Why Making Money From Free Software Matters 224
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by
kdawson
from the root-of-all-business-models dept.
from the root-of-all-business-models dept.
Glyn Moody sends in what could be a watershed article, if the recording and movie industries are paying attention. "People have been making money from free software ever since Richard Stallman started selling GNU Emacs on tapes for $150 a pop. That's been good for hackers, who have often managed to make a living from their coding by working for one of the startups based around free software. And as companies like Red Hat and Google have grown in size and profitability, so have the credibility and clout of free software. But there is another reason why the success of these new kinds of businesses is so crucial: in many respects they offer a glimpse of coming shifts in other industries that need to grapple with the conundrum of how to make money from goods that are freely available. In particular, they offer the music and film industries an example of an alternative to fighting people's natural instinct to share digital abundance, by making money from new scarcities."
Fundamentally different things, though (Score:5, Insightful)
You can't really equate software and music/movies. Music and Movies are consumable products. You get it, you consume it. Maybe you watch it or listen to it more than once, but it's the rare consumer that uses the media as the means to an end.
Software is typically a means to an end. You don't install Linux just to have Linux. You install it because you want to do something with it. Same with web browsers, office suites, and just about any other software. The exception would be games which are meant to be consumed similarly to movies and music. But on the whole, most software is meant to help you create something else. Whether it be a resume, a presentation, a spreadsheet, even more software, the software exists as a tool, not a thing to be enjoyed in and of itself.
That's why it doesn't make sense to compare the music/movie industry to the general free software industry. The media industry is involved in making consumables, and that means they provide a finished product to the customer. The software industry provides tools which have ample room for customization and service work. The two industries start from different premises, so that's why software can be free whereas media cannot.
If you want to compare the industries, it makes sense to compare the media industry to the niche game software industry. But here you'll find very similar actions. Anti-piracy is the norm. Expensive packaged software (or downloadable paid software) and expensive CDs/DVDs are analogous. Even the antagonistic attitude between the customers and the producers is similar. It's just inherent in any industry that needs to protect its IP because that is precisely what it is selling.
Re:Generational turnover (Score:4, Insightful)
I agree with you. This is off topic, but I wonder if there is evolutionary value in resisting change? Maybe to make sure that which is new stands a rigorous test to ensure it has a rightful place in history? Or perhaps to challenge our already set ways and give strength to existing process?
Google, here I come...
Cognitive dissonance (Score:2, Insightful)
I'll never understand the cognitive dissonance that makes people say 'software should be free' but at the same time 'I should get paid to work on that free software for you'.
Google? (Score:3, Insightful)
And as companies like Red Hat and Google have grown in size and profitability, so have the credibility and clout of free software. ...
Erm, Red Hat and SuSE, or Red Hat and Canonical Inc, or even Red Hat and Geeknet Inc., yes. But Red Hat and Google of all things? Google does not provide or support or grow from providing Open Source software any more than e.g. Microsoft does. They run a close-source search engine, a closed-source mail hosting service and sell ads for a living.
Re:Fundamentally different things, though (Score:5, Insightful)
Re:Fundamentally different things, though (Score:5, Insightful)
That's always been the trouble with `software', it don't ever wear out. The producers of the software would like if it was a consumable product like movies, which is why they would like to move us to software-as-a-service, in the Cloud.
Re:Cognitive dissonance (Score:5, Insightful)
It's not hard for people to find a half hour here and there to work on a project, but it becomes really difficult to find hours every week to do so without being paid. There are exceptions, but not many, and certainly not enough to support the ecosystem.
Re:Generational turnover (Score:5, Insightful)
Assuming that you are the incumbent(whether The top dog, or just one of the people for whom the status quo is working quite well, thanks), every day you successfully delay change is another day of profit rather than loss, and risk rather than security. There may be a point where you cut your own throat by resisting change(either the cost of resistance simply becomes too high, and consumes all your profits, or your resistance actively precludes your taking advantage of certain options in the changed future); but until you reach that point, a rearguard action is totally rational, even if it is inevitably doomed on the medium to long timescale. The degree to which rearguard actions are logical is increased if you have access to overt or covert subsidies. In the media case, they've been very effective in lobbying for copyright infringement, and its tools, to be ever more criminalized and, once criminalized, made a greater law enforcement priority. Fighting change is always cost effective when you are using somebody else's money...
