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Software Businesses The Almighty Buck

Getting the "Free" Business Model Wrong Doesn't Mean the Model is Flawed 218

While "free" seems to be an increasingly popular business model, there are quite a few people who seem to be completely bungling what to do with "free" and then complaining when it doesn't work. Techdirt takes a look at some of the arguments surrounding why free as a business model may or may not work and why many of these arguments, while prevalent, just don't hold water. "you give away the infinite goods, not the scarce goods. Your time is a scarce good. No one is saying that everything needs to be free -- they're saying that infinite goods will be free, because of it's very nature in economics. In fact, Poole's argument is particularly weak when it comes to programmers, because most programmers don't earn any kind of royalties for the software they write. They are paid a salary, for their time -- but not for the software itself (which is an infinite good). And, I won't even get into the number of programmers who work on open source projects for free ... or the fact that Poole is blogging for free ..."
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Getting the "Free" Business Model Wrong Doesn't Mean the Model is Flawed

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  • I laugh (Score:3, Insightful)

    by bobwrit ( 1232148 ) on Monday May 26, 2008 @01:30PM (#23546877) Homepage Journal
    I laugh when I see people complaining when free woftware has bugs in it. I reply to that with "And Windows never has any problems or bugs" They stop at that point because they relize that the free software is better than the commercial software, and they don't complain about the commercial software.
    • Re:I laugh (Score:5, Informative)

      by jeiler ( 1106393 ) <go.bugger.offNO@SPAMgmail.com> on Monday May 26, 2008 @01:34PM (#23546909) Journal

      I wish I could be so lucky. My boss won't let FOSS anywhere near the system with the exception of one lonely PC set up as a webserver. He knows commercial software has its problems--his biggest problem with FOSS is "lack of support." I've tried showing him that there is support available, but when he wants support, he wants to be able to pick up a phone and get an answer the same business day.

      Of course, this is the same boss who says "I'm not using anything I need to compile myself." Go figure!

      • Re:I laugh (Score:5, Informative)

        by basiles ( 626992 ) <basile@starynke[ ]ch.net ['vit' in gap]> on Monday May 26, 2008 @01:36PM (#23546931) Homepage

        I wish I could be so lucky. My boss won't let FOSS anywhere near the system with the exception of one lonely PC set up as a webserver. He knows commercial software has its problems--his biggest problem with FOSS is "lack of support." I've tried showing him that there is support available, but when he wants support, he wants to be able to pick up a phone and get an answer the same business day.

        He can buy that kind of support. Of course, it is probably expensive!
        • Re: (Score:3, Insightful)

          It's not only "lack of support". It's also a question of liability. Who do you sue when things go wrong? It's much easier to hold a company liable when you paid for their product.
          • Re:I laugh (Score:5, Insightful)

            by Rakishi ( 759894 ) on Monday May 26, 2008 @03:32PM (#23548065)

            Who do you sue when things go wrong?
            Cry because that's about all you can do, you've already agreed when buying the software that you do not hold the maker liable for anything.
          • Re: (Score:2, Funny)

            by mehemiah ( 971799 )
            Ah, but first you must read their EULA. For example, before we go into a contract, the other company must sign a contract for us. one denied because we had a clause in the contract to the tune of "you will be held responsible for loss of life resulting from the use of your software". In their defence, it was a resource management system that managed hardware. it was so fine grained and expensive that I could see someone jumping off a building after paying for it and seeing that it's crap(or miss managed med
          • Re: (Score:3, Insightful)

            by lena_10326 ( 1100441 )

            It's also a question of liability. Who do you sue when things go wrong? It's much easier to hold a company liable when you paid for their product.
            Business by definition is a venture riddled with risk. Managers try to minimize risk, but it's always there. I find it strange that those managers frequently bet the company on core products developed in-house, which aren't even proven business models, yet refuse to be willing to bet on FOSS.
          • It is? Most experiences in that matter I have run akin to this comic [userfriendly.org].
      • Re:I laugh (Score:5, Insightful)

        by CastrTroy ( 595695 ) on Monday May 26, 2008 @01:42PM (#23547017)
        Ask him when the last time was he picked up the phone and called MS and asked them for support? What kind of response did he get? How much did they charge? Then look at the kind of and cost of support available for products like Red Hat. Ask him how what MS provides is better.
        • Re:I laugh (Score:4, Interesting)

          by baffled ( 1034554 ) on Monday May 26, 2008 @02:15PM (#23547325)
          Maybe I'm too proud, or maybe I'm too cheap - but I've never contacted support from either MS or Red Hat. Perhaps someone who has could detail their experiences here? I'm interested to see how they compare.
          • Re: (Score:2, Troll)

            by tsm_sf ( 545316 )
            For the MS support experience in a nutshell, google John Belushi's Ma Bell sketch from the early days of SNL.
          • It really depends, in general you're better off not calling them. In most cases they charge for the privilege. I did have to call them one time because the registration server was down, preventing me from using the program I had bought. MS Money FWIW, Intuit is one of the few software companies I can think of that makes MS business practice seem quaint. Charging for upgrades, forced sunsetting of software, inability to import files from older version or from competitors, inability to use OFX because it wasn
          • Re:I laugh (Score:4, Interesting)

            by Opportunist ( 166417 ) on Monday May 26, 2008 @05:56PM (#23549367)
            I can't vouch for Red Hat, but here's a bit of my experience with MS support.

