Subject: Re: Thoughts on GPL
From: Keith Bostic <bostic@bsdi.com>
Date: Mon, 2 Mar 1998 15:38:10 -0500 (EST)

> From: John Gilmore <gnu@toad.com>
>
>> Back to my standard example: you spent N man-years writing your
>> software, and then you GPL it.  Many corporations already have
>> good marketing and support organizations, so one takes your
>> work, put their label and marketing/support behind it, and
>> they're going to make the money, not you.   What you brought to
>> the party, as a good software engineer, was the engineering and
>> an understanding of how to build complex software.  That's a
>> completely different skill set than the one required to market
>> a product.
>
> If this was true, then there would be a lot of marketing and sales
> companies in the free software market (as subsidized "free riders"),
> and few programmers (as exploited workhorses).  But in fact we have
> the exact opposite: thousands of programmers, and a half a dozen small
> CDROM companies.

I don't think you can consider the "free software market" a
counter-example.  "Free software" consists almost entirely of
software written for reasons other than profit.

Nobody is making money from selling software that's GPL'd.
There are add-on companies, there are bundlers, there are
support organizations, hardware vendors and so forth.  I need
an example of a company that wrote an application, GPL'd it,
and is now selling it, expecting to make a profit on those
software sales alone.

>> Even if your work isn't highjacked by someone, you aren't going
>> to even begin to recover your engineering costs by selling
>> support and/or enhancements.  I won't justify that statement
>> here, but believe me, it's absolutely correct.
>
> I know from personal experience that your "unjustified" statement is
> untrue.  Not only is Cygnus able to thrive this way with existing free
> software, but it has been able to catalyze the creation of new free
> software, being paid by customers to create it from scratch.

I think I disagree.

Now, I'm going to make a couple of statements that I don't know
to be right, but which I think are right.  If I'm wrong, correct
me gently...  :-)

Cygnus started by taking free software and selling support, so
there's little capital investment there.  They also did
enhancements, on demand, for that software for customers --
again, little or no capital investment.  Once Cygnus actually
wrote from-scratch applications, they chose not to GPL them.

I said that you can't recover your engineering costs.  In this
example, Cygnus' engineering costs are minimal, and scale with
their customer base.  If they'd had to develop gcc from scratch
to sell it, do you believe they could they have started the
company on $20K?

Am I wrong?  Are there any applications, where Cygnus invested
a significant amount of programmer time, which aren't built on
previously GPL'd software, and which are now GPL'd?

This whole discussion started with the statement by someone that
you couldn't recover initial software development costs if you
GPL'd the result.  We've wandered around a lot, but does anyone
fundamentally disagree with that statement?

(I agree that brand loyalty comes into play here, as someone
said -- Microsoft might be able to GPL applications and still
make a profit, because nobody can out-market them.  But that's
hypothetical, no company has actually done this, as far as I
know.)

>> Finally, to sell a product you have to find or build a marketing
>> organization, a sales organization, and all the other trimmings.
>> Expecting to convince your financiers that you're going to be
>> able to survive, when you give away your only product, is not
>> a good plan.
>
> Hmm, it worked for us.  Cygnus took an $8M venture capital investment
> a year ago.  The VC's understood the free software business model;
> they weren't hoodwinked.  We "convinced our financiers" that we would
> survive, perhaps by surviving for six years being run completely on
> revenues (total investment, loans and equity, before then was under
> $20K) and growing at a pretty good clip.

I don't disagree with this statement.  The point is that Cygnus'
product wasn't software.  It was support, it was enhancements.

I don't dispute that it's possible to GPL an application and
then build the company that offers support and enhancements.
But my statement was that a company with a larger marketing
and/or support organization can take over your work, and, that,
even if that doesn't happen, application writers are forced to
build sales/marketing organizations to make a profit from their
work.

J. Shapiro pointed out:

	For startup companies, marketing and sales is almost never a
	sustainable competitive advantage, so building a company in
	the way you propose is *very* hard to finance.

My initial argument was that the "free software" community has
excluded companies that write software for money, and that the
conditions of the GPL determine that no software companies are
going to be willing to play by its rules.  I have yet to see a
counter-example.

Here's the easy win: give me an example of a product where the
vendor is giving away the source code under the GPL or similar
license, and selling the same software, intending to profit from
nothing other than sales of that software.

--keith