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 ;)
URLs:
(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. ;)
Tags: business, coding, community, economics, network-effects, open-source, software, web2.0