            My question: I plan to ackquire VS 2008. Could you please inform me about the differences between the various packages you offer, so I could pick the license(s) that suit our needs best?

            One would assume that it, being a question dealing with making a sale, first of all has some sort of priority and second, should be part of a standard info. I was actually surprised that I couldn't find the info online, but maybe I just didn't manage to find it.

            The answer was that the service rep doesn't know and he will escalate the question. After that, a week of silence. After that week, I got an email with a link to a page giving me admittedly exactly the information I wanted.

            Asking how I could have found this page, so I don't have to bother their support the next time I need information about different software bundles, I was informed that there is no link from the main or search page that would have enabled me to find it.
        • Re: (Score:2, Informative)

          by Anonymous Coward
          Microsoft's paid support is pretty good in terms of price/performance, as long as you can prove to their satisfaction that anything you call them about is caused by a previously undocumented bug in their software. One of my coworkers (working on Exchange integration) has had 12 of 13 $250 support ticket charges refunded on that account.

          That said, I wholeheartedly agree that putting an OSS project's maintainer on retainer is generally speaking far more effective; getting a phone number to call to talk to one
          • Re: (Score:3, Informative)

            by ozmanjusri ( 601766 )
            My single experience with MS support was that they spent most of the time verifying that the failure/bug in Office Developer Edition 2002 was not a result of hardware or misconfiguration.

            They then advised me to reinstall ODE, and when that failed, to reformat and reinstall Windows and all of my applications. I was on a remote site, having flown there on a light plane with weight limits, so I had none of the install CDs.

            That was when I made the decision to move my business and customers away from Micros

        • Re: (Score:3, Interesting)

          by Anonymous Coward
          My company recently paid something around $300 for resolving our problem with MS Server 2003. The call did resolve the issue, BTW.

          We also paid $25,000 to LinuxWorks for 5 seats/1 year support (we had 2 seats only but LW did not have 2 seats packages). The support itself was not good (they have used outsourced clueless developers from India). At the end, we resolved all our problems ourselves.

        • Re: (Score:3, Informative)

          by westlake ( 615356 )
          Ask him when the last time was he picked up the phone and called MS and asked them for support?

          This always sounds like a great comeback...

          But if your boss is comfortable with where he is now it is probably because he is getting the support he needs and at a price he thinks is reasonable.

          He is not seeing the kind of problems that would make rebuilding his business around a Red Hat solution worthwhile.

      • Re: (Score:3, Interesting)

        Are you a programmer, or is there someone in your organization who is? Support doesn't necessarily mean your boss has to call some other company. You could learn the desired products well enough to provide basic support yourself (assuming your boss will pay you for the time spent doing so).

        If your boss isn't interested in paying someone internally to learn the products well enough to support them, he/she probably isn't really interested in spending money outside the organization either, no matter what th
        • Re: (Score:3, Interesting)

          by jeiler ( 1106393 )

          Are you a programmer, or is there someone in your organization who is?

          I am--but the catchphrase for our department is "We don't code. Ever."

          It's not a situation that's at all logical, and he knows that taking an absolute stand against FOSS isn't rational. But this is the same guy who will cheerfully pay $450 per hour for a consultant to come in and do something that we can (and have) done.

          On the plus side, he keeps the rest of the departments off our backs, and gives us the tools and the freedom to do

        • Re: (Score:3, Insightful)

          by davolfman ( 1245316 )
          The trick with in house experts is they move on to other things. If your expert works for the manufacturer you have something of a guarantee that the expertise will always be at the other end of the phone line.
          • If your expert works for the manufacturer you have something of a guarantee that the expertise will always be at the other end of the phone line.
            Yes, the expertise will be there, along with all the money you'll be shoveling to the manufacturer to keep him there. :)

            Just kidding...in all seriousness, I expect most of the time it's cheaper and less hassle to make support payments than it is to find/keep in-house experts.
      • For what it's worth, I can sympathize with his lack of interest for anything he has to compile himself. I'd consider myself quite computer literate. I can and have compiled programs in the past and likely will again in the future. Still, when I am trying to figure out what software to go with, anything I have to compile (or run in any other non-direct/standard fashion) is always going to be at the bottom of the list. This goes double for smaller software projects. If I run into any problems installing
        • For what it's worth, I can sympathize with his lack of interest for anything he has to compile himself. I'd consider myself quite computer literate. I can and have compiled programs in the past and likely will again in the future. Still, when I am trying to figure out what software to go with, anything I have to compile (or run in any other non-direct/standard fashion) is always going to be at the bottom of the list. This goes double for smaller software projects. If I run into any problems installing or running, the last thing I want to have to trouble-shoot is if I screwed something up compiling it or if the package wasn't quite complete or if a dependency is missing or god knows what.

          But for a large business it is good to compile some software by hand. For example on limited hardware, compiling a program may allow you to squeeze some extra performance out of the code or compile it to be faster then a stand-alone binary could.

