EOLE / OWF 12 - Free “libre” open source software licenses – a picklock to open the market-massimiliano gambardella (eole2012)

Background Economics Licences’ Strategies Business Models To be continued...

FLOSSA Pick-lock to Open the Market

Massimiliano [email protected]

EconomiX, University Paris Ouest

Paris October, 12 2012

Massimiliano Gambardella [email protected] EconomiX, University Paris Ouest

FLOSS A Pick-lock to Open the Market


Introduction

The Non-Senses

For an economist it seems a non-sense that:

people decides to invest effort and time without an advantage

a producer assembles and manages experts to produce aquasi-public good (non-rival & non-excludable)

experts decide to work for free

...this is what happens in the FLOSS




Economic dynamics

Economics




Economic dynamics

Formal Institution

All organization structures are based on Formal Institutions:

understandable

accepted

shared

FLOSS licenses represent our Formal Institution




Economic dynamics

Motivations

Intrinsic Motivation

activity itself (Lakhani and Wolf, 2005; Valentinov 2007)

ego motivation (Lerner and Tirole, 2002; Lakhani and Wolf 2005)

solve particular need (von Hippel, 1988, 2005; Johnson, 2002)




Economic dynamics

Motivations

Extrinsic Motivation

Monetary

administrative commands and money (Valentinov, 2007)

Non-Monetary

reputation (Lerner and Tirole, 2002)

career concerning (Lerner and Tirole, 2002)

peer recognition (Lerner and Tirole, 2002)

sharing innovation (Harloff et al., 2003)




Economic dynamics

The extrinsic non-monetary and intrinsic motivations compensatefor a lower salary and incentivise volunteering and donations




Licenses




Licenses

GNU/GPL

allows to modify, copy and redistribute with or without chargeas long as they reuse the same license

“do ut des”

I give so that you give (in a well-defined way)

persistent: constraint on the redistribution

viral: the union with a program under different license may bedistributed under the GPL

production disconnected from the diffusion

services are disconnected from the product




Licenses

BSD(-like)

allows to be incorporated into proprietary products

allows to license derivative works under proprietary license

much of FreeBSD’s code base is integral part of otheroperating systems such as Apple’s OS X




Licenses

IBM public

it places the liability on the publisher or distributor of thelicensed software code

the idea is to facilitate commercial use of floss

no risk of liability for the contributorsit reassures the customers




Licenses

Netscape public

first commercial license

Netscape can re-distribute external modifications underproprietary terms

mandatory clause because of accords with clients

Mozilla Public License

no special clause for Netscapeit allows proprietary modules in derived projects, but core filesmust remain free/open




Licenses

What was Netscape’s business model?

Adstremendous amount of downloadsNetscape portal as default browser homepage

ContributionsIBM and other Unix vendors paid to provide a browser

no client... no server!

Supportbug-fixing for customers




Business Models




The Magic Cauldron - E. Raymond, 2000 adapted by A. Schiff, 2002

Business Models 1/7

Loss-leader/Market positioner

Use open source software to maintain a market position for arelated proprietary software product.

Example

Netscape’s open source Mozilla web browser and proprietary serversoftware





Business Models 2/7

Widget frosting

Sell hardware with open source driver software.

Example

Apple’s MacOS X





Business Models 3/7

Give away the recipe, open a restaurant

Distribute open source software and sell service and supportcontracts.

Example

Suse





Business Models 4/7

Accessorising

Sell accessories for open source software such as documentation.

Example

O’Reilly and Associates





Business Models 5/7

Free the future, sell the present

Sell closed source software with a license that makes it open sourceafter a specified time period.

Example

Aladdin’s Ghostscript





Business Models 6/7

Free the software, sell the brand.

Sell other developers a brand that certifies their implementation ofyour open source technologies is compatible with all others whouse the brand.

Example

Sun’s StarOffice





Business Models 7/7

Free the software, sell the content.

Develop an open source product that receives proprietary contentthat the firm sells.

Example

e-Learning platform




Conclusions




Conclusions

Economies of Scale




Conclusions

The long tail

*

* http://www.leftclick.com/blog/online-marketing/chasing-the-long-tailMassimiliano Gambardella [email protected] EconomiX, University Paris Ouest



Conclusions

Local Economy

Firms point of view :

niche markets

starts-up

State point of view :

innovation

funds in the territory




Conclusions

It’s so easy?




Conclusions

tons of similar and different software

asymmetry of knowledge among different actors

no time...




Conclusions

Evaluation

* OITOS project in Italy




Conclusions

Total Cost of Ownership

* local health authority - Rimini - Gambardella Master Thesis 2004




Conclusions

costs distributed in 3 yearsFLOSS 1y:

Total e436.262,381 PC e256,62

Closed 1y:Total e946.194,131 PC e556,58

Total Cost of Ownership

* local health authority - Rimini - Gambardella Master Thesis 2004




Conclusions

Innovation is not an instrument...

...is a strategic variable!




Conclusions

Thank you!

This document is under Creative Commons license 3.0 Attribution -

*picture undercc-by-nd 2.0



Documents

EOLE / OWF 12 - Free “libre” open source software licenses – a picklock to open the market-massimiliano gambardella (eole2012)