User talk:Chevan/Open Source and Capitalism

Just read the sub article Capitalist View of Open Source. Seems like the author really missed the "business end" of the value proposition of open source. The inherent risk in starting a software venture is acquiring the capital in order to buy the intellectual property (outright or through engineers) to develop, market test and debug a product to maturity. Open source enables these processes to happen with no cost to a corporation because the cost is absorbed by the individual members of the open source project- a cost that is uncompensated (no salary).

Open source does fit nicely into capitalism but not in the way the author mentioned. In the end, there are a couple profitable outcomes to open source products. There is some marginal profit in the product itself, in the form of bundling (what other software or products you sell with the open source product). This is because bundling is the only way to differentiate an open source product from one company from that of another company (since they all have access to the same source code). Also, the depth of your channel (how much of the market you have access to) will help you inch margins around a little bit.

However, more than the product the real money maker with open source seems to lie in service: technical support, integration with legacy systems, integration with other applications, etc. The ideal case right now is Novell, Inc.'s marketing strategy of the Linux operating system. Novell has a widely-recognized brand name, a very deep world-wide channel, a revenue supported engineering staff dedicated to network operating systems, a revenue supported technical support operation, and industry relationships that facilitate integration efforts vertically and horizontally.

What is the bottom line for open source? I fear it is a sad one, speaking purely economically. Although there are profit making opportunities for open source, ultimately those profits are reserved for those people WHO ARE NOT the owners of the intellectual property of the product. Because the owners of the intellectual property (Linux engineers or Wikipedians for instance) give away their rights to ownership of the property in exchange for the esteem of contributing to the project, ultimately it is others who will profit from their work. Unlike the exploitation of labor in the 19th century, the exploitation of intellectual property today does not physically hurt and it can be done in addition to someone's day job. Also, open source differs from slavery because the "laborers" engage in the work with their own free will.

Open source is very curious. It is UN-capitalistic (because it uncouples inputs from outputs) but it is nonetheless exploitative (because others profit from the work of the owners of the intellectual property). It seems to be a new kind of economic structure, part captalistic and part socialistic, that in some way really taps into the desire of people to contribute their knowledge and expertise to something greater and perceived as good. -- Chevan 15:23, Apr 8, 2004 (UTC)