      • Re:I laugh (Score:5, Insightful)

        by AlecC ( 512609 ) <aleccawley@gmail.com> on Monday May 26, 2008 @02:44PM (#23547629)
        From my experience, you can buy support for any FOSS package worth mentioning, at a price that still beats commercial rivals. It is also my experience that the support thus purchased is outstandingly better than that for paid-for software. Problem responses within four hours, from somebody who really understands the system, instead of taking to weeks to dig through layers of ignoramuses to get to the expert. This, I conjecture, is because FOSS support teams live or die by the quality of support, whereas paid-for software put the best developers onto new features and regard support as very much a second-line function.
      • Re:I laugh (Score:5, Insightful)

        by Anonymous Coward on Monday May 26, 2008 @03:15PM (#23547917)
        Your boss does not want support. He just wants to cover his ass. If you have downtime because of a MS bug that takes months to fix, he can point the finger to MS and probably get away with it.
        If this happens with a FOSS product, upper management will start asking questions and eventually blame him for the choice of software. Your boss knows this.
      • by killjoe ( 766577 )
        Who do you continue to work for somebody who is that stupid and irrational?

        Clearly the man lacks the capacity to make sound decisions and your company is not going to last very long.

        One day he is going to make a business decision based on the phase of the moon or something he read in his horoscope and sink the business.
        • by jeiler ( 1106393 )

          Who do you continue to work for somebody who is that stupid and irrational?

          Because on any other issue besides FOSS, he's one of the best bosses I've ever had, and one of the best CIOs around. He's been CIO of where I work for over 20 years, and not shot himself in the foot yet.

          • Re: (Score:3, Interesting)

            by killjoe ( 766577 )
            >Because on any other issue besides FOSS,

            The issue is not FOSS. The issue is your bosses ability to make sound and rational decisions.

            >He's been CIO of where I work for over 20 years, and not shot himself in the foot yet.

            Except this one time. You yourself admit the decision is irrational.

            Maybe his mind is going. Maybe he has brain tumor. Maybe he is ill in some other way.

            Either way he has lost the ability to make rational decisions. He is making decisions based on ignorance and superstition.

            In short h
            • by jeiler ( 1106393 )

              In short he was become a zealot.

              Just asked him about this--he says part of the reason he avoids FOSS is not the software ... it's the community. He got tired of dealing with the folks who looked down on him because he has certain business functions that he is required to use Windows for.

              But we've wandered pretty far from the topic of the article. Best of luck to you.

              • Just asked him about this--he says part of the reason he avoids FOSS is not the software ... it's the community. He got tired of dealing with the folks who looked down on him because he has certain business functions that he is required to use Windows for.

                But for most if not all free software you don't even need to use the community. Take for instance Firefox, it is a browser that is installed on many Windows machines, it is F/OSS, better then IE, and is rather stable. Now how many users of Firefox have ever had to do anything with the community? My guess is very, very few. How many users of the GIMP have ever had to deal with the community, Pidgen, GNOME, KDE??? My guess is very, very few. Most (90-95%) of people using the software don't even go to the

      • by p0tat03 ( 985078 )
        It's a liability problem. If Windows borks, Microsoft's on the hook, your boss has a fallback, and can pass the buck to the vendor. With FOSS is much harder to do. Oops, our system broke, time to go in front of the board and blame it on a bunch of weekend programmers. Corporate America is really just a bunch of people too busy covering their asses to worry about doing what's actually good for the company.
      • Not lack of support. Lack of a company behind it.

        It's funny. I've had arguments of FOSS vs. commercial software with more than one company (being IT security freelancer gives you quite a bit of insight into a few companies IT makeup). When asked, you usually get the answer "We don't go Linux, because there is no company behind it".

        When asking why that's important, the omnipresent answer is "Well, if there's a company and something goes wrong, you can sue". Explaining that software is provided as-is most of
      • by kklein ( 900361 )

        Silly boss, valuing his time and that of his company! Doesn't he see that supporting people's hobby projects is more important than making money???

    • Re: (Score:3, Interesting)

      by zappepcs ( 820751 )
      Exactly. What he said!

      When people that I deal with sit down, open a few documents, surf a bit, check out pictures on their camera... well, they almost invariably say "oh, it's just like MS. What is it called again?" Then after a bit more conversation, I have to explain that they don't need windows to run GNU/Linux, that it's a free alternative to MS Windows and it has alternatives for all the MS software that you have been using. In fact, some of it is better than MS software, and all of it is free! Mind yo
    • Re:I laugh (Score:5, Interesting)

      by TheVelvetFlamebait ( 986083 ) on Monday May 26, 2008 @04:12PM (#23548453) Journal

      They stop at that point because they relize that the free software is better than the commercial software
      I'll just stop you there. Free software is generally very good, but the top spot of most (all?) software fields is usually occupied by a piece of (often expensive) proprietary software. For instance, open office just isn't quite as good as Microsoft Office, the GIMP isn't as good as Photoshop, Rosegarden isn't as good as finale, etc. Still, for zero dollars down, they have my support (even if they sometimes don't have the support of professionals in the field).
  • Allow me to say it yet again. If you're depending on something like advertising revenue alone to support your free product, you'd better make sure it's licensed appropriately and you understand your target audience. For software projects, it frequently makes a lot more sense to charge for support and feature enhancement. It frequently makes sense to give the software itself away under an OSI license (the approach I usually take).

