Subject: Re: Model for FOSS financing by consortium
From: Tim O'Reilly <tim@oreilly.com>
Date: Mon, 5 Apr 2004 14:01:27 -0700

Take a look at avalanche.org.  This is an IT OSS consortium.

On Apr 5, 2004, at 1:56 PM, Forrest J. Cavalier III wrote:

> This has a few paragraphs of introduction that FSBers
> do not need.  But what do you think of the idea?
>
> Of course this is not a cure-all, but do you think it will
> be useful?
>
> If the contract price is high enough to cover development,
> consortiums or cooperating individuals can join together
> to share the cost.  They only get one copy (there is only
> one contract, after all), but they can redistribute.
>
> Cooperating individuals must organize themselves, so that
> only one entity enters the contract.  The distributor does
> not try to organize them.  Do you think the FSF and other
> non-profits or governments would find these arrangements
> attractive?
>
> Commercial customers who make purchases may decide they do
> not want to redistribute.  They may have reasons which
> include avoiding risk/liability or even "don't help the
> competitors."  Will this allow certain developers in
> certain markets to set the contract price much lower than
> the development cost, in order to increase demand?
>
> Has anyone tried or written about this kind of model before?
>
> What kinds of changes should be made to this?
>
> -----------------------------
>
> Intro....
>
> Copyright law and proprietary software licensing enable
> software development to be effectively financed by splitting
> the cost among many customers. Each customer pays only a little,
> but hundreds, thousands, or millions each paying a little can
> fund costly projects.
>
> Open source software licensing is greatly challenged to provide
> similar magnitudes of financing. By definition, it is not
> possible to require each licensee to pay anything.
>
> Others have conceived of "closed source until freed" models for
> funding open-source software.  This isn't exactly open-source
> software development.  Another characteristic discouraging the
> success of this method is that it can be rational to wait, letting
> competitors spend money for something you get at no cost just a
> little bit delayed.
>
> The idea....
> ------------
>
> I propose the following arrangements. The first recipient
> receive an open-source copy. Cost-sharing is rational.
>
>  1. Distributor agrees to provide a copy of the software only
>     under contract.  For example, the distributor provides no
>     public FTP or WWW repository.
>
>  2. The contract covers the acts necessary to transfer a copy of
>     the software and assent to the terms of the license(s) and
>     disclaimer(s) of warranty.
>
>  3. The contract does not alter any rights and obligations provided
>     by the applicable software licenses.  For example, the contract
>     does not restrict owners of legitimate copies from redistributing
>     the software, nor influence fees for that.
>
>  4. If the distributor knowingly offers or transfers substantially
>     the same item or superset thereof to a third party within 12
>     months, the distributor owes the customer a refund equal
>     to the difference between the payment tendered and the
>     third-party's net cost if it is "substantially lower."
>     "Substantially lower" means discounted in excess of the greater
>     of 4% a month or $15 a month.
>
>
>
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