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How Can We Fix The Broken Economics of Open Source? (medium.com)

Posted by EditorDavid on from the salaries-for-source-code dept.

"The economics of Open Source software are fundamentally broken," argues Matt Klein, a senior software engineer at Lyft (who created Envoy). Here's a heavily-condensed version of his essay on Medium: If we take consulting, services, and support off the table as an option for high-growth revenue generation (the only thing VCs care about), we are left with open core [with some subset of features behind a paywall], software as a service, or some blurring of the two... Everyone wants infrastructure software to be free and continuously developed by highly skilled professional developers (who in turn expect to make substantial salaries), but no one wants to pay for it. The economics of this situation are unsustainable and broken...

[W]e now come to what I have recently called "loose" open core and SaaS. In the future, I believe the most successful OSS projects will be primarily monetized via this method. What is it? The idea behind "loose" open core and SaaS is that a popular OSS project can be developed as a completely community driven project (this avoids the conflicts of interest inherent in "pure" open core), while value added proprietary services and software can be sold in an ecosystem that forms around the OSS...

Unfortunately, there is an inflection point at which in some sense an OSS project becomes too popular for its own good, and outgrows its ability to generate enough revenue via either "pure" open core or services and support... [B]uilding a vibrant community and then enabling an ecosystem of "loose" open core and SaaS businesses on top appears to me to be the only viable path forward for modern VC-backed OSS startups.
Klein also suggests OSS foundations start providing fellowships to key maintainers, who currently "operate under an almost feudal system of patronage, hopping from company to company, trying to earn a living, keep the community vibrant, and all the while stay impartial..."

"[A]s an industry, we are going to have to come to terms with the economic reality: nothing is free, including OSS. If we want vibrant OSS projects maintained by engineers that are well compensated and not conflicted, we are going to have to decide that this is something worth paying for. In my opinion, fellowships provided by OSS foundations and funded by companies generating revenue off of the OSS is a great way to start down this path."

13 of 203 comments (clear)

  1. Open source doesn't mean free software by Anonymous Coward · · Score: 4, Interesting

    Just because people can build the software from source if they want to doesn't mean you can't get them to pay you for it.

    1. Re:Open source doesn't mean free software by Anonymous Coward · · Score: 1, Interesting

      Exactly. This is why OSI has done more harm than good with their promotion of "liberal" open source licenses such as MIT or BSD licenses that let corporations plunder this public good for their personal profits. Instead if software developers actually understand that licences like GPL actually provide an avenue for monetization by enforcing the need for proprietary software vendors to actually pay for the usage in a manner that keeps their sources and/or modifications closed.

    2. Re:Open source doesn't mean free software by Anonymous Coward · · Score: 2, Interesting

      A better way to put this:

      Even if milk, flour, eggs, and sugar could be obtained for 0$, people would still buy cakes from the store.

      But in this case you only need to bake the cake once, then it can be distributed for virtually no cost. Which is precisely why nobody is paying for a compiled version of an open source project.

    3. Re:Open source doesn't mean free software by Dasher42 · · Score: 4, Interesting

      It's true. I want that open source quality even if I'm not going to personally audit most of the code that I download on the system. I'm happy trusting a source that has a good track record for that practice. I *do* still care about the standards being open and being set by developer mindshare, what engineers are excited to build, because you can get pretty burnt when the health of the platform you run depends on suits and marketing divisions that don't really care about it. Every Amiga fan knows what I'm talking about. After I had to jump ship from that platform, I ran Linux almost entirely to this day, because no CEO has the option to sink that ship.

    4. Re:Open source doesn't mean free software by jellomizer · · Score: 3, Interesting

      There is a cost to "Plundering" an MIT or BSD licensed product. In general you begin creating a fork in the product, that only you will be able to maintain and control. So a 20 year old bug, that got fixed 18 years ago, will not make it into your product, because you swiped and altered the code around it for your product.
      However if they keep the code clean, and will support the mainline development, then it is actually a win-win.
      The problem with businesses and the GPL, is for them to be profitable, they need skirt the edge of the GPL rules, and often try fit into the different exceptions. Or other then trying so hard, we just say no GPL, but MIT and BSD is Ok.

      Sometime you need to allow people to do bad things, to keep the door open for good things as well.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    5. Re:Open source doesn't mean free software by jellomizer · · Score: 4, Interesting

      Microsoft business model of the time was to sell packaged software. Open Source was a risk at the time, because it offered alternatives. However it has changed to Cloud and software as a service, So people will be paying monthly fees and Open Source isn't as much a threat.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
  2. There is no economics by Billly+Gates · · Score: 5, Interesting

    That requires both a buyer and seller. FOSS is free.

    --
    http://saveie6.com/
    1. Re:There is no economics by thegarbz · · Score: 3, Interesting

      No FOSS is not free. It just doesn't cost money for the buyer to procure it. Economics are still very much at play even when no money changes hands.

