Subject: small worlds and better than ransom
From: Thomas Lord <>
Date: Fri, 05 Oct 2007 00:15:10 -0700

The "ransom" models of funding R&D don't quite work.  They
say "I will release a program that does X but only if the public
ponies up $Y."   Variations might let the exact value of $Y float
but all ransom variants have in common that "X" -- what the
program being sold does -- is known in advance.   (I consider
"bounty" models to be a special case of "ransom" models, for
this analysis.)

The only ways to know in advance that your program will do X
is if either it is a fairly uninteresting program that you plan to
write or if you've already done the bulk of the interesting work.
Either way, you aren't selling the activity of doing R&D: you're
selling past work.  (In the case of "bounties," if X isn't boring
and trivial and isn't already done, then you aren't selling development
at all -- you're selling your liability that feature X will be
ready by some specific time.)

R&D is, by nature, an activity of uncertain value.  You can
analyze the chances of one effort or another but, at the end
of the day, it is gambling.

A close cousin of "ransom" captures the nature of R&D more
accurately.   In particular:

A researcher with a promising project can perhaps bootstrap
by publishing an early version of the project, but then selling,
primarily, "pre-purchases" of future versions at a customer-determined

That is, you can have release 0.1 for free.   When release 0.2
is published, you can get that for free as well but, until then,
you can pre-purchase a copy of release 0.2 for any amount of
your choosing.

Customers who pre-purchase, rather than wait for, release 0.2
establish a relationship with the R&D vendor.   When they
speak to the vendor they are heard not as a member of the
general public, but as a valued customer whose repeat business
is hoped for.    It is for the purpose of establishing such a
relationship that some potential customers may choose to
actually incur the extra expense of making a pre-purchase.

This is gambling because customers bet that, in the end,
they get more value from their customer relationship than they
would have gotten by investing the purchase price in other
ways.   Competing customers, paying different amounts,
define a landscape of bets against which the R&D vendor
"fixes" the game.   In an honest R&D game, the vendor
fixes the game -- dedicates his attention in response to
pre-purchases of future releases -- so as to maximize his
repeat business.  (Unlike casino gambling, honest open source
R&D  vendors are unlikely to use cheap drinks, think
steaks, flashing lights, and noisy environments to encourage
reckless purchases by their gambling customers.)

For example: