The FOSS business Model

There are many objectives and purposes of FOSS, while boxware has only the purpose of selling units. That is tough to compete with because boxware, from an investor perspective (person investing in the company selling it, not the ones buying it) it is successful when they sell so many units, and fail if they sell too few. Very straight forward.

FOSS in every way is more complicated. Investors of Red Hat want to see subscriptions sold, but that also depends on who you would call an investor. Many people profit from Red Hat's work, and any FOSS progress is perpetual. Red Hat will always live on in a way because of its nature. People can always expand and support Linux no matter what happens, By contrast, whatever way it could happen, if Microsoft one day went belly up, EVERY investor, stock holders and users are totally burned.

So another contrast. The purpose of Windows is for the software to be sold. The purpose of Linux / FOSS is to be productive. FOSS doesn't need to be profitable by the box as much as it needs to be useful, and proprietary software doesn't need to be as useful or productive AS MUCH as it needs to sell box units.

When we are talking about a movie company, there are two routes to go. Movies are not FOSS, remembering that the last 'S' means software. Movies make more sense under a CC license if you want it to be that type of free, but that is something else entirely. FOSS v. proprietary for a movie studio is the argument of whether or not the company is going to use make all their own software (very impractical, they are not a software company), or pay someone to give them the software they need. On a larger scale, individual companies can make their own software (again, makes no sense cause not a software company) or movie studios as a whole can pay one big company to provide for all their needs. In a way this can make a lot of sense, but has certain limitations when it is proprietary.

The FOSS solution says use this open model, build upon it as you need, BUT if you share that code or want to sell it, you need to "share-alike". This means that movie studios can meet their own individual specialized needs, and have the benefits of a community that is 'invested' in having quality software. There is also the motivation and hope that if you choose to share parts / tools that are good for you, others will build upon it and improve upon it making it the best software possible.

So if 100 movie studios work together sharing their best in-house tools for making quality movies, then many things happens. You have great software everyone can use. The software is superior than what any one company could develop. The tools are more flexible than could have been possible by one company, and profitability will come down to the ability for companies to utilize that software to make a good movie. Software engineers got paid for their work, the software is very valuable, but 'worthless' as a stand alone package. So now the questionable investment is whether or not it is going to be worth your money to invest in someone looking to make money contributing to such a project that is not directly involved in the movie production itself. Red Hat is such a company (for another industry, of course), but when such business models 'fail', the ability to quantify the failure financially for that company is 'simple' (sort of) but not for the software as a whole, something MUCH more complicated.

But again, the only thing special here is that when proprietary boxware fails, it fails for EVERYBODY and entirely. FOSS just can't be judged the same way, even if it is something very difficult for people design a business model around.

And I'll just say it now before anyone needs to point it out, I do casually program and use Linux but I am not a software engineer, and certainly not involved in the industry beyond consumer and fan. This is just my observation and opinion as an outsider with a strong belief (even if a naive one) in FOSS.


Note: As usual this was an inspired post as linked above. The original article regarding the subject matter came from here.

Afterthought from reading this post:

What good does FOSS adoption mean if there's no money exchanging hands?

Cause sometimes software is made to be used. One way you could measure FOSS profitability (albeit unfairly) would be to add up the profits of all companies invested in FOSS, like IBM, Sun, Pixar, HP to name a few. These companies don't ONLY use FOSS, and they don't give away all their software secrets, but they ARE big investors in FOSS, and FOSS is a big part of what they use to be profitable while contributing to it.

So maybe FOSS profitability is a lot like the restaurant business; Never trust a skinny chef :)


And why not one more. This post kinda pissed me off.

One thing i think we will see FOSS project's movng away from is giving away the software. if you GPL something, it doesn't mean you have to give it away, it just means who ever you sell it to gets the source code along with the program.I could for example write some software, sell it to others and then give them access to the source where only paid customers could make commits and see the source. source is only required if you distribute something....

