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SubjectRe: business models [was patent stuff]
On Tue, 2002-05-28 at 01:24, Larry McVoy wrote:

> If the free software community is ever going to really compete with the
> non-free software community, they simply have to come up with a better
> business model than giving it away and trying to make money on support.
> It's economics 101 - a free market will go to whomever can provide the
> needed service most cheaply. With no barrier to entry, that means as
> soon as the price gets high enough, someone will resell the
> product for
> less. Which results in razor thin profits, if any at all.

Software is not a "product" any more then a lawyer argument in a case is
a "product" or an architect plan for a building is a "product". That's
the whole problem in a nut shell. If you continue to view software as a
sellable object then the business model indeed doesn't make sense. Then
again, if you try to look at a lawyers argument in a case as the
"product" of the law firm then that same business plan doesn't make
sense either. After all, in most countries I'm aware of, a lawyer
argument cannot be effectivly copyrighted. Of course, this doesn't stop
lawyers from make a living. Just ask anyone at Microsoft legal
depratment... ;-)

Most "Open Source service companies" that I'm aware off don't understand
the implications. They're not built like a small law firm that may be
large one day; they're built like a company that tries to be a 90 pound
world class gorrila backed by Vulture Capital. Sorry, but it doesn't
work like this: you have to walk before you can run.

So there's a business model and it works for years in other fields.
Maybe the problem is that people this path is it isn't "sexy" - they
will have to lose the dream of being High Tech millionares who built a
megacorporation and start thinking like a small time law firm, which
might one day be big. Maybe they don't like to work in a consultant kind
of way. I can understand that and it's OK, but there is a business

The way Open Source (or Free) software works is to multiply the "use
value" of software by killing the "sell value". But here is the
interesting part: it increases the "use value" of the open/free software
in a given niche, but kills the "sell value" of ALL software competing
in that niche. This is why it's going to win, cold hard economic facts
and no need for FSF like ideology (not that there's anything wrong with
that... ;-))))

And BTW I'm OK with patents as long as their licensed for free to GPLed
software (maybe add a clause that makes this irreversable?).

> How is Linux and open source ever going to be a leader, producing new
> applications, new protocols, new languages, new markets when it doesn't
> generate the incredible amounts of revenue needed to build all that?

A. Who cares? We're having fun.
B. It already is in many senses.

I even think that A leads to B, but that's just me...

> Ask yourself - how much open source is a reimplementation of what has
> already been designed and implemented, and how much is fundamentally new?

Ask yourself - how much science is a reimplmentation of what has
already been researched and implmented, and how much is fundamentally

If I remember correctly Linus quoted some dead guy about this once,
something about standing on the shoulders of giants...

OK, I'll now go back to being a quiet little lurker... ;-)

Gilad Ben-Yossef <>
"Hail Eris! All Hail Discordia!"

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