Come for the Price, stay for the Freedom?

It’s time for impossible to prove conjecture Tuesday! Today I’ll be looking at freedom and price. Those two great pillars of our movement from barbaric propriety and gouging monopolies into a bright future of open sharing and low-low prices.

I read about the Future of Open Source Survey and according to it’s findings most respondents value ‘open source’ and will be deploying it. But more intriguingly this time around instead of valuing ‘open source’ for costs reasons, the value is more firmly placed in Freedom.

This freedom can mean all sorts of things depending on what you do, and unlike what far too many commentators say about access to source code not being important to non-programmers; it isn’t actually about the source code at all.

So what happened to all that low-low price hype? I think that we’re reaching maturity. First FOSS is attractive to anyone who doesn’t quite understand it because of it’s apparent cost benefits. That is, what has already been written is free for anyone to use. Explaining the benefits of Free Software to someone who doesn’t see the problem of proprietary software is impossible.

Once you’re using an open source platform, of course it’s much easier to calculate the benefits of investing in the improvement of the code (hiring/contracting developers) against simply buying a replacement off the shelf product. This is what makes advocating FOSS so interesting, you never know if the person you’re convincing to use Ubuntu will turn around and spend money on helping it grow later.

So why is freedom now important to all these cost conscious businesses? I believe that the successful foss product in any market pretty much sets the commodity cost and any propriety software will have to either beat the cost or improve on features in orders of magnitude better. The problem of course is that a lot of these businesses have gotten a taste of what it’s like when you can take your internal tools and change them to do anything in any way your business requires. This is something that proprietary software vendors find hard and expensive to do well.

So, my conjecture today is: “People will be attracted by the price and with enough time, stay for the Freedom”

Your thoughts?

No Business Like Bad FOSS Business

In response to Bruce Byfield’s article on how We shouldn’t feel bad when businesses have no morals. I feel compelled to point out the flaw in his logic and hopefully add some sense to why moral outrage is the correct response to unscrupulous behaviour by companies.

It’s not a surprise when companies are inconsiderate/naughty/evil, but that doesn’t make what they do any less wrong and it doesn’t make a negative reaction any less justified. The most important thing to remember as a consumer is that your aversion to certain behaviours of others directly affects your willingness to engage in business with someone. To put it another way: What we think about a business being bad, effects their profit. Just ask BP or Toyota.

The purpose of a corporation is to fulfil all of it’s responsibilities. It’s responsibilities to it’s capital investors is to maximise the return on their capital investment through profits, but it’s responsibility to their employees is to pay them the contracted amount. Two conflicting responsibilities… and yet somehow companies manage to balance them.

To list just a few possibly conflicting responsibilities that all companies have: Shareholders to extract profits, employees to pay, business to continue, customers to serve, environment to maintain, suppliers to pay and even maintain, society to improve and government to appease. Here’s Bruce Schwartz doing a much better talk on why scruples are a good idea.

When a company hurts the FOSS ecosystem (in this case Novel), it’s neglecting it’s responsibility to maintain it’s suppliers, it’s hurting it’s relationship and ability to serve it’s customers and it’s endangering the continuation of it’s business. We don’t even need to bring in it’s possible legal responsibility to know that what Novel did was damaging and wrong. Yes I used the word ‘wrong’, because sometimes there is a right way and there is a wrong way to “maximise profits”.

Having a social responsibility shouldn’t be impossible for companies and we shouldn’t put up with companies that have the audacity to claim it isn’t their responsibility. Too often they hide behind “My responsibility is to the share holders” which is about as nonsensical as looking after sun, but not the earth.

If your business has short sighted, profit motivated share holders, my advice is to get rid of them as soon as possible. As a business owner you don’t have to take up extra responsibilities of having investors…. No wonder Canonical and Facebook don’t want to float on the stock market, I know I wouldn’t want to have share holders in the current ethical climate.

Your thoughts?

Example of FOSS Economics

People who read my blog regularly know I’m big on looking into discovering what it is that will allow software creators, bug fixers and all the other people involved in producing functional products with a sustainable income.

Only two weeks ago I was talking with Matt Lee of the Free Software Foundation about this problem and apparently someone he knows had sold himself online for 6 months as a free software hacker by setting levels of pledges and some rewards and products for people who invest in the project and although the FSF doesn’t consider economics important enough to be a goal (much to my disappointment) the activists there are aware of it.

