Subject: Re: proprietary -- a truism
From: hecker@netscape.com (Frank Hecker)
Date: Mon, 12 Apr 1999 00:21:09 -0400

Russell Nelson wrote:
> [ This should be obvious, but I feel like writing about it. Yes, Tim,
>   I know I have two chapters that need editing, and more to write for
>   the end of this month, but a guy needs a break, eh?  -russ ]

Thanks for putting this together; obvious though it may be, nevertheless
it's a very good way to think about the issues involved.

> I think it's almost a truism that a free software business has to keep
> something proprietary.  Unless you keep something proprietary, you
> have nothing to sell.

I was about to quibble a bit with your use of the word "proprietary"
here, but then I checked the dictionary (Webster's Seventh New
Collegiate Dictionary" in my case).  "Proprietary" implies to many
people that something is unique to a particular vendor and cannot be
sold by anyone else, as for example only Microsoft can sell Windows or
authorize others to do so.  This is indeed one possible definition
("made and marketed by one having the exclusive right to manufacture and
sell"), but in this case I believe you also intended (and, if so, I
agree with your use of) the more general definition "of, relating to, or
characteristic of a proprietor".

In other words, any free software business has certain attributes and
can do certain things that are uniquely associated with itself.  Even
when others can do the same sort of thing (like billing for time or
selling physical copies), nevertheless the FSB controls its own
"instantiations" of that thing; e.g., a CD produced by CheapBytes is
sold under terms ultimately dictated by CheapBytes alone; ditto for a
manual produced by O'Reilly, or a Quake episode created by Id Software.

However it might clarify your list to categorize the items and
attributes according to _how_ inherently unique they are to a particular
vendor or, more technically, whether they are fungible or not relative
to similar items and attributes associated with other vendors.  (Another
good dictionary item: "fungible: of such a kind or nature that one
specimen or part may be used in place of another speciman or equal part
in the satisfaction of an obligation".  I didn't realize before looking
it up that "fungible" has the same root as "function"; a less
highfaluting term would be "functionally equivalent".)

As a first cut, physical copies (3) are quite fungible, people's time
(2) is also fungible but less so (depending on personal skill and
expertise relative to the task at hand).  Reputation (1) and "some of
your software" (4) are not fungible, the former by nature and the latter
as a consequence of laws relating to intellectual property and
contracts; given the context of your discussion, documentation (5),
datasets (6), and hardware (7) are also assumed to be not fungible.

> Proprietary things:
>  1) Reputation.
>  2) People's time.
>  3) Physical copies.
>  4) Some of your software.
>  5) Documentation.
>  6) Datasets.
>  7) Hardware.

I would add at least the following additional two items:

8) Influence.  As I think I mentioned way back when on this list, a FSB
could charge customers fees to in essence represent the customers'
interests relating to development of a libre software product.  To be
more specific, if a free software business exerts great influence over
the development of a particular libre software product (typically
because the FSB employs many, most, or even all of the core developers
of that product), then a customer may be motivated to pay the FSB to
ensure that the customer's interests are reflected in the future
evolution of the software.

I think that this is at least part of what's going on when companies
invest in Linux distribution vendors like Red Hat: those investors are
at least to some degree buying some influence over the future direction
of Linux -- not so much that they want to "hijack" Linux for their own
purposes, but more that they want their interests to be taken into
consideration and not to be ignored.  (This is analogous to why
companies pay political lobbyists: much if not most lobbying is done not
to promote legislation favorable to the company, but rather to prevent
the passage of legislation harmful to the company.)

Influence is different from people's time (2) because the amount paid
may have no direct relation to the time spent and because all actual or
potential FSBs are not equal in the amount of influence they can exert. 
It is also different from reputation (1) because it comes into play in
different contexts; for example, a Linux distribution vendor may have a
well-known and respected brand name (reputation) enabling it to more
effectively sell to consumers, but they may have little influence over
the evolution of the Linux kernel and associated software, and thus
could not charge "influence fees" to parties interested in having Linux
evolve in a particular way.

9) Experiences.  Goaded by Stig, I am actually reading the book
"Experience Economy" (which I cited in an email to him).  Its central
premise is that companies can build into their business models the idea
of providing experiences, over and above any goods and services they
provide, and people will pay for the experience in isolation or in
association with a good or service.  This is again different from
reputation (1): For example, the experience of seeing the Disney
production of "The Lion King" has value for me that I might pay for,
independent of the fact that it is provided under Disney's brand.

I don't have time right now to speculate on whether (or how) experiences
in this sense might be incorporated into a free software business model,
but I wouldn't bet against the possibility.

Frank
-- 
Frank Hecker            Work: http://people.netscape.com/hecker/
hecker@netscape.com     Home: http://www.hecker.org/