Second is that change is only really inevitable in hindsight. Many changes have been successfully fought, even though their proponents were convinced of their inevitability. Incumbents who don't fight change don't remain incumbents for as long as incumbents who do; because almost any change, unless it is truly structurally unsound, can push you over unless you push back; but only a relative few changes are irresistible(and, even in those cases, see point 1).
On the minus side, I would be rather more surprised to see a net positive value in change resistance("net positive" in the "overall value across a society" sense from econ). Incumbents, by virtue of being incumbents, so very often have access to other people's money with which to fight change. Therefore, it is logical to suspect that(because of that effective subsidy) a greater-than-socially-optimal amount of change-resistance is generated. Further, all but the most dramatic innovations have a period of manifest inferiority to existing, well-polished, methods. During this period, they can be smothered in the cradle at comparatively low cost.
Re:Cognitive dissonance (Score:5, Insightful)
The software is free, the developer's time is not.
You're free to use the software however you choose, but if you want the developer to spend his time working to your schedule, then you may have to make it worth his while.
Lesson learned (Score:2, Insightful)
Google has made a ton of money *from* free software.
That's right FOSS developers, all the work you released for free was used to make billions for a couple of guys. And they of course took all that money they made off of the back of the FOSS community and ....kept it.
And they're paying back to the FOSS community by adding some minor code and ....well really nothing.
So, the lesson I get from Google is exploit the free software and the free labor of others, make a billion, and keep it all to myself.
Re:Fundamentally different things, though (Score:4, Insightful)
That depends. Some of the Blender movies [blender.org] do it. You can't give away physical props so easily, since they're physical, but that's a fundamental difference with physical versus digital.
false dichotomy (Score:4, Insightful)
the differences you cite aren't really differences. everything is a means to an end, including music and movies: pleasure. "You install it because you want to do something with it" applies to linux. it also applies to "iron man" and beyonce
put it this way: a hammer is not a screwdriver. but in terms of how they are acquired: bought in a store or ripped off from woodshop class, they are the same
Re:Fundamentally different things, though (Score:4, Insightful)
Which "niche games" market is that? Presumably not the independent-yet-original-and-good games market like 2dBoy [2dboy.com] (World of Goo) and Stardock [stardock.com] (Sins of a Solar Empire) compete in, where they're happy to have no or minimal DRM because pirates could be customers and customers are customers and should be treated as such.
Re:Generational turnover (Score:3, Insightful)
Re:Cognitive dissonance (Score:3, Insightful)
Which is why OS companies make money of support: They give software for free with no guarantees.
That seems like a pretty shitty way to conduct business. It gives an incentive for creating crappy software that requires extra support. Shouldn't the ideal be to make great software that doesn't require much support?
Re:Cognitive dissonance (Score:2, Insightful)
The software is free, the developer's time is not.
But developers spent time developing the software. So, if their time is not free, then how did the software come to be free in the first place?
Re:Cognitive dissonance (Score:3, Insightful)
If you're saying "should", then sure, there's cognitive dissonance. But that's a straw man.
If you want me to work in your IT department to install and maintain software on your computers, that's a job, and you need to pay me for it. If you'd like me to design, program, and test POS or support software tailored specifically to your company, that's a job, and you need to pay me for it. You don't have to hire me (or anyone) to do those things. If you're a one man shop, and perfectly comfortable doing your installs yourself, no one "should" get paid-you've every right to do it yourself. On the other hand, if you're a large corporation, chances are someone's going to get hired to do installation, maintenance, and customization. They're no more being paid for the software installing and maintaining Linux then they are installing Windows-they're not getting a cut of the licensing on Windows either. They're being paid for their time.