Now computer world uk is reporting on the exact same system, one where the artist, programmer or team sets out to raise money for a project and does so by setting a structured list to encourage higher amounts of money to be pledged.

Just like me they’ve avoided using words such as “charity” and “donation”, which I think are really not applicable to what we’re trying to do: viz. find a way to make Free as in speech economically sustainable.

What do you think about a stepped pledge model? Do you think that the model requires far too many direct supporters and existing backers before it can be made to work? Should I conduct myself in a similar fashion by creating a set of pledges for the ground control project and advertising it very widely?

FOSS: The Consideration Bridge

A debate, seemingly endless in the Free and Open Source landscape between purest Free Software activists and Practicalist Open Source is starting to find it’s way into a recognisable, worthwhile settlement. At least in my own head.

Freedom Through Production

I’ve never been very fond of the Free Software Foundation’s recent destructive, abstinence only, political approaches to advocacy. It may seem that they’re no longer concerned with Free Software as a social issue, but as only a political issue, but I don’t believe this is the only thing the FSF is up to, only what they are most loud about in the press and the way they allow themselves to be perceived.

The difference of course is how you fight. Back in the days when the FSF was finding it’s feet Richard and others began this amazing process of taking functional proprietary tools and recreating these tools as free software, drop-in replacements. This process of “doing all the boring bits” really set the technical foundations and I think is why a lot of people were really amazed by the principled dedication and out of this grew respect.

You could of course be strong by simply denying yourself the pleasures of technology, because it’s not Free Software. But this is something that only a very small majority will do and while it does show conviction, It’s not producing anything and it implies negative guilt in those unwilling to give up their Wii or Blackberry. Protests are great, but they have to resonate with the public and can’t just be about showing how rotten everyone is for being human and wanting nice things.

I know the FSF is still producing software, taking troublesome closed software and making new free versions of it (hence OpenSocial), but the strength of that production has not been keeping up with it’s ability to be loud, vocal and political. What we’ve ended up with is a political organisation, but not a guiding light that executes and demonstrates the way forward as it used to.

My key consideration: Support Free Software, have conviction, be strong on the issues and be principled. But don’t whine protests, instead make solutions. Let creation do the talking (and advertise it) and invite others to come together to make Free Software solutions. Freedom through production.

Utility Through Liberty

The open source movement grew out of the lack of compromise in the Free Software community, but it’s grown further from being just about inviting businesses into a friendly arena and into a more pragmatics’ hiding hole, there are no difficult questions to answer, and free as in beer software is how it’s all advertised with no further explanation about how it became free in the first place.

It’s disappointing because while the open source movement should have be trying to figure out the best ways to execute Free Software ideals in a realistic economic and business sense, it instead set off with a more vague set of principles that are simply less strict, but with the same intention as the FSF. Sure there is much more practical movement, more code production, but there is also a lot of confusion and grey areas being produced which are not helpful.

How many licenses are ratified by OSS? Why did they need to ratify licenses at all? or even bother with definitions? There is quite a good set of principles right there ready to use from the FSF, all that was needed was a more business, less political direction and advertising strategy. Something that business pragmatists would look at and be happy understanding and supporting based on it’s practical benefits, but also not shy away from explaining it’s long term reasons.

For me I find being practical in the immediate sense is important, but far too often this id-like satisfaction eclipses my responsibility to make sure I prepare for the future. Far too often you’ll find practicalism going hand in hand with myopia and an inability to see the future beyond next month. Even if I need to use some closed source bit of code, or some driver firmware to get everything working. I think I should always be mindful of making sure I am a) not investing further into the closed source ecosystem and that I can b) invest something into the FOSS alternatives in order to help the future of that functionality dig it’s way out of the hole.

These are long term practical and economic considerations for the open source philosophy that I wish were much more widely practised. We certainly can’t be thinking of how to construct new and exciting economic opportunities for free software development when in for example Ubuntu we shall have closed source programs with economic incentives (that users pay for) and Free Software programs with no economics beyond self interest (they’re all free and not linked to any sort of donations or investment information).

A deplorable imbalance in consideration of the future of Free and Open Source which I hope can be solved with some discussion with the distribution organisations and perhaps the organisations that manage projects financially. A standard formula and way to advertise that to end users would be most welcome.

My key consideration: Practicalism is good, but I’m weary that it doesn’t lead to complacency and myopia on the future issues. Free Software principles are very strong foundations for the long term and closed source solutions are very weak stop gaps in comparison. Be sure to invest in that long term solution even while using the short term stop gap.