    This means you're placing the value on your time. If people want installation help, custom configuration, or even hosting services for your application/software suite, you charge them. Ongoing maintenance? Charge them. Everything doesn't have to be free, something people seem to frequently forget.
  • A good example? (Score:4, Insightful)

    by DogDude ( 805747 ) on Monday May 26, 2008 @01:37PM (#23546943)
    The article makes a plausible argument, but fails to give any real world examples.
    • Re:A good example? (Score:4, Informative)

      by Anonymous Coward on Monday May 26, 2008 @03:58PM (#23548311)
      Mozilla, MySQL, (insert linux distro here), and plenty of others offer services and software for free. They also offer "premium" services, but nonetheless, there's a big 'free' portion of their business model. Google is another example of offer many services for free. Nine Inch Nails just made a load of money off an album that was written under the creative commons license, so its absolutely free to distribute if you own it.
  • by khasim ( 1285 ) <brandioch.conner@gmail.com> on Monday May 26, 2008 @01:37PM (#23546947)
    Some people will always blame others for their failures. It's just that right now it is fashionable to bash Free Software.

    I believe that this is because more people are trying to make $$MILLIONS$$ personally (remember the old Microsoft millionaires) on software that other people have written.

    Essentially, they're trying to put an artificial bottleneck between the consumers and the product so they can extract money from the bottleneck. Lots of money. When they don't get lots of money, they whine. When someone else renders the bottleneck ineffective, they whine.
  • by postbigbang ( 761081 ) on Monday May 26, 2008 @01:38PM (#23546957)
    There's the OS model as manifested by Ubuntu, RH, SUSE, and others. Each has different market motivators and success.

    There's the cool-app model, like MySQL, Apache, and others that depend on application support and transparency across a lot of software disciplines.

    There's the vertical app model, like Asterisk, that uses hardware/software/extensions to motivate the community, each making a few cents in within sub-markets.

    There's the 'fringe' app (not said in a deragotory way) that uses a shareware-like valuing through paypal, donationware, and other 'love of the art'/hacker's bent.

    And these are only a sampling of general categories. F/OSS in the Stallman model doesn't have to be a vow of poverty. On the contrary, we're only scratching the surface of how F/OSS makes money.

    • Personally, I like the Ransomware model. You give away the end result of your work (application, dynamic library, whatever) away for free, and you put a price on your actual work (source code). You let donations come in per project, and when it hits your goal, it gets released with whatever open source license (you probably want to specify which before you start accepting). If you application is good, and your code behind it is potentially useful, I've seen a couple of instances where a larger corp would pa
      • As its name implies, ransomware is a rather onerous and potentially litigious method of making money. Extortionware, TeaseWare, and other models are likely to be frown upon in most circles.
      • By not releasing any code before you complete the project dont you miss out on (some of) the benefits of being open source.
  • How ignorant. (Score:5, Interesting)

    by Score Whore ( 32328 ) on Monday May 26, 2008 @01:40PM (#23546999)
    I wonder at Techdirt's economic and business background. They make a fundamental error in they're argument that programmers are being paid for their time and not for their code. The problem is that most every programmer who is being paid for their time, doesn't own the code they produce. Those who are contracting aren't being paid for their time, they're being paid for a solution to a problem. The remaining few who are paid for their time but negotiated up front for a free license are so rare that they're basically ignorable.

    The fact that they've made such a basic blunder in understanding the actual mechanics of the industry makes me wonder, even in the presence of their semi-sophisticated talk of scarcity, what they actually know about business.

    • I recently got paid for my time developing a product, negotiated an open license for it, and retained copyright to the code. I think if more programmers were simple aware of these options, and knew how to show their customers the benefits of such arrangements, we'd have a lot adoption of this practice.
      • Re: (Score:3, Interesting)

        by Score Whore ( 32328 )
        Maybe. There are few circumstances where a customer will allow you to keep copyright to the code. Two of them are:

        1) It's something that they could buy, but you're selling it to them cheaper. Or
        2) It gives them no business advantage over their competitors.

        In case 1, you're going to continually fight a battle trying to price your sale lower than the competition. In case 2, you'll find an upper limit on what the customer is willing to pay.
        • Re:How ignorant. (Score:5, Interesting)

          by cduffy ( 652 ) <charles+slashdot@dyfis.net> on Monday May 26, 2008 @02:58PM (#23547785)
          I've been the employer allowing a contractor to keep copyright to his code. Why? The contractor was the maintainer of HylaFAX+ [sourceforge.net], and was offering to do custom work for us at a very reasonable price provided we made that policy exception; otherwise, his rates were much, much higher. In addition to fixing bugs on a timeframe that matched with our release schedule (rather than the as-time-permits bugfix schedule for regular OSS users), he added integration points and hooks where we could connect to our custom, proprietary code. Everyone -- including our competition -- has access to those hooks, but we were the folks with the code (both in our product and in the glue) to take immediate and best advantage of them.