Re:Authorship of software is different (Score:3, Insightful)
Even if an artist subscribes to the free->fame startup model, eventually the steps to monetization involve controlling the distribution of copies.
Counterexample: The Grateful Dead. They not only allowed the distribution of copies, they actively encouraged it.
Re:Generational turnover (Score:3, Insightful)
evolutionary value in resisting change?
Oh, definitely. Two main things: (blah, blah)
No, it's way simpler: changing to a new state is risky. Evolution has taught to minimize risk and avoid it. Let someone else be brave, I'll stay here in my hole.
Re:Cognitive dissonance (Score:3, Insightful)
Easy - software is duplicable into infinity. When I'm done on software, I'm done, and as many people as want it can use that software at no cost to me. I can (and usually do) also work on my projects when I darned well please. An hour or two put in before I turn in for bed, or with the advent of netbooks even while waiting for a friend to show up somewhere I can work on something for 10-15 minutes. IE, I can invest time that is inherently less valuable into it. It also helps that often times I'll (and I'm wagering many, many other developers) write software that I personally am interested in using myself too, so I have an incentive to write it regardless of compensation.
That said, support, custom coding, etc, are face time. You are paying for the EXCLUSIVE use of my time, and you often want it during peak business hours. That's not the same thing.
Re:Cognitive dissonance (Score:4, Insightful)
Wrong. It creates an incentive for creating software that seemingly requires support, but doesn't require that support in reality. In other words, it creates an incentive to build software that is better than it looks.
Re:Cognitive dissonance (Score:3, Insightful)
Wrong. It creates an incentive for creating software that seemingly requires support, but doesn't require that support in reality. In other words, it creates an incentive to build software that is better than it looks.
So, it's based upon the deception of customers. Still doesn't sound appealing. As a customer, I'd rather know exactly what I'm getting, rather than being tricked into something. If the software doesn't need that much support, why should I have to pay for it?
Re:Fundamentally different things, though (Score:3, Insightful)
If you sell sand $100/kg in the middle of the Sahara it is not a workable business model. Even if you have a mine employing 1000 people, protecting this business plan would be silly. Well, selling $30 DVDs that can't be read easily whereas it is free to download a rip that provides more functionalities is exactly the same situation.
Re:Authorship of software is different (Score:3, Insightful)
You started with the wrong foot.
"Open source advocates" are guys who think that open source is good from a technological standpoint.
They don't envision the future, they code. You don't want to extract an ideology from programmers talking about programming.
You should read some free software material. Free software _is_ about freedom, and about the balance between users and programmers. _Some_ of the ideas inherent to free software can be applied to the whole of society. The "balance" between the different actors is similar in software and in music.
Here's the thing. Software is easy to see, because free software is almost as old as proprietary software. Both had a similar start from a cultural standpoint. That's why it's easier to understand. On the other hand, we have had proprietary music all our lives, and almosta all business models are anchored to that. It's hard to see a world without copyrights in music. That doesn't make it a bad world, it just makes it unusual.
This is what _I_ think: 300 years ago, copyright arised as an bargain, an incentive for authors to publish. Publishing was hard and expensive, and required upfront investments. Right now, we don't need that. We would have the same amount of cultural production without copyright, so the public is getting nothing from copyright, and its costs are getting higher and higher.
I don't care if some music company wants to restrict distribution of songs they publish, let them do that, but I think it's nonsense that I have to pay for it. And it's nonsense that my internet connection is threatened by their whims. I think the only solution would be to go back to the bargain table, and get a better deal. With copyright, the public is losing a lot, and getting nothing in exchange.
(Of course, authors do have some inalienable rights that should be protected, like authorship, to prevent plagiarism and stuff, but a monopoly on distribution is not an inalienable right, it's just the result of a bargain)
Re:Cognitive dissonance (Score:5, Insightful)
Several possibilities.