Your thoughts on my whole ramble today?

Making Money with FOSS Part 3

Greetings everyone interested in FOSS economics, ok so this week NickFox has written another great blog entry with some arguments against and for my last blog entry about making money with FOSS.

fund-development-logoAnd now for my reply, as requested, to continue this interesting debate (your interest may vary), so lets get stuck in:

This is indeed true. The community itself and it’s development of software has no use for software it cannot touch. However, that said, closed source software does have its uses.

I wouldn’t deny that proprietary software has it’s uses, to the individual. It’s easy to see how it’s useful for the immediate task. What it doesn’t have though is a future. The cost to the community of maintaining compatibility, of supporting these closed offerings is not zero. Very often the companies who put these things out do not bare those costs and instead it’s the community serving the community that pays the integration price.

My point is that we must be careful, account for all costs.

I also think there will require a bridge between the two business models, a stop gap if you will. That stop gap is in-fact the FOSS community semi-adopting and supporting closed source applications.

Mr Fox may be right that supporting some commercial apps will make us more attractive in the immediate short term, but in the long haul it will discourage users from investing in and developers from making compatible or comparative software.

For instance, if flash for linux was not available, the community would have already have developed gnash to a much more advanced state. We’d have a much better flash experience than most other platforms and it’s likely that the gnash project would be a more serious competitor on mobile and alternative platforms. We might also have seen faster progress and pressure on the svg standard.

Now I’d never stop any one person from taking advantage of these proprietary offerings to improve their own experiences. But I would encourage them to also think of them as stop gap measures and proceed with investing time and money into the free software alternatives. This is more of the “Use but Pay for Future Freedom” model, rather than the OSS’s “Doesn’t matter so long as it works” and the FSF’s “It must be Free Software or you can’t use it”.

As users, if we don’t value freedom then we loose it. But conversely if we don’t value functionality, then we loose people. A balance is needed, the communication of the importance of Free Software ideals with some of the practicalism of OSS, a balanced approach that sees the short term satisfied without the long term forgotten to complacence.

there is no real competition in the market for Microsoft.

Microsoft are a monopoly, this is not a problem for the community alone to solve, but it is also a problem for competition commissions and legal systems around the world to not let Microsoft get away with it’s licensing arrangements with OEMs. Fairness won’t come about until either we in the FreeDesktop world have something 50x better or monopoly regulators start doing their jobs.

what reason does a development company have to try to change to the open source business model when they are targeting the largest audience possible?

FOSS is not just about making things available on a FreeDesktop like Ubuntu. It’s about choosing to respect your users, even if it means that some of those users will port it to Ubuntu for you. If they are FOSS, then they don’t need to really concern themselves with any of the small players, and can focus on windows all they like. FreeDesktops will take advantage of what they need to.

Proprietary software on Ubuntu will still require investment, but this time it’s static and not very future proof. It’s functional now perhaps, but it’s not secure, it’s not efficient and it’s not very stable. It’s easy to see how skype could drop it’s “Linux” support like a lead balloon and leave us powerless to stop them.

Finally, the point is while the closed source business, due to lack of competition among other things will not make the change to open source, I believe if the FOSS community were to build the bridge, they would use it.

As well as convincing users of the usefulness of using FreeDesktops, we must at the same time be able to convince them of the necessity of demanding FOSS licenses from their software providers. Just like users are already demanding organic and other valuable, non mass produced ideals. The time is right for Linux and the time is right to communicate to users, the general public, that what they buy matters.

Businesses will follow, so long as we have a way for users to buy something from a FOSS marketplace.

I also would like to respond to Simon who commented on my last entry:

Your model assumes that users know what they want and while that may sometimes be true, most of the time it is not. There is a big difference between what users THINK they want, and what they ACTUALLY want. You can see that in many forms in FOSS, for example, there are users wanting option A to be added to program Z, when what they actually want is a better application behavior (and that option A is not really necessary).

That’s very true, users have to not only be able to ask for what they think they want, but they have to trust producers that communicate why they think that’s a bad idea. There needs to be a trusting relationship and to some degree users will have to be convinced to invest in pure R&D. Purely idealistic because users aren’t that future proof when it comes to spending money.

Perhaps some kind of governmental or organisational research fund? or some website which developers and project managers can get together to get users interested in further development? I’m confident these problems can be solved if people really push in that direction.

