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Some questions for the Bazaar
I just read Andrew Leonard's piece in Salon. Here's the key paragraph, with a bonus red herring question: Open-source software is becoming big business these days -- Microsoft's gibbering fear is clear evidence of that. But originally, free software grew out of individual passion. Richard Stallman, who worked on the GNU project, and Linus Torvalds and the thousands of other developers who created Linux, did it not to make a buck, but because they wanted to. They were pursuing their own happiness without regard to revenue generation or market share. What could be more American than that? Nothing could be more American than working together to make better infrastructure for everybody. And nothing could be more American than doing business on that infrastructure. Thus endeth the answer to the red herring question. Here's a tougher one: What can be built only by commercial software developers selling closed source software? I believe there is a huge zone of business out there that Eric Raymond and the open source folks get closer to than Richard Stallman and the free software folks, but is still outside the scope of their interests and beliefs — so far. I add that caveat because I don't believe anybody — not even Richard Stallman and Jim Allchin — have finished opinions on the matter. It should be clear to Jim and others in the bigtime software industry that their business could not — and would not — have built the Internet. No business wants to make something that nobody owns, everybody can use and anybody can improve. Those are virtues that hackers love, and that's why, to a large extent, hackers built the Net, even when they were working at the time for some commercial enterprise. But does that mean that hackers have the last word about the software business? Or that they're even right? Or done thinking about the subject? So far the main economic thinking on the hacker side is Eric Raymond's. Check out the section of The Magic Cauldron called The Manufacturing Delusion. Here Eric says that software has two kinds of value: sale value and use value. He discounts the former and predicts that the superior nature of the latter will obsolete the software manufacturing industry. Here's the discount: ...software is largely a service industry operating under the persistent but unfounded delusion that it is a manufacturing industry. And here's the prediction: If not the factory model, then what? To handle the real cost structure of the software life-cycle efficiently (in both the informal and economics-jargon senses of `efficiency'), we require a price structure founded on service contracts, subscriptions, and a continuing exchange of value between vendor and customer. Under the efficiency-seeking conditions of the free market, therefore, we can predict that this is the sort of price structure most of a mature software industry will ultimately follow. The foregoing begins to give us some insight into why open-source software increasingly poses not merely a technological but an economic challenge to the prevailing order. The effect of making software `free', it seems, is to force us into that service-fee-dominated world -- and to expose what a relatively weak prop the sale value of closed-source bits was all along. But what if we take away sale value as a motivator for writing (i.e. manufacturing) software? How much doesn't get written? A shitload. Not just hundreds of billions of dollars of absent sales, but lots of contributions to culture and infrastructure. Also the Net. Take away Cisco and its proprietary software, and how much smaller and weaker does the Net become? I don't know, but I don't want to discredit Cisco's success, or the reasons behind it. Sale value is maximized by scarcity, which drives up price, which maximizes profits, which motivates manufacture and sale. Open the source code of manufactured software and scarcity starts to go away. So does sale value. This is not good for business, if your business is manufacturing software. Red Hat, Caldera, SuSE and TurboLinux all in the software manufacturing business. All of them offer high-margin closed source products in addition to their familiar open source Linux distributions. They don't call attention to that fact that they are in the closed source end of the open source category, but they are. They have to be, they reason, because they need some high margin products to sell to enterprise customers, or they won't drive up shareholder value. Among other things. These companies come from the free and open source software movements. They are native to the culture. And they sell closed source products. Not open source products with a restrictive license for using that source code. (In Red Hat's case they sell a service that relies on a partner's closed source product.) These are hybrid approaches. They are also in an overlap zone — a quiet DMZ — between two cultures that often disrespect and distrust each other. There's not enough conversation across the borders here. But there must be plenty inside these companies, where their business is maximizing the benefit of free and open source software and development methods in service to manufacturing closed source software. I'd like to hear more of those conversations externalized. Both sides are here to stay. Both need to learn from, and contribute to, each other's success. How can we do good for ourselves and for the rest of us at the same time? That's the big question. Craig puts it this way: How can you drive ubiquity and shareholder value at the same time? The two interests don't oppose each other. They're orthogonal. And if you add the dimension of altruism as well (which I think we need to), we've got choices in three-dimensional space, which change over time, and depending on conditions. It's complicated and messy. Also necessary. Computing is social. So are markets. Human beings and businesses are both equally private and public. The two are not opposed. The free and open source movement are good at articulating public virtues. The business world is good at articulating private virtues. Free and private enterprise are the same. Can free and private software be the same as well? I don't know. I do know there are authorities much more knowing than mine that have something to contribute to the conversation about it. Speaking of which, think about the value of authority. The economics of things has no good way of reckoning authority, because authority's intrinsic value grows as the inverse of scarcity. If my authority is a secret only to myself, it's worthless. But if I share it, through my Weblog, or by allowing my writing to be syndicated through many Weblogs (as I talked about a couple weeks ago here), my authority increases. And it only has value if others make it their own. So it's not exclusive or private. It's a public virtue. Think about the value of information. Not as a commodity, but as the rhetorical commoditization of the way one human being adds to the knowledge of another. Or that grows out of a conversation, such as the one I talk about here: We may have motored out of the Information Age, but the conceptual flywheels of Industrial Consciousness continue to spin inside our minds, and our culture. The ironic result is that we try to understand the Information Age in terms that have limited relevance and are often misleading. We even mistake information for a manufactured good. One of the best conversations I had in the last year was one Tim O'Reilly in which we talked about the deeper meanings of information. It's a noun, we realized, derived from the verb to inform, which was in turn derived from the verb to form. What we call "information," we agreed, was not some kind of data, but the changes we cause by adding to what other people know. If you inform me, I now know something I didn't know before. More than that, I am changed by the process. Information is how we commodify the positive intellectual changes we cause to each other. As such, information is far more profound and human than any physical commodity. Tonight Eric Raymond will be a guest on The Linux Show. He'll be talking about O'Reilly's new release of The Cathedral and the Bazaar. I'm a regular on the show, but I don't know if I'll make it tonight (it's unlikely). But it's a great opportunity, I think, to start talking across the DMZ.
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