Why Making Money From Free Software Matters

Glyn Moody sends in what could be a watershed article, if the recording and movie industries are paying attention. "People have been making money from free software ever since Richard Stallman started selling GNU Emacs on tapes for $150 a pop. That's been good for hackers, who have often managed to make a living from their coding by working for one of the startups based around free software. And as companies like Red Hat and Google have grown in size and profitability, so have the credibility and clout of free software. But there is another reason why the success of these new kinds of businesses is so crucial: in many respects they offer a glimpse of coming shifts in other industries that need to grapple with the conundrum of how to make money from goods that are freely available. In particular, they offer the music and film industries an example of an alternative to fighting people's natural instinct to share digital abundance, by making money from new scarcities."

Comments

Generational turnover

[paiute]

It is human nature to dig in one's ideological heels against change, especially when money is involved. Substantial changes or the oft-cited paradigm shift often have to wait for an older generation to die off.

Re:Generational turnover

[Stenchwarrior]

I agree with you. This is off topic, but I wonder if there is evolutionary value in resisting change? Maybe to make sure that which is new stands a rigorous test to ensure it has a rightful place in history? Or perhaps to challenge our already set ways and give strength to existing process?

Google, here I come...

Re:Generational turnover

[fuzzyfuzzyfungus]

Oh, definitely. Two main things:

Assuming that you are the incumbent(whether The top dog, or just one of the people for whom the status quo is working quite well, thanks), every day you successfully delay change is another day of profit rather than loss, and risk rather than security. There may be a point where you cut your own throat by resisting change(either the cost of resistance simply becomes too high, and consumes all your profits, or your resistance actively precludes your taking advantage of certain options in the changed future); but until you reach that point, a rearguard action is totally rational, even if it is inevitably doomed on the medium to long timescale. The degree to which rearguard actions are logical is increased if you have access to overt or covert subsidies. In the media case, they've been very effective in lobbying for copyright infringement, and its tools, to be ever more criminalized and, once criminalized, made a greater law enforcement priority. Fighting change is always cost effective when you are using somebody else's money...

Second is that change is only really inevitable in hindsight. Many changes have been successfully fought, even though their proponents were convinced of their inevitability. Incumbents who don't fight change don't remain incumbents for as long as incumbents who do; because almost any change, unless it is truly structurally unsound, can push you over unless you push back; but only a relative few changes are irresistible(and, even in those cases, see point 1).

On the minus side, I would be rather more surprised to see a net positive value in change resistance("net positive" in the "overall value across a society" sense from econ). Incumbents, by virtue of being incumbents, so very often have access to other people's money with which to fight change. Therefore, it is logical to suspect that(because of that effective subsidy) a greater-than-socially-optimal amount of change-resistance is generated. Further, all but the most dramatic innovations have a period of manifest inferiority to existing, well-polished, methods. During this period, they can be smothered in the cradle at comparatively low cost.

Fundamentally different things, though

[BadAnalogyGuy]

You can't really equate software and music/movies. Music and Movies are consumable products. You get it, you consume it. Maybe you watch it or listen to it more than once, but it's the rare consumer that uses the media as the means to an end.

Software is typically a means to an end. You don't install Linux just to have Linux. You install it because you want to do something with it. Same with web browsers, office suites, and just about any other software. The exception would be games which are meant to be consumed similarly to movies and music. But on the whole, most software is meant to help you create something else. Whether it be a resume, a presentation, a spreadsheet, even more software, the software exists as a tool, not a thing to be enjoyed in and of itself.

That's why it doesn't make sense to compare the music/movie industry to the general free software industry. The media industry is involved in making consumables, and that means they provide a finished product to the customer. The software industry provides tools which have ample room for customization and service work. The two industries start from different premises, so that's why software can be free whereas media cannot.

If you want to compare the industries, it makes sense to compare the media industry to the niche game software industry. But here you'll find very similar actions. Anti-piracy is the norm. Expensive packaged software (or downloadable paid software) and expensive CDs/DVDs are analogous. Even the antagonistic attitude between the customers and the producers is similar. It's just inherent in any industry that needs to protect its IP because that is precisely what it is selling.

Re:Fundamentally different things, though

[betterunixthanunix]

Actually, movie and music companies make a lot of money selling usage rights, to each other and to advertisers. Whenever you hear a well known song in a movie, the studio that produced the movie had to pay some music company for the rights to use the song like that. Likewise with commercials, or MacDonald's using movie characters for kids meal toys, and so forth. "Consumables" are not the be-all and end-all of music and movies.

Re:Fundamentally different things, though

[Anonymous Coward]

"You can't really equate software and music/movies. Music and Movies are consumable products. You get it, you consume it. Maybe you watch it or listen to it more than once, but it's the rare consumer that uses the media as the means to an end"

That's always been the trouble with `software', it don't ever wear out. The producers of the software would like if it was a consumable product like movies, which is why they would like to move us to software-as-a-service, in the Cloud.