          We even released some of our less proprietary related bits upstream to the community -- such as scriptage for using Inkscape as a just-in-time SVG renderer for much fancier cover pages than HylaFAX was able to handle on its own. Why? Because I wrote them in-house, and I wasn't going to be there (or working on faxing) forever; having those bits (which weren't exactly "secret sauce", just a little bit of extra flare) in the public consciousness meant that whoever ends up taking over the fax subsystem (of our much, much larger product) now that I'm gone will be able to pick up any third-party enhancements to that code which have been made upstream -- and maybe, just maybe, having that example available of what the enhancements we paid to add to HylaFAX+ can do will result in the HylaFAX.org branch deciding to pick them up, meaning that customers owning fax hardware only the iFax commercial variant of HylaFAX.org can interoperate with would be able to use that hardware with our product.
          • Of course, you could have hired someone in hyperbad or bangladesh to write your custom code at half of the price.
            • Re: (Score:3, Insightful)

              by cduffy ( 652 )
              That someone probably wouldn't have written code up to the standards of the project's maintainer, thus it wouldn't have gotten accepted upstream, thus we would have had to keep paying that someone to update their code every time we wanted to port to a newer version of the upstream product. Sure, it might save some money in the short term (but then it might not -- communications problems can throw off a release schedule pretty easily, and a slipped release date costs more money than any fax subsystem enhance
    • Re: (Score:3, Informative)

      by Seska ( 253960 )
      I don't see how this is relevant. Techdirt's article was all about how real business models need to reflect both the near-zero marginal cost of additional copies of media and (therefore) the need to make money on scarce commodities.

      For example, programmers generally charge for scarce commodities (time or solutions), and don't attempt to trade for the free stuff (additional (marginal) copies of their completed software).

      They then point out how the blogger blew it (trying to get paid for near-zero marginal co
      • by shmlco ( 594907 )
        Or come up with new distribution methods. Look at how Apple will be doing applications for the iPhone. Users will browse the "app" store directly from the phone, purchase from the phone, and they will be digitally signed and downloaded directly to the phone.
    • by dwandy ( 907337 )

      They make a fundamental error in they're argument that programmers are being paid for their time and not for their code.

      Please explain.

      I don't know of any coders who get paid by the line: they get paid by some measure of time. Sure there are instances where the deliverable takes more time than was budgeted and you end up working unpaid overtime, but that's an estimation and contract problem. (though if coders got paid by the line, it sure would explain bloat-ware!)

      The problem is that most every programme

      • Please explain. ... Precisely, because they are being paid for their time, much like a plumber doesn't own your pipes when he's done installing your sink. It's the service of coding that's being charged for.

        From the perspective of the programmer who is selling his time, at the end of the day they (almost always) have nothing to give away. So where is the argument for giving away the non-scarce item? If you have something to give away, then you probably haven't been paid for your development time. That's wha

        • by dwandy ( 907337 )
          I guess not everything is looking for a solution. Programmers get paid by charging for their (scarce) time. So in general this already follows the first half of what the techdirt guys say: charge for what you don't have a lot of, and give away stuff that has a negligible cost (to you) but (hopefully!) generates a greater premium for your (scarce) time. Since it's a service that you get paid for, you're correct that there may be nothing for this specific example to give away in order to increase your per-die
    • Re:How ignorant. (Score:4, Insightful)

      by Bodrius ( 191265 ) on Monday May 26, 2008 @02:42PM (#23547597) Homepage
      Perhaps you are the one making a basic blunder: when people outside of Slashdot talk about "Free", they mean the dictionary "Free" as abscribed to a product, not the "RMS definition of Free".

      There is nothing in the article related to open source licenses, etc. They're completely irrelevant to the economic argument - and frankly, to the common mechanics of the industries that the article describes.

      That's the problem with arbitrarily redefining perfectly good words in common use.
      Don't expect the rest of the world to suddenly adopt your new meanings for their own words - most of them don't know (or give a rat's derriere) about such terminology.

  • TANSTAAFL (Score:5, Insightful)

    by symbolset ( 646467 ) * on Monday May 26, 2008 @01:42PM (#23547015) Journal

    No human effort is free. All human efforts require time and energy, overhead and maintenance. This is more so true when the efforts are subsidized by a company. When a contributor gives effort to the improvement of software that is to be made freely available to all he (or she) is engaged in a contract wherein he can expect a benefit called "progress."

    Such a contributor may offer this up for the benefit of all, but that point is not important to the contract. As long as there are two contributors in the world so involved that their efforts benefit each other the terms of the contract are kept and the benefit is achieved. That there are many, many contributors so engaged amplifies the benefit for all.

    Progress benefits us everyone. Perhaps "free" isn't the right word after all.

  • Paying for your time (Score:5, Interesting)

    by Anonymous Coward on Monday May 26, 2008 @01:43PM (#23547035)
    So, since the software itself is free, and all revenue is generated from service contracts and tech support, who pays for the time that went into the original software?

    If the software was perfect, ie the original programmers had put enough time into it to completely debug the code, the user interface was simple and intuitive, no conflicts with other programs arose, etc...
        there would be no need for tech-support
        there would be no income from the software

    So by giving away the software free, does that encourage buggy programming?

    ABIL
    • by HappySmileMan ( 1088123 ) on Monday May 26, 2008 @02:01PM (#23547213)
      One of the key points of FOSS from what I remember is that the users ARE the developers, that's incentive enough for them not to produce crap.

      Of course MS programmers are users of Windows mostly, but I suppose when they're given deadlines and told exactly what to do by marketers who care more about looks and advertising than features they start to slip
      • Re: (Score:3, Insightful)

        by westlake ( 615356 )
        One of the key points of FOSS from what I remember is that the users ARE the developers, that's incentive enough for them not to produce crap.

        That is incentive enough to produce something that doesn't look like complete crap to your fellow geeks. It doesn't mean that you can deliver a damn thing that is usable by anyone else.