I have said this so many places, but I think it needs to be said again given your post. I don't think you GET free software. I know this is separate from the article, but you fail to see the primary goal of free software and why it works. Sharing code makes better software. THAT'S IT! It was never about making profit directly off the software. Profit is made from productive USE of the software. What people want to try to do is take this great, powerful, and successful thing Linux and make profit off of it directly, like business people have tried to do with everything forever! Free software is just really hard because its nature. And as many commented, and my interpretation of what you said, people are not going to turn free software into proprietary software. Hmm... I take that back, noone is going to turn GPL software into proprietary software. DAMNIT, technically, you are right, it is called Mac OSX. Personally, and let people flame me for saying this, exactly the fears you are expressing that will be the death of FOSS are exactly what has happened to BSD. This is why I think the BSD Free model is going out because people are recognizing that for free to stay free comes at the price of making sure it stays that way. That is what GPL is all about. Torvalds disdain for GPLv3 I think reveals some reveals a lot about how the classical belief in free software is dead as people are forced to take harder and harder lines on free v. proprietary, where before it was just about free, and not necessarily what happened to it.

Governmental role in Free market - part #1

I got this message from someone bringing up the old "too much" / "too little" regulation argument. Seemed like a good topic to rant about today and my perception of what is going on in this situation.

fgrod writes:
Democracy and the free market system only works when you have a protective body in place to stem corruption and cheating. Wall Street and China continue to break the rules and plunder the system with gov't doing nothing about it.

With regard to stemming corruption and cheating, it reminds me of the old Latin saying "Sed quis custodiet ipsos custodies?" or better known as "Who watches the watchers?"

Free Market, according to Smith is without monopolies naturally. a monopoly requires total control over a supply line... which is usually impossible, impossible without government intervention, intentional or otherwise.

What the government should do is manage certain acceptable standards; limits that encourage competition, or standards that say what people don't have to compete with. Preferably, I would like to see standards bodies that rate companies and products to inform people about quality and such.

I think education is the key. the problem with trying to control things behind the lines rather than letting consumers make informed decisions, consumers get more apathetic as they trust the government to take care of everything for them, and voluntarily get dumber.

One example: I like the V-chip. FCC says what kind of rating a show / station gets based on the content. Consumers can choose to use the v-chip or not, and automatically filter what they want to be able to watch, or let their kids watch. HOWEVER, any kind of filter on what can and can not be put onto certain types of mediums is wrong, imo. Further, allow stations to put whatever they want, and not get ratings, or use an open system that allow organizations to develop their own rating systems. Then consumers can pick their own standards body, and pick which rating systems they like and block content as truly as they wish, with as much assistance to make informed decisions as possible.

Let the free market take care of the rest. Free Market Theory says the best stations, the best chips, the best standards body, and the best shows will come out on top as consumers are free to make those decisions. Even let tv makers decide the chips they want, and what is on or off by default. The best will win out with freedom.

Free Market Theory also says that, by contrast, the equilibrium for which that would reach naturally CAN'T be figured out by a bunch of politicians arguing about it. The market will figure it out better and faster than anyone. Especially when technology continuously changes.

I personally think the government can and is a central location for people to complain about the world. customer feedback is more important than anything. According to Mesis (The Theory of Money and Credit), government can merely be a player in the market (ok, a bit more, but beyond the scope of this rant). If the government has all the best knowledge of what people want, they can use or sell the ideas that will produce the best products that will dominate in the market that other very smart people will have to compete.

What I see is people calling bad regulation "too much regulation, leave it alone" or for the same thing "it is too little regulation / too many loop holes". There isn't "too much" or "too little" regulation. Further, I can't remember who said this, but I agree "There is no such thing as a loop hole. It either is the law, or it is not the law". Loop holes are either people disagreeing with the law, or natural the natural result of trying to control something that can't be controlled resulting in "unintended consequences". One such example: High taxes + world market = take business elsewhere. How those businesses go elsewhere isn't the issue, be it their money, their headquarters, their labor, their call centers, whatever. Government can't break natural laws: If the government does not provide a competitive advantage to encourage international corporations to come to the United States, they won't.

I feel we cripple businesses, tweaking and poking and making up reasons to change how much money we won't take away from them without any real thought to the big picture, social policy, or much thinking period. I think rather than poking at individual products or even industries, we can have guidelines and standards bodies that inform customers about businesses.

