Subject: Re: economic efficiency of free software
From: Brian Behlendorf <brian@collab.net>
Date: Tue, 17 Feb 2004 08:46:03 -0800 (PST)

On Mon, 16 Feb 2004, Taran Rampersad wrote:
> With Free Software, the consumer is denied nothing by the market - the
> consumer denies themself. Some things are ubiquitous, like office
> applications. But if you need something, you can get it. Software is
> *not* scarce, I disagree with that completely. It may just not be
> available in the manner which you need it.

Precisely.  It's the creation and maintenance of that software that is
scarce.

For any given "software problem space", a critical mass of developers is
required to build a sustainable solution.  If that critical mass can be
reached using developers for whom Open Source provides enough reward
(whether monetary reward via OS-compatible business models, or personal
interest/hobby), then you can have a viable project.  When there is not
that critical mass, then that software will either not be written, or
written by developers funded by business models not compatible with Open
Source.

That is why, in my opinion, there will always be proprietary software of
some sort - because there are problem spaces without critical mass of open
source developers, but with the possibility that per-user licensing (or
related) can pay for its development.  I believe this would still be true
even if we had no duplication of effort in the open source world, which
otherwise makes critical mass much harder to achieve.

> The rules of proprietary software do not apply, and a culture needs to
> unlearn how it thinks about software. If it's needed enough, you'll be
> able to get it in the pretty box (and with the price of the colorful box
> included). Software itself, though a functional work, is in fact
> intangible. What you pay for is it's creation and distribution. Even the
> U.S. government calls software a *service*. Facilitating the service is
> key, and with proprietary models there are failures in assuming what
> consumers want. For every successful software product, there are plenty
> of abandoned software projects which were just not financially viable
> for the producing company.

Of course, but failure of software products or even companies is not a bad
thing, in the broader context.  Capitalism, for example, relies just as
much as Darwinism on continual experiments at the edge - and experiments
often fail, far more often than they succeed.  But it's still regarded as
a superior way to figure out "what consumers want" than central planning.

What you are chafing at is the fact that as software companies that fail
wind down, they don't adequately sell or leverage one of their remaining
assets: their source code.  The reason for this is that business
schools teach future CEOs to put software assets at the *wrong place* on
the balance sheet.  Software is a perishable good - it decays as the
problem it was designed to solve evolves, and as the platforms it builds
upon are updated.  It's far more like lettuce sitting in a warehouse than
gold bars in a safe.  Software that sits too long without being put to
market in one form or another becomes worse than worthless; it can become
a liability.  MBAs will one day wake up to realize this; for the meantime
it's a competitive advantage for the few businessfolk who do.

	Brian