    • Users will always need upgrades and demand more features, those can be addressed offering bounties.
    • by init100 ( 915886 ) on Monday May 26, 2008 @03:21PM (#23547977)

      Support does not only mean a help desk and bug fixes, but also include customization and integration with the customers' existing systems. Even if you would write perfect bug-free software, those two demands wouldn't magically vanish.

    • by coldtone ( 98189 )
      I think the response might be that you should only get paid for writing new software. So in the above example you build a perfect product give it away for free then people will pay you to build a custom version (or something else) for them.

      But if the original is perfect would they need a custom version? Also would they not choke on the cost of custom development (Lets say $200 a hour) vs just using a free product?

      The argument does not make a ton of sense to me. How can a programmer make money if everything
    • by jimicus ( 737525 )

      If the software was perfect, ie the original programmers had put enough time into it to completely debug the code, the user interface was simple and intuitive, no conflicts with other programs arose, etc...

      there would be no need for tech-support

      there would be no income from the software

      So by giving away the software free, does that encourage buggy programming?

      Interesting argument, but the amount of time (and therefore money) involved in producing code which has demonstrably zero bugs is such that only a very few are prepared to pay it (think heavily regulated industries such as aerospace).

      Hence, most commercial software is just as full of bugs as its free counterpart. The biggest difference is that commercial software houses work most of these bugs out inhouse before showing any of their work to the world, so they can present the illusion that they churn out c

  • by Deanalator ( 806515 ) <pierce403@gmail.com> on Monday May 26, 2008 @01:45PM (#23547049) Homepage
    A good business model is simple and robust enough that it's hard to screw up. If a company is brave enough to try a "free" business model, and it fails, it was probably explained to them in poor and simplistic terms.

    Once you start tacking on conditionals and making the model more complex, it is no longer a good business model. Blaming companies that can't figure it out helps no one.

    Just because you have an idea that works well in a theoretical context, and there have been a few success stories, does not mean that it's a good model.
    • A good business model is simple and robust enough that it's hard to screw up.

      All business models are easy to screw up. Most new companies fail within a very few years.

      This isn't a matter of blaming companies, it's a matter of recognizing reality.

      Just because you have an idea that works well in a theoretical context, and there have been a few success stories, does not mean that it's a good model.

      The article wasn't about a business model, it was about why some business models work and others don't. There are many business models that involve giving away one good to promote the sales of other goods that you can sell at a higher margin. "Give away the razor and sell the blades" is a business model, and obviously a successful one, but do you expect to get into that business today, without a lot of effort and luck?

      The first lesson this article is trying to impart is that when you have a good that has a high marginal cost of production, and one that has a low marginal cost of production, you are probably not going to succeed if you give away a lot of the ones that cost you a lot to produce, but you may be able to succeed if you can give away the ones that don't cost much to produce to drive the sales of the higher cost one.

      The second is that there are many business models that can be based on the fact that some goods have a zero marginal cost of production. If you are going to make a living that way, you need to come up with one of them. But just noticing that a good has a zero marginal cost of production isn't a business model.
  • It's not that things ought to be free because they can be free -- but that things will be free because that's just basic economics. Price gets driven to marginal cost in a competitive market, and the reason it happens is because others do learn to put in place business models that work, and then if you're the lone holdout, people start to ignore you.

    This is just the limiting case of the market. This is what destroyed DEC and other big hardware companies that tried to avoid producing cheap computers that would outcompete their high margin ones. People didn't buy the VAX instead of their desktop PDP-11s running stripped down RSX (P/OS, what a perfect name for an OS that was), people bought desktop micros that had processors that might have sucked compared to the LSI-11... but they cost so much less that there was no demand for something in the middle.

    So now one of the things that's hurting traditionally marketed music sales is nontraditionally marketed music. The marginal cost of production of music is now nearly zero, therefore if you can make enough money to make it worthwhile to keep selling a small number of CDs at CDBABY based on the free samples you give away at LAST.FM, why wouldn't you? If you can get your music onto iTunes and Amazon for nothing, and get modest sales and the possibility of better sales (look at how Jonathan Coulton's doing, eh?), you're going to do that as well as playing gigs and trying to get the attention of the big labels and all the other stuff that musicians have been doing for years.

    And so people like me get our music from last.fm and 3hive.com and Amazon and iTunes and don't bother going to the record store or listening to the radio (which is all the same Clear Channel approved pulp anyway)... because it's getting easier and easier to find out about the people who are making free work for them... mostly free, just enough that's not free to keep the people making the free stuff to keep people like me going "hey, that's good, I'll get their album" now and then...
  • by sayfawa ( 1099071 ) on Monday May 26, 2008 @01:50PM (#23547111)
    It's easy to see this in the logical (and hopefully soon, prevalent) way when one talks about the scarce vs non-scarce goods.

    I've given up thinking or caring or trying to explain to others whether or not illegal downloading hurts authors. Now I just point out how stupid it is to trade a scarce good, like money or food, for a non-scarce one, like a digital reproduction. It just doesn't make any kind of mathematical or economical sense.

    If a person wants to give their favourite author some money, fine. But call it what it is: a donation, not a trade.
    • I prefer paper, so I do get extra value from the non-digital reproductions which have a non-zero cost of replication. Trade. Not donation.
    • by samkass ( 174571 ) on Monday May 26, 2008 @03:58PM (#23548307) Homepage Journal
      So what are you proposing, state sponsorship of all creative works? Everyone contribute what they can and take what they need?