Speaking metaphorically is difficult, so let me use a real example of some "bad regulations and loop holes. In California, there was recently a proposition for people to vote on, proposition 2. This was a law that was intended to curtail animal abuse, particularly by requiring a minimum amount of space for chickens and nursing / pregnant pigs. Good idea, bad law as written. This law only affected California farmers. It non nothing to regulate consumers or importers. The pro argument was that California wasn't going to tolerate mistreatment of these animals. The con was the increased costs for space and unfair competition. What I think would have been better to help everybody would be either 1) require labeling to inform consumers about whether certain farms meet a certain standard OR for those that like a more aggressive solution, require that stores must only sell eggs that meet those regulations, and possibly add the same requirement for anyone in California to sell eggs. This makes the playing field even, and means that everybody is supporting fair treatment of animals, not just California farmers.

Only labeling eggs and informing consumers that this products meets certain standards I think falls under the "less regulation" catagory, While the flat prohibition is "more regulation". Prop 2 is just bad regulation that doesn't really address the problem in a way that I feel has any relationship with what consumers want, or have any business really voting on. Prop 2 is just tweaking, and not something that I think moves us towards being a more enlightened society about the treatment of animals.

Free market works... but how would anyone know living in the United States when we really have nothing like it here. I am not saying all the regulations are bad, I just don't think the types of policies we put in place encourage free market. Best example? look at the recent "rescue / bail out" plan. Even aside from the heart of the bill and its intention, look at all the tweaks that make up 90%+ of the bills text and you can see it could only be the result of guessing and buying votes. The wooden arrows, for example, after some investigating totally made sense... but only in a place where our taxes are so screwed up could a problem like the one addressed by that section of the bill need passing. Further, it is only a patch, it doesn't address the heart of this giant mess we call a tax code that can not be understood by anybody in its entirety. Many argue that not everyone needs to understand it... but is that really justification for it to be so convoluted?

A quick note, I support the Fair Tax. May there be problems with it? Quite possibly! I say it is a great start, and that it addresses the issue from the right direction. Now it is just a matter of details. It just needs to be the RIGHT details. The only place where any tweaking that might be industry where what definition of "consumption" is will need some definition, like gambling (which has already been addressed).

Also, China is a sovereign nation. When our irresponsibility makes them rich, that doesn't mean they are cheating or taking advantage of us. If we don't want what they have to offer, stop buying it from them and go elsewhere. That is what market is all about. Now while this may sound a bit harsh, nobody forced us to become so dependent on foreign oil. We did that all on our own. Now, if we can't live without buying a certain amount, while that makes them lots of money, that doesn't mean it is all their fault.

So as I started with, this isn't about cheating the system through loop holes, over regulation or deregulation, it is about BAD regulation written by people that would like to control their industry, and congressmen too gullible or compromising, or down right stupid to help their proposals become law instead of doing their job.

And the reason that happens is a much bigger issue that I am not going to go into. I will say, however, we need to take some responsibility for electing these idiots. And as I have mentioned before, in any system with which you are not informed, you are a slave. It is also that ignorance that makes traditional democracy such a failure, because individuals are so easily scared and manipulated. Look at prop 8, drug war, IP war, war on terrorism. In this way, they are all the same.

Happy Election Day!!

I am enjoying election day. The only upsetting thing is the people I know with VERY strong opinions on a number of issues, and to be fair share my opinion on most of the propositions, but are not voting. I fear too many people that might share my opinions will not vote, while the minority (like yes on 8 people) will vote in record numbers.

Anyway, there was a great discussion, and a lot of people brought up some interesting questions I enjoyed covering. Anyway, here they are.

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Are we over regulating business or not enough?

People talk about free market like as if it is an anything goes. If that was true, why was "Wealth of Nations" and "The Theory of Money and Credit" such massive works?

Free market theory theory of economics, IMHO, isn't about what the government shouldn't do, it is about what it CAN'T do given the nature of an economy. The government can be a normal competitor, and one with BIG money, but it can't make bad businesses successful. Money doesn't create wealth, no matter how much you give away. We can redistribute wealth, and that costs money. Doing useful work is the only thing that improves the 'wealth of a nation'.

