Subject: Re: Free software businesses
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Sat, 17 Jun 2006 15:18:45 +0900

>>>>> "Thomas" == Thomas Lord <lord@emf.net> writes:

    Thomas> Stephen J. Turnbull wrote:

    >> Let's talk about somebody who's walked the walk and knows the
    >> spiel would tell us he doesn't want to hear about "many eyes",
    >> "community loyalty", "bug fixes while you wait", "no vendor
    >> lock-in", and all those other pretty visions that drinking the
    >> Kool-Aid gives you.

    Thomas> Do people really still sell that way?

Do they sell open source that way?  Yes.  Read Gabriel's book, for one
example.  Do they sell product that way?  They may try, but I doubt
they succeed very often.

    Thomas> Anyway, you aren't talking about free software at all.

Oops.  You realize that if *I'm* not talking about free software, then
neither are you?

    Thomas> Like me, you might find the above analysis basically
    Thomas> correct -- regarding the FSB industry as it stands -- but
    Thomas> puzzling.

I don't find it puzzling at all---as a life-long academic, I was
missing a lot of the business facts, but it's very easy to see that
they fit together, and how.  What I find puzzling is the claim that
software freedom has moral standing, given the abundant evidence that
it's a purely economic benefit that even the most clueful software
users won't use, let alone pay a penny for, in most circumstances.  At
least when that claim is made (even in passing) on this list.

    Thomas> Licensing is not enough.   Software architecture matters.

For business, licensing is a marketing tool.  Software architecture
makes it more than hype.  Occasionally....

As far as I can tell, free software is something that happens because
it can, and because the transactions costs of trying to maintain exact
quid pro quo are "too high", resulting in a thriving gift economy.

This free software gift economy presents business opportunities, some
of which involve free riding on the gift economy, others of which are
based on leveraging contributions to the free software economy to
achieve broad distribution of technology that enables customers to
purchase your profit-making product.

I think it would be very unusual if the special conditions of the free
software economy didn't lead to some entrepreneurs specializing in
sniffing out such opportunities specifically in free software.  But by
the same token most businesses that involve free software will be
discovered by "accident", i.e., by entrepreneurs whose business models
are based on some other dimension of business, and serendipitously
find that some free software program either saves them money or
improves customer value, or both.  Sometimes that additional value
will derive from the license, but frequently it will not.

Personally, I hope, and still believe, that there is a *lot* of room
in the world for software developing SMEs to focus on free software.
I think there *is* such a thing as a free software business, though I
know better than to try to define it in public.  I'm a little
disheartened that "Gumby" Henkel-Wallace denies it, but hope springs
eternal, as they say.

-- 
Graduate School of Systems and Information Engineering   University of Tsukuba
http://turnbull.sk.tsukuba.ac.jp/        Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
        Economics of Information Communication and Computation Systems
          Experimental Economics, Microeconomic Theory, Game Theory