The Open Code Market

There's a new article in First Monday entitled "The Open Code Market". Jordi Carrasco-Munoz, the author has some interesting comments about the article itself, which I've put below, but the overall direction of the piece is, in his words: "In short, The Open Code Market aims to become a Free Market for software, as well as a market for Free Software. The OCM introduces into the Free/Open Source movement an economic incentive, to help align the priorities of Free/Open Source developers with those of the end users. " Jordi writes: "

The Open Code Market

The peer reviewed magazine FirstMonday has published one paper I wrote on the business possibilities of Open Source titled "The Open Code Market".

In short, The Open Code Market aims to become a Free Market for software, as well as a market for Free Software. The OCM introduces into the Free/Open Source movement an economic incentive, to help align the priorities of Free/Open Source developers with those of the end users.

Between the final draft and publication, I received many valuable comments on the idea. I am very grateful to all those who dedicated some of their valuable time to read the paper and make insightful comments.

Some of those comments led me to an earlier similar effort by Brian Behlendorf named SourceXchange (originally at www.sourcexchange.com). After contacting Brian, his comments were probably the most valuable, since he had gone through the the actual proces of running a project similar to what I am proposing.

His main line was that:
a) while the market made profits, it did not reach the levels of profitability that were expected in the middle of the dot.com boom, and investors looked for other (more lucrative) endevours
b) That the dot.com boom also addedd costs (high salaries, etc) to his attempt and
c) that it is difficult to commoditise software creation due to the uncertainties over time / effort required to write the software, and the difficulty of the role of "project manager".

My line on all this is that
- The project may be easier to develop now as expectations for profits (and costs) have decreased, and that sourcing on low-cost countries (i.e. India, Vietnam, etc.) would reduce costs significantly.
- I also expect that the market will take off only as Free Software/Open Source (Linux in particular) moves to the mass market of the desktop, thus generating the necessary economies of scale, visibility and consumer-mass. In my idea, the target end-users of the market are not IT companies, but mainly individuals with no IT knowled (nor desire to acquire it) and Small and Medium Enterprises with small or no IT departments. "

Comments

this all sounds great...

[Major_Small]

but you have to look at most computer users... most people don't know about programming and think an open-source program means that somebody will come in and hack their computer...

try explaining the good side of open-source programs to people who have never written a program in their life... you'll see what I mean...

I can't see much revenue comming from ordinary computer users who would see this as a 'hacker's' network or something. where they should direct themselves is towards the programming communities and (mostly) businesses...

TopCoder Software is already doing this

[srowen]

TopCoder Software has being doing what this article describes for over a year:

http://software.topcoder.com/

In short they are trying to put a structured, process-oriented community development model into a design / development competition format (with cash incentives, both upfront and as royalties) for creating new software. The resulting work is marketed as a component library, and the community itself is marketed as a "no-shore" development resource.

Check it out, it is a pretty good system -- the results are surprisingly good. I regularly participate in these projects.

A bazaar in cathedral clothing...

[TrombaMarina]

most of the success stories so far (Amazon, Google, etc.) are not new producers, but more efficient (and cheaper) middlemen.

+1 Perceptive

This solution helps to bring together two separated communities: Users and developers, cutting drastically (but not entirely) middlemen and their added costs... The OCM acts as clearing house by delivering the software to the client and the money to the developer

The communities are not separated. The high level of communication between developer, tester, and user is the greatest strength of OpenSource software. They are sometimes the same person! By introducing a "clearing house" you are adding a middleman and thereby reducing efficiency.

While the customer may be able to tell if the software works as requested, it cannot identify buggy, poorly written software, let alone know if the software presents a security risk. Thus, the OCM will also have to provide services as required.

+1 Perceptive

This is a difficult problem. Really difficult - and essentially unsolved by traditional development models. OpenSource itself is a solution to this problem. Code reviews, while one of the most useful tools for preventing these problems, are also one of the most labor-intensive (read "expensive").

consumers and businesses work for money, and they mistrust people who do not

Very true. But I believe this paper underrates the strength of (as Eric Raymond calls it) the gift culture. Essentially, OpenSource developers compete to give the biggest gift to the community. The bigger the gift, the more their standing within the community rises. This has worked pretty well the past 13 years or so.

While I applaud the effort to pay these people for their gifts, I think it tries to shove a square peg into a round hole here. It changes the motivation from "give a big gift" to "give the user what they asked for". That raises many problems:

1. What users ask for often isn't what they want. There's a curse (I think it's Russian) that goes, "May your every wish be instantly granted." Read any story about genies for examples of the problems with getting what you ask for.
2. Even if a specific enhancement meets a user's short-term needs (as this system encourages) there is little or no encouragement to provide an extensible solution. By comparison, "Giving the greatest gift" encourages long-term extensibility.
3. Even if the enhancement is extensible, it may break something else that used to work. Again, the compensation scheme is weak here.

The developer rating system would address these problems to some degree, but all ratings systems come with their own problems. Look at what OpenSource has accomplished so far. I use all OpenSource software at home, and much at work. Linux is rapidly penetrating corporate infrastructure - it's been the fastest growing operating system for years. What's broken about it?

Ultimately, I think this paper encourages one to think about the differences between OpenSource and traditional motivational schemes/business models. It is a very interesting read and a lot of thought obviously went into it. I personally believe that society as a whole has more to gain by embracing the benefits of sharing, than to see OpenSource become as systemitized and hierarchical as much of the rest of our society.