Sure, people are greedy, but people are driven by greed to do really great things. Greed can always lead to corruption, but what? Somehow our politicians are above that? What country have you been living in? At least greedy businessmen have something to loose. I think the most important thing we can do set high standards and educate people. And the balance? Employees are greedy, and nothing is more greedy than a consumer.

I don't get this whole "how much regulation is enough?". No amount of the wrong regulation is going to work. We need to look at what types of regulations can and can not work. Price fixing DOES NOT WORK. Taxes need to be product and revenue neutral. Regulations need to be equal, but the government needs to know its place. Mises says that one of the few roles of government that it can play that are different than any other large consumer is the handling of broken contracts. In particular, when someone provides goods, services, or money today to get goods, services, or money in the future, and one of those parties fails to meet their obligation, then the government can intervene to see that the failing party is treated fairly in the liquidation of it's assets as appropriate. That is why this bailout thing is such a nightmare! Businesses that have proven not worthy of survival, for many different reasons, need to die. The government needs to ensure that those businesses are liquidated in a fair manner. Instead, they are being propped up? Why?!?

Now I know that isn't all that is happening. Anyone can buy these loans, and if the government wants to get into that business, then they can be an equal player, but buying any loan under its fair market value makes little sense.

The place where there can be a problem is when government tried to drive the market in a direction it doesn't want to go. I think a great example of this is the drug war. We spend tons of money, for a number of different reason to artificially reduce the supply of certain drugs deemed unsafe. What happens? price goes up. That isn't regulation, that is just manipulation. Regulation would be oversight into ensuring drugs were made cleanly and that customers knew what they were getting. Government could give oversight to certification programs that have various standards, just like the FDA, BBB, HUD, and such. If someone is brewing drugs in their bathtub, they should be shut down for the fire hazard. If a place has quality equipment that is well maintained, doctors, clean needles, safe rooms, and counseling services, not only should they get an A+ like the health department does for restaurants, but nobody is going to buy from the drug dealer on the street corner. And I thought this was all about keeping people safe. It has worked in European countries that have adopted this, and I think Canada has a similar program, and that was exactly the result. Also, a good number of people cleaned up, not to mention drug crime virtually disappeared. How can we keep saying that the type of regulation we have today is working when the number one cause of accidental death in this country is from overdose prescription drugs?

Free market says the best players win that give the customer what they want with quality and at a low price. Government has the power to encourage the best business, and that is the type of regulation we need. We can also use a lot of it. But the current ideology in regulation is fundamentally and it has been proven for a very long time that it CAN'T work, and it is those types of regulations that need to be eliminated.

What I see by both sides is blaming bad regulations as PROOF of too little regulation by liberals, and too much regulation by conservatives. There are tons of books on this stuff, not just by Mises and Smith, but too often it really looks like Congress is just guessing at what would work. Why not back off, study the market, and then see where they can find the competitive advantage. Personally, I think if the government likes what a company is doing, they should buy the product, not mess with how much money they aren't going to take away from them.

This is in part why I think Fair Tax makes sense. It was the result of a large, quality study. The government needs taxes, not to mention the government supports this great country where the market exists. I like the way the Ferangi in Star Trek see the market, as a large river that must carefully be navigated. Regulating taxes is like building a damn. A consumption tax puts the damn as far down stream as possible, and in just one place where everyone knows. What we have right now is water polution. When it comes to supply and demand, income taxes just discourage income, which manifests itself in some very bizzare ways. Same with payroll taxes, estate taxes, corporate taxes, and other things. We have this crazy mess of nets in this "river", and rightfully so businesses have to traverse it; a businesses ability to navigate the river directly coorilates to competitive advantage. And when somebody wins, they call it a loop hole.

Pull out the unnecessary nets. The market place is difficult enough to figure out without all these artifical barriers. Tax consumption in a fair way as Fair Tax proposes (Personally, I think the prebate would eliminate a need for welfare, but maybe that's just me), and in any place where the market fails, jump in there and compete, and stop just handing out monopolies to the highest bidder that meets some kind of short sighted goal. The market is rough, and every time the government tries to do something unnatural, trying to tame something that can't be tamed, it just keeps resulting in a cascading effect of "unintended consequences".

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Did the GOP change McCain?

