Subject: Re: contra-ESR and the principle of infinite exploitation
From: Ian Lance Taylor <ian@airs.com>
Date: 23 Dec 1998 20:10:51 -0500

   From: Adam Di Carlo <apharris@burrito.onshore.com>
   Date: 16 Dec 1998 18:25:43 -0500

   After reading Tim O'Reilly's article on Esther Dyson's Release 1.0,
   I'm starting to realize how much everyone in the business world
   swallows hook, line, and sinker Eric Raymond's (ESR's) message to
   corporate culture about how companies can and should interact with
   "Open Source".

At first I was pleased to see all the open source press.  Now I'd say
that open source is riding a hype curve which will lead to
disillusionment and a turn away from open source.  These hype curves
are a perennial cycle in the computer industry (e.g., AI, object
oriented programming, Java, Internet companies), and, for all I know,
in other industries as well.

I read ESR's ``Business Case for Open Source''
   http://www.opensource.org/for-suits.html
as almost a pyramid scheme.  He argues various benefits derived from
open source; those benefits result from, in essence, getting unpaid
hackers to do your work.  The fact that they are doing your work helps
you to pay your hackers.  But what are your hackers doing?  If they
aren't working on other people's open source software, then you have a
pyramid scheme.  If they are working on other people's open source
software, then you aren't getting as much of an advantage as you
think.

I'm oversimplifying, of course.  Some advantages of open source come
from getting a wide array of testers, which essentially amounts to a
wide-spread beta distribution.  This is clearly helpful for a small
company in certain fields, less clearly so for a large one.

If everyone in the business world really is swallowing this stuff
hook, line, and sinker--I don't know whether they are or not--then
they need to learn a lot more about hype cycles in the computer
industry.

Don't get me wrong here: I think open source (or, as I still say, free
software) is a great idea.  But making money from open source software
is hard.  It can not be done by rote; it requires a hand crafted
solution in each sub-field of the computer industry.  There is no
royal road and no silver bullet.  Using open source without a deep
understanding of open source, of the industry sub-field, and even of
the relevant individuals, is unlikely to make money.

   However, I think ESR's analysis is fundamentally flawed, and moreover,
   is predicated on an economic principle which is not sustainable:
   something for nothing.  This applies mostly to the "Loss Leader"
   category from ESR's <URL:http://www.opensource.org/for-suits.html>.

Getting something for nothing is characteristic of all pyramid
schemes.

   As more and more companies like Netscape free their software, I
   believe it's inevitable that there will be diminishing returns from
   Net Hackers (using a broad term, could also include companies who are
   repurposing and redistributing software).  It's difficult to see
   corporations who use this model as doing more than rather brazenly
   exploiting Net Hackers in order to get mindshare.  Ok, well, Netscape
   is an early case and we *do* need a free browser.  But what is Opera,
   MSIE, etc etc all went open source.  Do you think they would all
   receive the same benefit?

In fairness, ESR does mention this problem on the above web page:

>> ESR quote
    It follows that commercial developers leveraging the bazaar mode
    should be able to grab, and keep, a substantial initiative
    advantage over those that don't. But there's more; the first
    commercial developer in a given market niche to switch to this
    mode may gain substantial advantages over later ones.

    Why? Because the pool of talent available for bazaar recruitment
    is limited. The first bazaar project in a given niche is more
    likely to attract the best co-developers to invest time in
    it. Once they've invested the time, they're more likely to stick
    with it.
<< etouq RSE

   [ Notably missing from those business models, BTW, is the integrator
     model.  Our company, onShore, Inc., is such a model -- we integrate
     free software whenever it makes sense and provides a better
     solution.  And of course we're active participants in the
     community. ]

My read of www.onshore.com is that onShore uses a consulting model.
ESR is really addressing companies which write their own code.  So the
question for onShore is: what happens with code that you write
yourselves, rather than code written by others that you reuse?

   The flaws in his arguemnts also indicates, to me, that he doesn't seem
   to understand the fundmental motives of the free software community.
   That motive is to participate and increase a community of sharing.

There is no one motive, though I agree that that is a significant one.
ESR's ``Homesteading the Noosphere'' paper
    http://www.tuxedo.org/~esr/writings/homesteading/
describes another motive.

(While I think the homesteading paper has some interesting and valid
points, I think it overgeneralizes drastically.  I think I've made
some reasonably significant open source contributions in my day, and I
homesteaded UUCP software pretty well several years ago, but I don't
think my goals were ever prestige or peer repute.  For me, those are
not goals, but rather tools which may be used to simplify further
work, in that in certain specific areas people listen seriously to
what I have to say.)

   I believe in this community, but I'm not anti-capitalist.  I just
   think that we need to give much deeper thought to the issues of
   intellectual property.  I find it hard to conceive of a free software
   business with non-linear profit potentials (ruling out most of the
   models ESR presents) assuming the embrace the ideal that software
   ought to be community property.  This poses a fundamental problem for
   venture capitalists looking for fsb investment opportunities.  It also
   poses a fundamental conflict between the CEOs and the Net Hackers.

I agree that FSBs can't just jump in.  They need to think about it.
However, it's clear that some FSBs have non-linear profit potential
(Red Hat), so you shouldn't rule that out either.

Ian