1. The software author was contributing to a project that he/she saw their own benefits from, and therefore were compensated by the resulting product. In a few smaller projects, a single person writes code entirely for their own benefit, then releases the code because someone else might want to use it, too. In this case, their time was "free" in terms of money, they compensated themselves with the results of their own work then offered out a copy of it for others to benefit from as well.
This, by the way, is why FOSS is often compared to "communism" (not the totalitarian kind as we've seen practiced, but the purer Marxian kind of "from each according to ability, to each according to need"). Everyone in a project like this is free to contribute whatever they can or want to, and everyone benefits from all of the contributions. Of course, where communism in the real world breaks down is in simple resource limitations - a lot of people want to take according to need, but not give according to ability. In the world of software development, you can have a very low number of givers and a very high number of takers and the model still works as long as you have some givers. And if the givers are benefiting themselves by creating what they themselves need, then they are building their own compensation.
2. The software was written under contract for a specific company to solve a specific problem and that company is not using the software for competitive advantage, so they release the code for others to use. It can also mean that software they use themselves can be improved by others at no cost to them, so symbiotic relationships can form.
3. The software was available in crude form and a company didn't want to reinvent the wheel, so they started with what was out there, improved it, and released the improved version as a way of "paying back" for the fact that the codebase saved them a crapload of development time. Or, in the case of a lot of projects, the company wants to sell you some hardware and they are OK with you doing other things with it once you've bought it (ie. what is now known as the Linksys WRT54GL series), so providing the source code moves more cheap generic-parts units off the shelf because the modding community wants to turn them into all sorts of crazy stuff.
In reality, most free software is the result of multiple of the above scenarios happening.
The fact is that while an author's time is not free, they can still give away the software under circumstances where enough people will give them small amounts of money (advertising on their download site, voluntary donations, or even kudos and appreciation to feed the ego for a spare-time project). They can also write software that benefits themselves and send it out, but if you want them to change it to suit your own needs you can offer them some money to make the changes, and the improved version can be released for all to enjoy.
I've seen projects where the original author makes the source code available, then uses "paypal voting" for new features. "Many people have asked me for feature 'x'. It's going to take me about 8 hours to write it, and I'm out of beer and nachos. If you want me to add feature 'x', send money and tell me it's for feature 'x' - when my donations for feature 'x' hit $400, I'll write it and release it for all to enjoy."
Re:Fundamentally different things, though (Score:4, Insightful)
Free software doesn't have just one revenue stream, there are numerous different ways to get money. The fundamental problem is that music does not require support. Most of the revenue streams either assume you're paying for physical media or support
I'd say the fundamental problem is that support as a revenue stream incentivizes the wrong thing. Being good at programming and being good at providing support are not the same skill. In fact, good programmers are often lousy at dealing with customers and their problems. Why should a programmer's income be based on how well he provides support, instead of how well he programs?
Even worse, if a particular programmer is good at providing support, he makes the most money by making sure his software isn't as good as it could be. It should have bugs and problems, just as long as they aren't enough to drive people to his competitors, so that he can sell more support.
Similarly for music. Many musicians are great in the studio, but suck at concerts. For some kinds of music, the whole notion of a concert doesn't even make sense.
A good system for paying creative people (programmers, musicians, artists, and so on) should make their money be tied to their creative output, not some ancillary thing. Programmers should be paid to program. Musicians should be paid to make music. etc.
Re:Cognitive dissonance (Score:3, Insightful)
The software is free, the developer's time is not. You're free to use the software however you choose, but if you want the developer to spend his time working to your schedule, then you may have to make it worth his while.
It's the open source ineconomy of scale. A million organisations can use a piece of software, and all want the same new feature added. But if any organisation says "add the feature, Joe" they have to pay full price for the change as if they were the only user, because the feature is given free to all the other 999,999 users rather than sharing the cost. So, of course, nobody does -- while the feature might be worth $1,000 to each of the million organisations it's not worth the $10,000 it would cost to develop to any of them. So it never gets developed.