Web 2.0 and Open Source

A commenter at this post on Colm MacCarthaigh’s weblog writes:

I guess I still don’t understand how Open Source makes sense for the developers, economically. I understand how it makes sense for adapters like me, who take an app like Xoops or Gecko and customize it gently for a contract. Saves me hundreds of hours of labour. The down side of this is that the whole software industry is seeing a good deal of undercutting aimed at sales to small and medium sized commercial institutions.

Similarly, in the follow-up to the O’Reilly “web 2.0” trademark shitstorm, there’s been quite a few comments along the lines of “it’s all hype anyway”.

I disagree with that assertion — and Joe Drumgoole has posted a great list of key Web 2.0 vs Web 1.0 differentiators, which nails down some key ideas about the new concepts, in a clear set of one-liners.

Both open source software companies, and “web 2.0” companies, are based on new economic ideas about software and the internet. There’s still quite a lot of confusion, fear and doubt about both, I think.

Open Source

As I said in my comment at Colm’s weblog — open source is a network effect. If you think of the software market as a single buyer and seller, with the seller producing software and selling to the buyer, it doesn’t make sense.

But that’s not the real picture of a software market. If you expand the picture beyond that, to a more realistic picture of a larger community of all sorts of people at all levels, with various levels interacting in a more complex maze of conversation and transactions, open source creates new opportunities.

Here’s one example, speaking from experience. As the developer of SpamAssassin, open source made sense for me because I could never compete with the big companies any other way.

If I had been considering it in terms of me (the seller) and a single customer (the buyer), economically I could make a case of ‘proprietary SpamAssassin’ being a viable situation — but that’s not the real situation; in reality there was me, the buyer, a few 800lb gorillas who could stomp all over any puny little underfunded Irish company I could put together, and quite a few other very smart people, who I could never afford to employ, who were happy to help out on ‘open-source SpamAssassin’ for free.

Given this picture, I’m quite sure that I made the right choice by open sourcing my code. Since then, I’ve basically had a career in SpamAssassin. In other words my open source product allowed me to make income that I wouldn’t have had, any other way.

It’s certainly not simple economics, is a risk, and is complicated, and many people don’t believe it works — but it’s viable as an economic strategy for developers, in my experience. (I’m not sure how to make it work for an entire company, mind you, but for single developers it’s entirely viable.)

Web 2.0

Similarly — I feel some of the companies that have been tagged as “web 2.0” are using the core ideas of open source code, and applying them in other ways.

Consider Threadless, which encourages designers to make their designs available, essentially for free — the designer doesn’t get paid when their tee shirt is printed; they get entered into a contest to win prizes.

Or Upcoming.org, where event tracking is entirely user-contributed; there’s no professional content writers scribbling reviews and leader text, just random people doing the same. For fun, wtf!

Or Flickr, where users upload their photos for free to create the social experience that is the site’s unique selling point.

In other words — these companies rely heavily on communities (or more correctly certain actors within the community) to produce part of the system — exactly as open source development relies on bottom-up community contribution to help out a little in places.

The alternative is the traditional, “web 1.0” style; it’s where you’re Bill Gates in the late 90’s, running a commercial software company from the top down.

  • You have the “crown jewels” — your source code — and the “users” don’t get to see it; they just “use”.
  • Then they get to pay for upgrades to the next version.
  • If you deal with users, it’s via your sales “channels” and your tech support call centre.
  • User forums are certainly not to be encouraged, since it could be a PR nightmare if your users start getting together and talking about how buggy your products are.
  • Developers (er, I mean “engineers”) similarly can’t go talking to customers on those forums, since they’ll get distracted and give away competitive advantage by accidentally leaking secrets.
  • Anyway, the best PR is the stuff that your PR staff put out — if customers talk to engineers they’ll just get confused by the over-technical messages!

Yeah, so, good luck with that. I remember doing all that back in the ’90’s and it really wasn’t much fun being so bloody paranoid all the time ;)


(PS: The web2.0 companies aren’t using all of the concepts of open-source, of course — not all those web apps have their source code available for public reimplementation and cloning. I wish they were, but as I said, I can’t see how that’s entirely viable for every company. Not that it seems to stop the cloners, anyway. ;)

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  1. Posted May 29, 2006 at 20:29 | Permalink

    Hi Justin,

    Software is moving in the direction of all mature industries. This is a post gold rush era, where IP creation and is being commoditised by two forces, Open Source (which says IP wants to be free) and Software as a Service (ala Salesforce.com) which gives people the holes they need instead of trying to sell them a drill. The price gouging that Microsoft enjoyed in the past is going the way of the dodo. Instead they are having to compete on price and service.