      The output of creative folks is NOT a non-scarce good... it's actually extremely scarce. And if there isn't a better model than Copyright (and no one seems to have implemented one yet), then when you pay for the reproductions you're funding the original work.

      • I'm not claiming that the creativity, the creation of the original work, is a non-scarce good. Just that subsequent copies of it are.

        As for proposals. State sponsorship is one possible method. In my country (Canada) government grants are available for artists. I'm a scientist and the final result of my work is a publication. I don't get paid every time someone buys the journal my articles show up in, I get paid (mostly through government grants) for doing the research and writing about it in the first pl
    • Now I just point out how stupid it is to trade a scarce good, like money or food, for a non-scarce one, like a digital reproduction.

      Making a electronic copy does not require much in resources, true, but distributing that copy in volume requires resources which is scarce. It also requires expensive advertising to get their name out there. Advertising is also scarce. When you pay for an electronic copy, you're paying to author to recoup their distribution and advertising costs, not the cost of copying.

      If

  • But if there's been a comparable success by a band that hasn't already gained its cultural capital and name-recognition through the evils of copyright and corporate promotion, I'd like to know about it.

    Jonathan Coulton [wired.com]?
  • by politicsapocalypse ( 1296149 ) on Monday May 26, 2008 @02:08PM (#23547255)
    Last month I released Politics Apocalypse, a full length album using the creative commons licence attribution 3.0. This allows you to use the music however you please (including in commercial projects) so long as you give credit. Since last month we have had over 3000 album downloads. We accept donations, and we have a name-your-own-price CD; which is a unique concept where you can name your own price (starting at cost price) for a CD. We have had some orders and heaps of positive feedback. We have just added a new members area of the website. The members area contains new songs as they are finished, available to members long before they are released in album form to the rest of the world. Anyone who supports us by donating, ordering a CD (name-your-own-price) or submitting creative feedback are given an account. Hopefully this new addition will encourage donations, as so far the number of donations and CD orders are much lower than the number of album downloads and positive feedback. I realise that the created music is an infinite good, but it would be nice to get some support for the amount of time it takes to create. The statistics of downloads/orders etc are on the website. http://www.politicsapocalypse.com/ [politicsapocalypse.com]
  • you give away the infinite goods, not the scarce goods. Your time is a scarce good.

    This works well if you are a consulting house. But the danger is that you are so scarce that you cannot replicate yourself fast enough for support, so you will not support what you do either. Someone else will, and you'll risk having nothing because you've given away the only thing that you truly owned, which was the part you contributed.

    This also takes a dim view of what you are contributing, as if the only part of coding was implementation. Good design is, alas, not copyrightable, and so is difficult to protect. But that doesn't mean it wasn't scarce. It just means there isn't good protection for that kind of scarcity. And since many participants in the discussion are predisposed to think that protection of any kind of intellectual property is bad just because they've seen some things in intellectual property that it was demonstrably bad to protect, the possibility of adding intellectual property protection of one kind or another doesn't occur.

    I actually think a lot of the problems of IP protection are due to the duration of the protection and not the fact of it (though I do agree there are also things that are protected foolishly). My point is that if they expired quickly, it wouldn't matter much if there were mistakes made favoring creators, but it would give the creator time to negotiate before the fact that he created something was irrelevant because everyone else had it and was exploiting it to their advantage, not to his.

  • by Zombie Ryushu ( 803103 ) on Monday May 26, 2008 @02:22PM (#23547389)
    Keep in mind that I am a supporter of the Free software movement and its ideals. I just think that in some ways, the F/OSS model and software in general could use a modified lesson from Edward Demming (too bad he is worm food.)

    I speak strictly to the Linux economy when I say this, and this is one reason why Linux isn't as popular an OS with commercial development as it is.

    First:

    Do not write your applications with a blatant double standard. Examnple:

    Windows version: Nice GUI interface.
    Linux Version of same App: CLI if lucky with text file configuration.

    That is really really really disrepectful. I'm looking at you: synergy

    Second. There are established methods of installing appication software. e.g. RPMs, Debs. I hate to say it. Disregaurd the other package formats. make an RPM or a DEB and you have 95% of the Linux market covered. RPM and DEB are availible on EVERY distro.

    Don't leave your software full of memory leaks, integer overflows, and other things that can make a system crash.

    If you are a closed source vendor, provide an x86_64 and x86_32 package.

    If you are an Open Source Vendor: Do NOT package your source as a RAR. Package using BZ2.

    Do NOT package your own hacked versions of SDL, OpenAL, or OpenGL. This is likely to break things. (I'm looking at you d2x-xl.)

    Have a good support model. Don't be fly-by-night. Don't be a scam artist, don't be a con artist. Don't do a half ass job on your Linux port. Simply stated don't be a total imbecile.
    • Don't leave your software full of memory leaks, integer overflows, and other things that can make a system crash.

      Please supply 1 off only, pig, flying, Mk1.

      (a major reason for free software is that people who can't do it right, make a start, give it away, and let others who can, fix it)

    • Comment removed based on user account deletion
      • About a month ago. I joined Karx Erx's D2X-XL mailing list. Well, Here is the thing. I actually own original DOS Descent 1 and Descent 2 Install media and wanted to use Karx Erx's D2X-XL Engine for Linux which was pretty good actually. Except for one thing. Sometimes it was prone to freezing between levels. This was easily reproducible, and I had backtraces to prove it. I actually FOUND the offending line and sent it in to my distributor.