All of this is my opinion, I would appreciate everyone’s thoughts on this subject below in comments or on your own blogs.

Really Making Money with FOSS

So many people have attempted to describe, explore and probe the economic workings of the Free and Open Source Software business. Recently Nick Fox has given us his thoughts on what this means.

And this is my critical article explaining why he is wrong, sorry Nick got to be critical. The first half of the article is fairly correct as far as I know. so I’m just going to skip to the bad parts:

Commercial software being generally closed source is a necessary evil.

This assumes proprietary software is the only model for profitable commercial software. It is not. It also assumes that FOSS can’t possibly be commercial, a big mistake and a common myth. You can take a copy of a GPL licensed program and sell (that’s right, for money) the software to someone. So long as you don’t remove the recipients freedoms and they get to redistribute, that may sound like it crushes your commercial opportunities and it does sort of, but I’ll get to that.

noncomm

However creating software as a business requires a level of production protection that is not usually accepted in the Linux circles. Compiled and protected sources are a bad thing for software freedom and progress, however they are good for free market business.

This part floored me. The idea that proprietary software could be in any way free market is so absurd that I can’t understand how this idea has come about. The nature of the free market is that goods or services will be priced very close to the costs of replication and distribution when supply is above demand, software had infinite supply and will always be above demand.

The costs of software replication and distribution are very close to zero. So in a free market, all software is free of cost by order of the invisible hand. What is NOT free of cost is the creative production. But because the creative industries can not yet find a secure way of funding their production; they have gotten government regulation (copyright) to warp the nature of the free market to create temporary monopolies on distribution instead. Shifting costs around. And if you’ve been following your economics, a monopoly will tend to price things at the very maximum a customer is willing to pay, not the minimum it’s economically sustainable to charge (as in the free market).

The separation of first creation and replication of copies, I think is important to understanding the nature of these economic processes. Writing software is creative production, copying software is replication production, they are not the same thing.

So, what we have here is an industry that is not only removing user and developer freedoms, but it’s doing it at the expense of the free market too. On the other hand, FOSS is free market, it doesn’t claim to have created an economic rewards system to drive the cost of one economic activity into another one. It’s goal is to create a social and legal framework for collaboration. The software production is priced accordingly through commission or (more normally) through the needs of the user’s time and the distribution is priced very close to zero.

The incentive to make money inside the Linux community will help to break the cycle. When businesses find there is money to be made by producing Linux based applications for busness users, it will help bring Linux to more desktops. While I very highly advocate the Free and Open Source movement, I am suggesting that closed source software for sale does have it’s place, and in fact may help bring Linux to more desktops.

I recommend watching this video on motivation first:

As we’ve already discussed, there is money to be made from FOSS, it’s just you have to follow the economic landscape. You can’t go begging on government to bail you out of your unprofitable software distribution business with anti-free market copyright laws. You have to make your money from the development of software, not the distribution of it. This shift in thought needs to accompany the shift to FOSS, because without it FOSS will be uneconomic in the old mindsets.

Closed, proprietary software has no place in a rational, enlightened, scientific and honest economic world. It is NOT a necessary evil, it is a plain misunderstanding of economic mechanics. An attempt to create rents on distribution instead of maintaining the economic costs of production. It’s is not good, useful or progressive and the longer we hold onto some of these mythologies the longer it’s going to take to drag our industry out of the dark ages.

My own thoughts are that in order to fund software production properly, we need to have ways of getting money from users who want software to be made or changed, to programmers who want to earn money writing software. It’s not an easy task.

Treat Microsoft Different

I was reading The Register as I do from time to time and was struck by the nature of comments concerning the European commissions battle to redress some balance to Microsoft’s illegal monopoly abuse with regards to internet browsers.

to give you some background: The EU convicted Microsoft of abusing it’s Operating Systems monopoly in order to gain a web browser monopoly.

The proposed solution from Microsoft was originally to not include any browser at all, effectively hobble the operating system in the EU in order to blackmail the EUC into a simple fine. It’s called playing hard ball. Unfortunately for Microsoft the EUC have decided to play hard ball back to them, deciding that that option wasn’t good enough.

Enter idea number two. To present all users of windows (XP, Vista and 7) who have Internet Explorer as their default browser, with a ballot screen. Effectively asking every user what internet browser they would like. The EUC are considering this idea, although Opera objects on grounds of I can’t quite tell.