    This doesn’t mean you can’t make money out of software, just that there will probably never be another Microsoft. Its no accident that Google has been successful via a completely different business model.

    In the Web 2.0 it turns out the coder rather than the marketer is king.


  2. Posted May 29, 2006 at 21:16 | Permalink

    “but its viable as an economic strategy for developers”

    For developers yes, but sometimes I wonder how viable it is for entrepreneurs?

    In nearly every open source arena there’s the one market leader sucking up all the services and support cash, which traditionally is supposed to be the revenue generator if you’re giving the code to the community. Monetizing an open source product which isn’t the leader in it’s field strikes me as being even more difficult than usual, and it changes the business dynamic as leaders in their field manage to lock in their advantage early but then have access to everything you have access to as time goes on.

    It’s hard to disrupt the market leader when the company in question has greater resources, long standing goodwill, and access to the same code and community of developers as you might have.

  3. David Malone
    Posted May 29, 2006 at 21:20 | Permalink

    While I’m regurally wrong about this sort of stuff…

    I hadn’t even noticed the term “Web 2.0” before last week, so I don’t think it can be generic outside a specific community. I had a look at Joe’s list to see if I can understand what I’m missing. Some of it is clear – writing vs. reading and creating things that can easily be reused – these are big differences. Other bits seem just to be technology-of-the-day (wireless, XML, broadband, trade sales). Other bits seem just plain wrong – the amount of bandwidth people want has always been more expensive than the amount of hardware they want.

    Mind you, I’m the person who it took some time to figure out why the web was better than just using ftp and the page command. To be fair to myself, I was using the CERN linemode browser at the time.

  4. ben
    Posted May 29, 2006 at 21:35 | Permalink

    What’s special about upcoming compared to, say, craigslist? And how does this have any bearing as to the technologies around Web 2.0, which is surely what O’Reilly is interested in. I’ve written some stuff with drag-and-drop AJAX interfaces with roundy corners and no, you can’t have it. Is Web 2.0 something idealistic about “user-generated content”, or is it a family of technologies?

    I’m also skeptical as to the real revolutionary input of a bunch of idiots linking to their home-made “Snakes on a Plane” trailers.

    Iisn’t “user-generated content” really just software-as-a-service? In exchange for providing advertiser eyeballs & personal information for marketing purposes, Flikr provides me with a way to store and share my photographs. For the same quid pro quo, upcoming gives me event listings.

    Ultimately, the idea that there’s this mean nasty economy out there which is operated by Montgomery Burns clones who think dark thoughts about “User forums are certainly not to be encouraged”, and there’s a bunch of happy frolicking Web 2.0 philanthropists is nonsense. These people want to make obscene amounts of money to have Ken-Lay style IPO parties with ice sculptures of Michaelangelo’s David dipensing Stoli from their penises. They are not your friends, regardless of how cuddly their logo is and how easy they make it to “add” your “friends” to their database.

    Companies which position themselves idealistically but remain in the cut-thrust of new technology, venture capital, and the stock market always end up having to compromise those ideals. There’s no other way. Tribe.net with its we-own-your-content changes to its user agreement; Google and Yahoo and their dealings with the Chinese dictatorship; etc. etc. The cool guys with the right-on ideas aren’t in charge; the next SEC filing is.

    Craigslist, by contrast, doesn’t play the gee-whiz venture capital 2.0 game. It’s privately and quirkily held. Not as many amusing Photoshop contests or Aqua Teen Hunger Force tag clouds as the cognoscenti might prefer, of course.

  5. Posted May 30, 2006 at 10:19 | Permalink

    Mark: totally agreed! After years of random cogitating, I still can’t think of a reliable way to build a profitable business on a fully open source codebase (unless you’re lucky enough to be Red Hat).

