What exactly do we mean when we say open source software is “unique?”
Using “free” as synonymous with “open source” in this specific context, as explicitly clarified in a footnote (but see the distinction I make below), Karl Fogel says:
Running a free software project is not exactly like running a business (imagine having to constantly negotiate the nature of your product with a group of volunteers, most of whom you’ve never met!). Nor, for various reasons, is it exactly like running a traditional non-profit organization, nor a government. It has similarities to all of these things, but I have slowly come to the conclusion that [open source] software is sui generis. There are many things with which it can usefully be compared, but none with which it can be equated.
So what exactly is it that is unique about open source software? Again quoting Karl Fogel:
...even the assumption that free software projects can be “run” is a stretch. A free software project can be started, and it can be influenced by interested parties, often quite strongly. But its assets cannot be made the property of any single owner, and as long as there are people somewhere – anywhere – interested in continuing, it cannot be unilaterally shut down. Everyone has infinite power, everyone has no power.
Another unique aspect of open source software, as discussed earlier, is the ambiguous competitive environment: potential direct competition with commercial products, but scrupulous avoidance of competition with other open source projects.
As previously mentioned, open source software has three basic attributes: it permits unrestricted use (or at least unrestricted non-commercial use), it provides access to the source code, and it allows freedom to modify the source code and to redistribute the modifications. It’s typically made available with a public license stating this explicitly.
The concept of “free software” has been in use for decades and has long been the subject of heated debates in the software development community. In 1998 a group convened by technical publisher Tim O’Reilly (see next section) proposed the term “open source software” to describe software fitting the new development paradigm but not necessarily “free” in all the ways advocated by the most ardent proponents of free software. For example, the source code might be free for non-commercial use, but a fee might be required for its incorporation into a commercial product. O’Reilly points out that software can be free in the form of a downloadable application, but without public source code, preventing its modification by anyone other than the original author. The focus of this book is open source software as opposed to free software.
Tim O’Reilly, publisher of the acclaimed O’Reilly technical books series and an accomplished technical author in his own right, has contributed perhaps one of the best-informed and insightful discussions of this topic in his article “The Open Source Paradigm Shift” (Chapter 16 of Open Sources 2.0). O’Reilly emphasizes the importance of modularity of architectural design coupled with mechanisms to support communication and collaboration in making open source development possible. In his view, the participatory nature of the development process is central to the open source paradigm, and the global electronic communication the Internet has provided has greatly facilitated this participation. He also discusses the commodity nature of open source software, considers its ramifications for innovation, and suggests that its emergence pushes profitability from operating systems and applications into Web services.
O’Reilly steers clear of debates over free software and points out that open source software can be used to create totally proprietary systems, one example being Amazon.com, which builds its Web services on Linux but doesn’t sell its software. In his view, open source software shifts the focus away from releasing shrink-wrapped products that will be installed locally and used for a year or more before an update is released. Online systems that are continuously updated, like eBay® or craigslist® now come to the fore.
Steven Weber’s 2004 book The Success of Open Source has an interesting discussion of open source software considered as a good in a traditional economic sense and how it deviates from established paradigms. In a conventional economic framework, he says:
Public goods theory predicts that nonrival and nonexcludable goods ought to encourage free riding. Particularly if the good is subject to collective provision, and many people must contribute together to get something of value, the system should unravel backward toward underprovision.
The unarguable success of open source software, in direct contradiction to a prediction that has such immediate intuitive appeal, indicates that this category of software indeed represents a profound innovation.
Given that open source software is indeed a new paradigm, it’s axiomatic that conventional business models will not apply. What new business models are viable in the context of open source software? Opportunities here hinge on the fact that what’s free about open source software is its initial acquisition and subsequent use, but not its support and enhancement. This topic is broad enough to merit a chapter of its own, but a capsule summary from Michael Goulde and Eric Brown’s 2006 report, Open Source Software: A Primer for Health Care Leaders suffices at this point:
New business models are emerging based on revenue generated from things such as support services, consulting services, and product enhancements rather than the software itself. Customers can acquire the source code for free, but they pay for other products and services.