort, but I haven't noticed much innovation in their business strategy anyway.

Of course, in the long term, I'd love to see a standardized electronic payment client (with a Qt or GTK interface) which supports subscription management bundled with all Linux distributions. Then you could easily pay with a single click in your browser.

Are the hobbyists really driving open source?

[Junks Jerzey]

Sure, there are some smaller and lesser known open source programs out there. Heck, lots of little solitaire games and remakes of Breakout (Arkanoid, for you young 'uns) are released under the GPL. But those are not the programs that give open source it's high profile. We're talking about:

1. Perl & Python
2. Apache
3. the Linux kernel
4. gcc
5. KDE
6. X

There are certainly commercial interests behind most of these, in that some people--not all--have full time jobs working on them. gcc especially wouldn't be anywhere near where it is today without the input of a number of large companies.

Surprise, surprise

[underpaidISPtech]

The economy is in the shitter. This whole article is nearly pointless. Open-source (the business model) was circling the drain before any other sector of industry was, and this is news?

And now to burn some karma....

I think that the open-source phenomenon will quietly, undignifiably, dissapear soon. It is a lofty and noble goal to be sure, however as a sustainable movement, I believe it will become less important over time. Why? Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source. The time to code the time to host it, the time to collaborate, just aint there any more during the dot-bomb hangover.

Open-source is an idea; that will remain. Linux the kernel, and any derivatives; they will remain. Unix is still with us after 30 odd years, and so too will Linux and OSS. Good. But, making money and supplanting a capitalistic machine that is designed for high proiduct turn-over, planned obsolecence, and not giving the customer what they want is the sustainable model, not selling services to free products. If you pay for the product, then you will pay for support. Get a free product, and you find out its not up to par or whatver, why pay for support, just get another free clone....

As an example, look at the mp3, CDR, DVD products out there. Is there a single product (game console, entertainment device or otherwise) that can play mp3s, read and write CDR, CDRW, DVD, DVD-ROM/RAM/RW and any other format? No. It is much better business sense to force the consumer to buy a couple of different devices than one do-it all device.

As with software, you want return customers, hence the excruciatingly long path to a stable windows platform (some may argue this point, although at this time I think it's the licensing/terms of use that is the problem not the OS itself).

There is alot of uncertainty around everthing right now, both socially and economically, and open-source is a real gamble. Will it become a security threat to use OSS? Of course it isnt, we know better than that, but we don't make the law.

Where does crypto stand? Do you want to continue to code for free, or maybe you're unemployed (or facing it) and would like to see a return on your effort? I dont think selling services is the way. I can just as easily support your software as you can.

Anyways flame away, mod me down for blasphemy, whatever, maybe I forgot my happy pills this morning...

Re:Surprise, surprise

[geomon]

I believe it will become less important over time. Why? Because the high-flying VC money and gold-rush speculation that drove those fat boomtime salaries are what really paid for open-source.

Now that we have heard from Bill Gates, perhaps we can pump a little more reality into the discussion.

When I started using Linux in 1994, the Information Superhighway wasn't on the radar. MOST IT jobs were in the same sectors that they are in now: database management. At that time, I saw thousands of listings on usenet for DB administrators and sysadmins. What the hell did those jobs have to do with open source? Nothing! People got paid for computing and open source projects were flourishing. This momentary dip in open source funding does not equate to a death knell for non-proprietary software development.

But now that you have done your obligatory dance on the open source grave, keep this in mind: As long as there are programmers who are willing to collectivly contribute their spare time to a project, open source will survive. That may seem alien to you, but people contribute to all kinds of collaborative efforts without the expectation of monitary gain ($1BUSD donated to Red Cross).

You might not agree with the cooperative sentiment, but there is 400 years of history behind the open source philosophy.

Who found the Open Source b-plan?

[mnf999]

OK, the article is actually interesting. Having founded JBoss Group, a commercial entity behind JBoss I relate to many of the points.

But somehow the thinking is backwards still, thinking with old filters. One of the fundamental flaws of business in open source is that you give away your core competency.

But then OSS existed before companies tried to grow on its ground (Linux) and very succesful service companies existed independently of Open Source (EDS). So there must be a middle ground.

I believe part of the problem is that is that business folks out there (mostly VCs, I have met my share of arrogance back in the good ol days of the valley, confusion!) well VCs try to apply the old model of company building on the new way of producing software. It doesn't work. Open Source CANNOT support fat and overhead and corporate structures, just because IT CAN'T.

My (small) company is profitable and we are growing but I clearly see that I cannot AND SHOULD NOT grow with employees, just not flexible enough. As research on business plans goes, I understand that JBoss even though it is in the very rich field of enterprise software (and there is a lot of service), well JBoss for all its success cannot support a massive company right now. And again it is probably not the right structure ANYWAY. VCs got it wrong, most business men are scratching their heads, we at JBoss Group are trying, trying hard. Can't say we got it, we don't, but like many others in open source we make a living.

We offer many services around our free product are thinking about subscriptions and paying for information. The product is free, the service is not. The information is not (documentation, help, support, training (plug: http://www.jboss.org)).

Training is our biggest gig, people want to meet the developers of the framework. Also I don't think this would work with "GUI" frameworks. Just not enough customization to go by. If it is hard in the J2EE field, I can imagine how much harder it is in other fields.

Had I taken VC money (not that it was offered) or had I hired anybody left and right with borrowed money (what VC money is in the first place), well I WOULD BE DEAD TODAY.

It's a bitch out there, but I for one still believe, believe strong, we'll get it

marcf

Article equates success with $$$

[mactari]

NEWFLASH! Open source projects aren't making money when commercial ventures aren't making money, therefore open source is fading!

The author of the article referenced here takes examples like VA Linux and says, "See, open source is on the way out." The point should be that times were so wild for a while there you could offer Free[dom] software and *still* make money.

Quoting a quote from the article:
"The development model of open-source software is wonderful. But let's not confuse a development model with a business model. Basic business principles were forgotten by some," said Turbolinux Chief Executive Ly-Huong Pham.
[end quote]

Mistaking open-source for a business model is exactly what this article does. The fact that open-source companies are struggling is not a good indicator that open source is "fading". That's like measuring the well-being of the Catholic Church by how much the Pope makes each year, after taxes, of course. *sigh*

What about education?

[jefferson]

The articles only talk about Open Source in terms of companies trying to make money from it. But education, specifically university CS departments, are both huge users and huge resources for the open source community, and will help keep it afloat in hard times.

Not having to buy licenses for much or all of the software on their un*x workstations saves departments huge amounts of money. Moreover, they can build workstations from commodity components. This allows them to provide more machines for students, and simultaneously exposes huge numbers of CS undergrads and grad students to free software.

Also, the dot-com bubble bursting caused CS graduate school enrollments to swell enormously. Grad schools have traditionally been places where much free software is born, as student researchers put their work out there for everyone to see.

The problem is that only a few schools really do research in user interfaces and similar areas that will advance free software in the mainstream. But in a lot of less visible areas: like the core-OS, distributed computing, networking, scientific computing, high-performance graphics, AI and robotics, free software will continue to progress and improve through universities. In the process the universities will continue to graduate students who are used to working with free software, and who will wonder why they should buy licenses for software when so much is available for free.