    David: I think you’d have to be watching it to notice, alright ;) Regarding the bandwidth example — I read that as discussing one of the earliest infrastructural limits a company is likely to run into. A few years back, hardware was the first limitation, but now that’s more or less solved — Moore’s Law, plus effective server-farm parallelisation, has taken care of it reasonably nicely. However the bandwidth problem still remains as yet unsolved, while it has become a key part of the user experience on the client side (think big uploaded photos and videos) — so now is likely to put a cramp on one’s plans.

    ben: upcoming vs craigslist — there’s nothing really special between them, and I’d probably have mentioned CL if I was familiar with it. However, I’m not familiar with CL at all — it’s really just a bay area phenom. (I know if you’re in the Bay it seems like a big deal, but it’s not ;)

    In my opinion, web2.0 is about the concept of running an internet business around communities and user-generated content; the AJAXy/rounded-corners technology angle is irrelevant. So yeah, I’d call CL a web2.0 company in that respect.

    Montgomery Burns clones who think dark thoughts about ‘User forums are certainly not to be encouraged’… is nonsense

    Hmm. how quickly we forget the Iona days, eh? ;)

    I’m sure there are a few Ken Lay wannabes out there. As long as they’re happy to not screw me as a “user”, fine, they can book Spinal Tap for JavaOne if they like.

  6. Posted May 30, 2006 at 10:48 | Permalink

    Hey Justin, just wanted to mention your post makes great sense (here’s too an “open source developer” struggling a whole lot with the “open source company” dillemma), and in general that lately I’ve really enjoyed the stuff you’ve been writing — oftentimes quality stuff, very clearly written. Keep it up!

  7. Posted May 30, 2006 at 11:02 | Permalink

    hey thanks Leo! I’m very happy to hear that ;)

  8. Posted May 30, 2006 at 11:26 | Permalink
    it really wasn’t much fun being so bloody paranoid all the time

    Amen. Probably in the top three reasons I’m loving this generation. Scares the hell out of business types though, they fear trust and “our fellow man.”

  9. Chekov
    Posted May 30, 2006 at 13:03 | Permalink

    Hi Justin,

    I have to disagree with you about the usefulness of “Web 2.0” as a concept. Essentially it is really nothing more than a marketing “hold-all” for whatever is considered fresh and new in web-technology / web-business models. While many of the technologies and trends that have been more-or-less arbitrarily assigned to the web 2.0 box are themselves interesting, grouping them altogether under a common rubrik doesn’t make a whole lot of sense.

    For example, the Ajax stuff and the user-contributed-content stuff has pretty much no relationship (wikipedia, indymedia, blogs etc rarely use rich client technologies).

  10. Posted May 30, 2006 at 13:14 | Permalink

    hey Chekov —

    Actually I agree with you 100% on that!

    The AJAX-style technology is irrelevant to the “web 2.0” idea/business model, in my opinion — it’s just been lumped in by many people because a few of the more recent “web 2.0” companies use it.

  11. Posted May 30, 2006 at 14:18 | Permalink

    Paul: I’ve met “our fellow man”, and he’s a cunt.

    Pardon the expletive but it’s accurate, and even though this is the carpet bagging money grabbing swashbuckling pirate robber baron suit in me talking, we’ve all been around long enough to know that some members of this generation are more trustworthy (if not just downright better human beings) than others.

  12. ben
    Posted May 30, 2006 at 17:06 | Permalink

    Also, in passing — is Flikr’s code actually open-source? I doubt it.

  13. Posted May 30, 2006 at 17:44 | Permalink

    Ben — as I said, no, it’s code is not.

  14. nishad
    Posted May 30, 2006 at 20:44 | Permalink

    JM, as a person with a hazy skepticism towards the benefits of OSS, I have to say that the bit beginning with “As the developer of SpamAssassin, open source made sense for me because …” is the most sensible explanation I’ve ever seen of “Why choose OSS as a developer”. I could feel the idea finally penetrating my thick skull :-)

    I think you really should write this up more elaborately. There are lots of people like me who write software for a living and are, shall we say, unconvinced by the writings of Eric S. Raymond and the type. We need to read more, shall we say, considered viewpoints, that are not as simplistic as the evangelical style tends to be.

  15. Posted June 1, 2006 at 01:35 | Permalink

    I think Open Software and Buzz-thing called “Web 2.0” (I sent line-by-line reply to Joe’s list of 1.0 vs 2.0) have one main thing in common. Willingness to donate one’s time and effort to anybody who wants it. And, in the process, trying to merge professional side with a hobby and earn a bit of money.