OK back to the comments from the article above. There are a number of commentators who are of the opinion that it’s Microsoft’s business as to what to include and what not to include in their operating system, and that if we do not apply the same restrictions to the FreeDesktops like Ubuntu and Apple’s Mac OSX then it wouldn’t be fair.

Since the EU isn’t calling for a ballot screen in Ubuntu, the EUC must be trying to do something improper. Since it’s obviously not very good for a Free Market to have a commission simply making stuff up as it goes along in order to disadvantage one competitor in a market place.

This is a quote from the noted Economist Adam Smith:

The price of monopoly is upon every occasion the highest which can be got. – The Wealth of Nations, Book I, Chapter VII

The problem with Microsoft is that they are a monopoly. This is an economic term for a business who controls the market through being it’s only supplier. This means that the invisible hand of the free market is in chains, so long as there is only one to which all the control is focused.

What regulators attempt to do is redress some of the balances by supporting the competition (financial or regulatory) and/or creating anti competition laws which restrict some of the actions that a company can take in order to use their existing monopoly in order to gain a new one.

For instance, say there was only a single petrol/gas company who sold fuel. Now lets say that the company decided to get into the Hackney Carriage business (taxies). Because of their monopoly status, regulators would be (or should be) keeping a keen eye on what they do in order to break into this market and if they do something to restrict competition unfairly. If it’s seen that this fuel company is using it’s unfair advantage as a fuel supplier to create a taxi monopoly; the regulator has the power to step in and split the monopoly up into a separate taxi business and fuel business and making sure they stay separated in operation.

Let’s say a single company (Microsoft) manages to get a monopoly of the computer operating systems on desktop computers, through the bad handling of another monopoly owned by a different company (IBM). At first everything is going fantastic. Then they miss the boat on a new technology platform called “The Internet” and they’re finding that lots of people are using web browsers such as Mosaic/Netscape to get content via the world wide web on the internet.

Now suppose this company buys/borrows a browser for it’s self. They bundle this browser into their operating system for which they have a monopoly and they do not charge for it. Suddenly all the browser software makers have to compete with a product which is not only free (undercutting their business economics) but is also delivered to every single desktop user. Each of which is forced to buy IBM compatible desktop computers with a single operating system.

Through monopolisation they have rolled one monopoly (desktop computers) into another one (web browsers) and destroyed an entire market for software in the process.

Using their economic strength and their distribution monopoly Microsoft have killed off effective competition in a number of desktop fields: Web Browsers, Media Players, Word Processors, Spreadsheets, Networking Services and many more have all fallen to Microsoft and the companies that developed those ideas and software industries have been swept into the dusts of time.

Web Browsers was a particular worry, since as soon as Internet Explorer had destroyed the market for Netscape. The very standards of the World Wide Web as set up by the W3C began to erode. Everyone doing web development felt it, you developed for IE because it was what everyone had, no one cared that it didn’t follow the standards and it didn’t take long for a great number of websites to be completely incompatible with any other web browser.

So, what have I learned about monopolies? Well firstly they are economically damaging, they serve only to remove fair prices from the market and to stagnate the development of ideas. They are the very opposite of a free market economy and should not be allowed to occur, either through regulation or support for competition.

But what about now? Apple and Free Software is giving Microsoft a run for it’s money isn’t it? That’s fair competition, they can’t be a monopoly if there is competition right? Consider that I’m concerned with the IBM compatible desktop PC market.

Apple is a hardware and glorified life style product company, they don’t sell software to IBM compatible PC users. And if they did, Microsoft would just use it’s other newer monopoly in Office Productivity software to change their minds. Free Software on the desktop computer, it’s not a business, is very small and has no control over the supply. We in the community don’t tell OEMs what they will ship, we give OEMs choices and they choose to do the wrong thing for the market by shipping Microsoft Windows. Free Software is not a competitor because it’s an idea and a principle, not a business, and would be like Goliath vs the moon. Microsoft’s failed attempts to battle Free Software development actually look very similar to that image of a giant trying to battle the moon in my mind.

I believe that the EUC’s goal of regulating Microsoft is right and proper and that the commentators on those articles are simply misinformed about the nature of the beast. Economic freedom and fairness are all well and good so long as everyone is on an even playing field, but good government comes from knowing how to achieve that balance and not loose it to unfortunate history.

As a side note, I would love for the competition commission to award a great deal of money to Free Software development as a way of spuring on competition.