  3. Trash Writing by Anonymous Coward · · Score: 5, Interesting

    The point of working on something for free is the work, not some sly method of monetizing something that is labeled "free."

    Might as well write an article about how soup kitchen volunteers can sinergize to maximal returns with Soup as a Service open core pricing.

    Trash writing from a human being with trash ethics.

  4. Math by religionofpeas · · Score: 3, Interesting

    How can we fix the broken economics of free developments in mathematics ?

  5. Re: A fundamental misunderstanding. by astrofurter · · Score: 4, Interesting

    I know a little about this first hand, from experiences I choose not to share.

    Using real big-F Free Software is orders of magnitude more productive than using proprietary crapware. Many companies running on Free Software generate prodigious economic output. No CTO under fifty wants even to touch âoeenterpriseâ software, much less build business-critical systems around it.

    However the men who actually write that Free Software capture almost none of the value they create. Many struggle just to make ends meet. Those who do earn a comfortable (never handsome) income do so at the cost of proletarianization. Work for Big Capital or starve.

    Consider the depency chain of a typical production web app. The application code alone may have hundreds of direct and indirect library dependencies. Thousands if it's a Nodejs app. ;) Probably a quarter of those libraries are already abandonware. Almost all of them will be abandoned in a few years, because they take time to maintain yet bring no income to their authors.

    In the short term this is great for companies. They pay nothing and get a lot of value. Free (like beer) software = profit! The capital owners would just as soon get rid of the free like speech part of Free Software. Thankfully we have some bold and incorruptible champions, like St Richard of Boston, standing up for software Freedom.

    In the medium term this situation is a maintenance and security nightmare. Our production applications are like houses of cards. Propped up atop layers and layers of increasingly unmaintained software. At first we can work around this. We replace components that have become unsupported, either with newer FOSS components, or with home rolled software.

    In the long run this is a potential disaster. More and more FOSS projects, having failed to provide material support to their maintainers, fall into abandonment. At some point the rate of abandonment surpasses companiesâ(TM) ability to keep up with maintenance. Rot starts to set in. Like aggressive termites or an invasive mold. The profit-generating superstructure sitting on this rotting base starts to become shaky, unstable.

    I don't know how to fix this mess. At a high level we must either figure out how to ensure authors of Free Software area able to earn a good living *for their Free Software work*, not incidentally to it. Or we must accept a permanent secular decline in software development productivity, because the rich commons of Free Software will have fallen into ruin.

  6. Apache model? by Anonymous Coward · · Score: 2, Interesting

    Isn't this already exactly how the Apache model works (or used to)?
    Multiple companies each sponsored a developer to have a seat on the Apache project board giving them a controlling vote(s) on what direction to develop the project in next. All the companies contributing, and everyone else not, benefited by the resulting Apache project results. The sponsoring companies got their needs met sooner (and at all).

  7. Re: A fundamental misunderstanding. by turbidostato · · Score: 4, Interesting

    "Tragedy of the Commons (Look it up; there is a good read on Wikipedia.)"

    Exactly that. And then moronic egotism (its near relative). Just look at the entry: "Broken Economics of Open Source" but, then, what that "broken economics of Opern Source" means for the author? It basically ends up "I want tons of money from VC for something that will never have so much value form them" -it seems his target is "billionaire or nothing"... and even he has the guts to say "If I take out all the ways I know I can make money off of open source (consulting, services, and support), then there is no other way to make money that I know about". Simply brilliant, Monthy Python level, "what have the romans ever done for us?"

    Now, what *should* be the proper way to make money out of open source? Well, it's right there, open to anybody to see, as long as they want to: software takes effort to write, but it doesn't take effort to replicate, then the answer is obvious: bill the "writing code" fact. In no part of any open source license says the code needs to be written for free; they are only about what you can do with that code *once* is already written (basically being "you can't control it anymore").

    Now, the problem comes from the fact that people (not only corporations: people) very much prefer acquiring things they can already see better than things that are in the future. It's not only a thing of software: i.e.: most millionaires (specially unknowledged ones) will prefer paying, say, 5000$ for a pret-a-porter suit than 3000$ for a bespoke one and that says all.

    Add to this the myopic greed of most corporations: right now I'm working for a big bank on an Openstack deployment with a strong backing from Red Hat (and quite a few in-house consultors from them). What's the best value those consultors bring? Being able to talk about our common problems with other Red Hat consultors working on very similar projects on other industries, even competing banks, and sharing the solutions they find. Of course, if we were clever, we could get rid of the middleman and just set our own communication channels with our competitors: there's even a MBA-buzzword for that: coopetition. But, of course too, we prefer paying money through our noses to Red Hat better than sharing efforts with our competition.

    The very same idea could be expanded to the production of the software itself: take the common software requirements of Fortune 100 corporations: they could build an alliance and pay for the common software they need on themselves; it could be open source and developers could be payed for the part that takes the effort -it won't happen in a million years. Not because "open source is broken" but because *we* are broken.