The economics of open source software

In comments here, I started talking about the nature of open source, and how people will come together spontaneously to create things:

Did government direct that MacOS or Windows be created? What about the uncountable pieces of open source software? Open source is in fact the best example, because in order to get a whole product, some people put in a considerably larger share of resources than others, because they value the whole product that much. If one person contributes merely one line out of millions, and another contributes 20% of the whole, it was hardly "unfair" to the latter: he'd rather put in 20% so he could have the whole.

Here, I made a comment about Linux that set off an interesting discussion on open source:

I am Linux on anonymous hardware. I take what others willingly leave me to use, and incorporate the best into myself. I am free to be myself without harming others.

Boulder Refugee disagreed. With respect to a good guy, doesn't quite understand the nature of open source. Go read the whole thing to get the flow of the discussion, but here at my replies that illustrate the economic basis of open source:

Forced collectivism is clearly immoral. However, as JK pointed out, open source development is voluntary association. In open source development, you are free to use what others have freely given away. You are also free to not participate, to develop your own commercial product that you can copyright and sell.

Nothing about open source can be compared to the "public option" or health care "cooperatives." Open source funding comes only from willing participants. By contrast, the "public option" by definition will be partially funded by non-participants' taxes. "Cooperatives" will by definition be "seeded" with government money, again funds that are forcibly taken from non-participants.

You cannot copyright open source that you've modified, but you also cannot take a pamphlet whose use license mandates free distribution, modify it, then copyright it as your own.

Open source code in and of itself is not always "capitalist," but only in that a lot of open source code is created with no expectations of profit. OpenOffice is one of the most amazing modern examples of Hayekian spontaneous order: "The result of human action but not of human design." Was it intended to compete with Microsoft Office? Of course, but is it not people's right to give their creation away for free if they want? In principle, it's no different than a commercial competitor charging less. So "sticking it" to commercial companies is not inherently evil.

And yet there are plenty of capitalists who make a living off open source development. My oldest friend and his partners develop open source databases for clients. The clients get to keep the database code for themselves. They could even have their own staff examine the code and modify it themselves, deciding that they don't need my friend's team any longer. But their services are competitive enough that clients will generally retain them.

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Nothing prevents you from doing as my friend does, selling your services instead of code. But you cannot sell the fruit of your labor when you have agreed to give up that right. Remember that the giving of open source is based on a license, even though it's free. Not a license in the sense of government granting permission, but a private, binding contract that defines permitted use of a product. For example, when you buy a media disc or book, the physical product is yours, but you didn't buy the music, video or the words -- you bought a license to use the product according to the seller's terms. (This is the only way copyrights work, otherwise there would be no way to enforce them once you bought the copyrighted product.) If you don't like it, then don't buy it.

I could offer you an apple only under the condition that you eat it yourself and not give it to someone else, even eat it yourself while standing on your head and humming Beethoven's Ninth. This agreement would be hard to enforce if you broke it, but it's still a contract. It's a license for use. And breaking the contract does not require measurable harm done to one party, only that a term of the contract is broken.

So like the licensing of a CD, if you don't like that an open source license limits what you can do, nothing prevents you from designing and selling your own product from scratch. If you are demanding "the right" to modify someone's freely given open source and sell it, even with full disclosure that it wasn't entirely yours, you are in fact the one encroaching on another's rights. You are the one imposing your will on another person who did not consent.

Most people don't have access to the kind of information required to fund, market and distribute software through regular commercial channels. No matter how "good" their product is, they'll find a lack of investors, marketing networks, distributor networks, etc., extremely limiting to their enterprises. Open source, then, can be the cheap(er) alternative for them to develop and distribute their product.

My programmer friend had a couple of comments, and he's as much of an authority as anyone on the planet on this:

Well, you do have copyright the parts you create when you make a derivative work of an open source piece of software. And OSS is by definition capitalist, IMO. Private property and control of how it is disposed of. Just that since the reproductive costs are near zero, they're very liberal about others giving it away.

And, in fact, it's interesting how many people have more faith in the stuff when you actually charge them for it :)

Never having been in a position to do that, I was unaware of the possibility of copyrighting your own portion of the code. He replied,

Well, just add your copyright to it. There are advantages to having multiple copyright holders, too, IMO. There was some dude who wanted to buy a private license to the linux kernel for $50,000 and not have to follow the normal license rules. But, since there are so many damn contributors and copyright holders, it's impossible. :) Take it with the current license or no other deal.

And he granted me permission to reprint his comments:

Feel free. I hearby grant a non-exclusive perpetual royalty-free license to use those words any way you see fit. Just don't twist them into shit and then try to re-attribute them to me. :)