McCain hasn't changed at all. I think knowing him, Palin was the perfect pick. The issue was that McCain was the perfect pick to put up against Hillary. The PROBLEM is that McCain didn't change his strategy. An over simplification of the issue was that Hillary would have come off as an unrealistic leftist, while McCain made off as the conservative / left moderate. The problem (for him) is honestly Obama's change thing. He wants to revolutionize socialism (what some have called democratic socialism). McCain's plan of attack didn't anticipate this at all, and not knowing how to deal with it, he has defaulted to sticking with a failed game plan OR he is being consistent. Either way, we are now forced to decided between a democrat, and a socialist.

And only one is seen as a traitor to their party.

Republicans have not stood on a conservative platform in over 20 years, and conservatives that loved their party are jumping ship. Republicans on their conservative platform saw the advantage of pandering to the religious right. The problem is that they ended up selling out and letting their constituents take over so far as to sell out on their conservative beliefs.

I consider myself a conservative, and do republicans, but my democrat friends say I am an extreme libertarian. I had hope and belief that Republicans had conservatism as the fore front of their policy, but the constant compromising and this neo-conservative nightmare has become "do whatever sounds nice for the people that support us".

Some people like this. Obviously, otherwise why would the Republicans have adopted it? They just under estimated the number of people that are conservative because it is the best thing for the country, not their self serving interests. There are people that love Palin, and there are Republicans that see McCain's move to the left as a positive, encouraging bipartisanship.

And I think it would have been enough for a win against Hillary. It was just the wrong strategy against Obama when it comes to getting the majority of electorates. I do not fault McCain for sticking to what he believes in, if you can at least believe for a moment that he did that. I think the fault lies more with the GOP. I know many people would say this is crazy, but I think the reason Ron Paul was not supported by the GOP is because he is hated by the media / entertainment industry. The GOP be that it couldn't beat the media at that game. Ron Paul ran on a platform of change. dramatic change back to logic and traditional conservatism that believes in a rational science of politics. I think with the back of the GOP, and unfortunately the religious right that would never have voted for Obama, HIS conservative platform of change, getting the Republican party to what it stood for, and had MAJOR victories throughout the 60's, 70's, and 80's would have brought hope to people that we can get back to what worked, within an enlightened vision, versus this radically untested democratic socialist platform of Obama's. The media would have been forced to back off and cover the election in the way it could to get ratings. McCain's coverage is proof that the media doesn't go light on any candidate it doesn't support, and McCain got hit harder than has been seen in a long time. McCain's actual weaknesses didn't help either.

I really think Paul could have stood up to the heat, and I really wish there could have been a real debate between Obama and Paul rather than that monkey dance we were made to endure. IMHO, the reason McCain could not hit any of Obama's weaknesses was because on his important faults, McCain is virtually the same person. I seriously wish some of those weaknesses could have been addressed by a real, experienced, and lovable conservative.

To anyone that follows business stuff, the GOP was to the entertainment industry what Rubbermaid was to Walmart; a disposable asset that could be manipulated in their favor. And to (certain) music lovers, the only chance they had was what happened between ICP and Disney. ICP may not have done as well, as they could have.. but they are doing a whole lot better than Rubbermaid.

The GOP didn't know when to quit, so their voters did instead.

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Why Palin was a good pick for McCain

1) She was/is the highest rated governor in the Country.

2) Alaska joined the Union for its oil reserves, and Palin strongly believes that this country needs energy independence (despite any reasons / understanding or how closely she may have had business with oil companies).

3) She is not a Washington insider / new face

4) She is a role model for women that take the same position as her on women's issues, not to mention she is a very positive example of a person that takes that kind of position


And as I mentioned earlier, all together, I think the pair / plan would have beat Hillary. It is just senseless against Obama. The GOP picked the perfect weapon, for the wrong type of target.

McCain sold the "I am not Bush" plan. Palin is the "I am not Hillary" plan. In addition to being the complete opposite of Hillary with respect to the issues mentioned above, Palin is a more likable person (remember polls saying in 2000 that Bush was the candidate voters would most like to sit with and have a beer? I meant something), and 5) she is really hot.

Hillary never would have had a chance.

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When did Obama break?

When do you think it happened?