Google is not a FOSS sofware vendor!

[AnonymousClown]

RedHat sell FOSS services - pretty much all Linux and makes half their money from financial activities. RedHat is a FOSS vendor - I can't take that away from them.

Google is a search engine that uses FOSS for it's company - it makes its money from advertising and selling non FOSS software.As a matter of fact, Google is actually a shitty FOSS company - see Sketchup and Sketchup Pro. Where's the source for those things? Hmmmm? And Sketchup Pro is pretty expensive, btw, and it's closed and proprietary program.

All the software written by Google, how much of it is really open? Honestly.

Authorship of software is different

[patSPLAT]

Thus far engineers are the only ones to directly profit from open source businesses.

The single biggest mistake open source advocates make when envisioning a future is the assumption that successful engineering practices will be successful artist practices. You don't sample a Britney Spears song to make a longer, better Britney Spears song; you sample it for reference. Whereas when you patch emacs, you aren't referencing emacs, you are adding functionality.

Even if an artist subscribes to the free->fame startup model, eventually the steps to monetization involve controlling the distribution of copies. For example, first Danger Mouse released the Grey Album to great acclaim, then formed Gnarls Barkley and released music in traditional commercial channels.

While copyright is bad for engineers, it is a 300 year old legal framework designed to compensate artists. Discarding it for nothing is short sighted at best, and at worst exploitive of artists.

Re:Cognitive dissonance

[hedwards]

There isn't any. The more accurate statement is 'software should be free' but if 'you want me to work on it consistently for larger periods of time you'll have to pay me.'

It's not hard for people to find a half hour here and there to work on a project, but it becomes really difficult to find hours every week to do so without being paid. There are exceptions, but not many, and certainly not enough to support the ecosystem.

Re:Cognitive dissonance

[NickFortune]

I'll never understand the cognitive dissonance that makes people say 'software should be free' but at the same time 'I should get paid to work on that free software for you'.

The software is free, the developer's time is not.

You're free to use the software however you choose, but if you want the developer to spend his time working to your schedule, then you may have to make it worth his while.

Re:Cognitive dissonance

[Anonymous Coward]

Wrong. It creates an incentive for creating software that seemingly requires support, but doesn't require that support in reality. In other words, it creates an incentive to build software that is better than it looks.

Re:Cognitive dissonance

[Hatta]

Software is not scarce, developer time is. I'll never understand the cognitive dissonance that makes people think a non-scarce resource should be treated like a scarce one.

Re:Cognitive dissonance

[natehoy]

Several possibilities.

1. The software author was contributing to a project that he/she saw their own benefits from, and therefore were compensated by the resulting product. In a few smaller projects, a single person writes code entirely for their own benefit, then releases the code because someone else might want to use it, too. In this case, their time was "free" in terms of money, they compensated themselves with the results of their own work then offered out a copy of it for others to benefit from as well.

This, by the way, is why FOSS is often compared to "communism" (not the totalitarian kind as we've seen practiced, but the purer Marxian kind of "from each according to ability, to each according to need"). Everyone in a project like this is free to contribute whatever they can or want to, and everyone benefits from all of the contributions. Of course, where communism in the real world breaks down is in simple resource limitations - a lot of people want to take according to need, but not give according to ability. In the world of software development, you can have a very low number of givers and a very high number of takers and the model still works as long as you have some givers. And if the givers are benefiting themselves by creating what they themselves need, then they are building their own compensation.

2. The software was written under contract for a specific company to solve a specific problem and that company is not using the software for competitive advantage, so they release the code for others to use. It can also mean that software they use themselves can be improved by others at no cost to them, so symbiotic relationships can form.

3. The software was available in crude form and a company didn't want to reinvent the wheel, so they started with what was out there, improved it, and released the improved version as a way of "paying back" for the fact that the codebase saved them a crapload of development time. Or, in the case of a lot of projects, the company wants to sell you some hardware and they are OK with you doing other things with it once you've bought it (ie. what is now known as the Linksys WRT54GL series), so providing the source code moves more cheap generic-parts units off the shelf because the modding community wants to turn them into all sorts of crazy stuff.

In reality, most free software is the result of multiple of the above scenarios happening.

The fact is that while an author's time is not free, they can still give away the software under circumstances where enough people will give them small amounts of money (advertising on their download site, voluntary donations, or even kudos and appreciation to feed the ego for a spare-time project). They can also write software that benefits themselves and send it out, but if you want them to change it to suit your own needs you can offer them some money to make the changes, and the improved version can be released for all to enjoy.

I've seen projects where the original author makes the source code available, then uses "paypal voting" for new features. "Many people have asked me for feature 'x'. It's going to take me about 8 hours to write it, and I'm out of beer and nachos. If you want me to add feature 'x', send money and tell me it's for feature 'x' - when my donations for feature 'x' hit $400, I'll write it and release it for all to enjoy."