I think it happened in the last few weeks before the primary. Hillary's hate. McCain's hate. I think Obama saw this as something that was only going to help him, but really sad that he could not have had a real fight debating technical issues.

He is great at the "Hope" "Change" speeches that get all the idiots drooling over him, but he also really has the ability to get down to specific details and argue their merits and set out a clear vision such as his "A Call to Renewal" podcast from 2002.

I said it to myself around the primary that Obama was a great gift, and the best we could really wish for to lead this country... but we don't deserve him, and our petty BS is going to break a really great man. I know this is just what some really hate hearing, but he reminds me of John Coffey from The Green Mile; he was this miracle given to us that by our greed and hate we would destroy for our own selfish, petty reasons.


Now is he broken? Maybe. Could he just need some rest and recover soon after today?

I have Hope.


On a separate note, I hated him a LOT up till recently for supporting the bail out, and further for supporting the PRO-IP Act. But going to give him a chance, and hope it plays out well, like Lessig or Patry being given the position of Internet Czar. Preferably Patry cause I know there is already a position of Internet Advisor Obama has made for Lessig in his cabinet.

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United States Naval Academy is nothing to scoff at

While I am not a McCain fan AT ALL, and while it is sad that neither Palin or McCain have ANY higher education, and both Biden and Obama have great educational achievements, it is worth keeping in mind that McCain did graduate at the bottom of his class from the United States Naval Academy, which for any of you who are not military buffs, is about the most prestigious, not to mention most difficult, training facility in the world. It would be little different than criticizing an athlete for getting nearly last place in the Olympics. Yeah, it is nearly last, but it is the MF'n Olympics. Or bottom of your class from MIT, Harvard, or Stanford

I don't think it is really something that can be used to criticize his experience. The disgusting mess of this war? Now that is certainly something well worth using against him... I just think it is a separate issue from his academic achievements.

Why Windows 7 has so little to offer...

... and misconceptions / revisionist history on the 'greatness' of windows XP.

There will never be another system like XP. There CAN'T be. To understand that you need to know what XP was. It was a merge of Windows 2000 and Windows 98. Windows 98 was a 'home user' operating system great for web browsing, games and such. Windows 2000 was a more user friendly Windows NT with some major updates, and great performance as a server / business platform. The problem was that windows 2000 and windows 98 were two completely different operating systems, as different as OSX and Solaris. One was targeted more towards business and the other towards everyone else. A lot of people didn't get this, and were quite upset at the incompatibility of software. "Why can't we just have one operating system called Windows?", thus, Windows XP was born. It took somewhere the best of each, and everything of both and put them all into one system. XP is VERY little more than Windows NT and Windows 98 all in one.

Vista offers nothing significantly new, and I doubt Windows 7 will have much more either except with some hope, FINALLY posix compliance somewhere in some broken weird way, you know, where tools can only be used in a very specific, Microsoft anticipated and approved way. But that isn't any motivation for me since I already have a real posix / iso compliant OS. But it will be nice Windows 7 might give Windows fans a chance to catch up with the rest of the world.

And with regard to the linked article, being better than Vista, putting hype against hype, is a pretty low bar. Will "better than Vista" really be a selling point?

Ok, I can't help it. Ubuntu 8.10 (released today, woot) has been advertising for months, both short and long lists describing the specific functionality and productivity that 8.10 users will gain by upgrading from 8.04. You can actually watch the progress of individual components of the system and their integration by checking out the blue print.

So there are supposed to be some performance improvements, but we can't see what they are, or know how it works, or criticize the method. Linux had a huge debate over the "completely fair scheduler". a LOT of people gave their input on that. How many people audit components like that in Windows? Ok, so personally, I thought XP had a reasonably good scheduler from what I could tell (not including network applications).

My problem is that I am simply supposed to put out all this money for yet another operating system, without really ever getting to know what I am buying... err... licensing to use?

Its not a bad idea, and many people feel like it works for them. It just doesn't work for me. Windows 7 does not draw me at all, and neither did Vista. It wasn't a 'Vista bad' thing for me necessarily, I just didn't see anything that should catch my attention.

Well, at least they aren't claiming "Windows 7 will be WAY better than Windows Me!". But it feels a little too similar.