        Only then did I realize this: Karx had modified SDL_mixer. This freeze
  • by Animats ( 122034 ) on Monday May 26, 2008 @02:34PM (#23547495) Homepage

    The "free" model is breaking down for Craigslist. I just wrote an article about this on Techdirt. [techdirt.com] Craigslist allows free ads, but not unlimited free ads. The intent is to allow individuals to post a few ads a week. But for some advertisers, that's not enough.

    Craigslist has all the usual defenses. They have limits on how much each account can post. They have a CAPTCHA. They have E-mail account validation. They check for excessive posting from one IP address. And they have a flagging system to catch any remaining spam.

    All those defenses have been breached. There are power tools for Craiglist spammers. Commercially [adsoncraigs.com] available [adbomber.com] power tools. Multiple accounts are created for ad spamming. OCR is used to break the CAPTCHA. Jiffy Gmail Creator [jiffycreator.com] ("Who Else Wants to Create Unlimited Gmail Accounts in Seconds Flat Without Breaking a Sweat?") is used to create vast numbers of GMail accounts to receive the account validation replies. IP proxies are used to get around per-IP limitations. Postings flagged off are automatically reposted.

    Against these industrial strength automated posting tools, Craigslist is losing. Major areas of the site are over 90% spam, and angry users are deserting the site. Craigslist is trying phone verification, but even that has been broken. (Read the Techdirt article and the Black Hat SEO forums for how that's done.)

    Craigslist is being hit because it's the biggest free ad site, but attack tools are available for other ad and social networking sites. You can read about it on the "Black Hat SEO" forums. [blackhatworld.com]

  • by CohibaVancouver ( 864662 ) on Monday May 26, 2008 @03:11PM (#23547893)
    [flame suit on]

    I still don't get it.

    My brother writes books and magazine articles. He gets paid for his books and articles. He also publishes some stuff 'for free' on his blog (there's a free e/audio-book on there right now for instance). However, his core, major work isn't free. This way he can afford to feed and clothe his children. If he gave his stuff away, or asked for contributions he wouldn't make any money (he knows this because he's tried unsuccessfully).

    How does an author who writes 8 hours a day make a living if he gives his stuff away?

    Or does he become a carpenter and write for fun an hour or two a week because writing is not a 'career path', but being a mechanic or carpenter is?

    Please explain.

    [/flame]

  • by SpinyNorman ( 33776 ) on Monday May 26, 2008 @03:17PM (#23547935)
    In the real world:

    1) Software costs a lot of money to design, write, document and support, and little money to reproduce, and the latter therefore plays little role in determining price, regardless of how much potential customers want to whine "but it costs you nothing to reproduce - it's an infinite resource"

    2) Software is basically ideas encoded as 1's and 0's. The 1's and 0's may be an infinite resource, but the ideas are not. Some ideas are scarcer than others, or more expensive to turn into 1's and 0's, and you may expect to pay more for them according to this scarcity and conversion cost.
  • by Eskarel ( 565631 ) on Monday May 26, 2008 @08:28PM (#23550443)
    Copyright is a social contract, the entire principle behind it is to add an artificial value to something which in the free market is essentially valueless. It does this on the basis that while the replication of a creative idea is free, the creation of it is not and while creative people can always make a living in other ways and even continue their art, it'd be better for society if the ones who created good works could have a revenue stream to continue creating them.

    The problem in the modern era is not that the marginal cost has come down(it was never all that high), but that the copyright holders have breached their side of the contract. The length of copyright is such that a copyright holder can sometimes ensure that one or two pieces of work can provide an income not only for themselves but for their descendants. While wise investment of the profits from a successful creative work has always had this capability, it is only fairly recently that the creative work itself could do this.

    This not only means that creative individuals(and the children of creative individuals who might have otherwise been creative themselves) are, contrary to the intention of the social contract not encouraged to create, but that their works do not reenter the public domain and provide value to society in general.

    Copyright law cannot be enforced because the majority of people do not believe they are doing anything wrong when they break it. The reason(IMO) for this is that they feel consciously or not, that the other side broke the deal first. Unless copyright returns to it's original intent, or the social contract is successfully redefined(a difficult proposition for all those reeducation classes they want to give students since it's hard to convince someone that they shouldn't want a fair deal), copyright will die. If copyright dies, a great number of ideas and creations that might otherwise benefit society may never be created and industries and creative individuals will be forced to conceal their ideas in order to protect their value.

    This would not be a good thing, so for the good of society hopefully we can find a compromise where artists and inventors get to make a living(though not forever) and society gets free access to creativity(though not right away).

    • Re: (Score:3, Insightful)

      by cdrguru ( 88047 )
      For the most part, I agree with you. Unfortunately we are currently educating people that violating copyright is OK. Every student going through school today gets this from other students and gets nothing in the way of information opposing this view. I would claim that it makes no difference whether or not "getting a fair deal" has anything to do with it. If people are conditioned to believe that murder is good under the right circumstances, they will happily participate in murder. Just check out the A
      • Re: (Score:3, Insightful)

        by Eskarel ( 565631 )
        The Mona Lisa does indeed have value, as does all art, it has value as art. That's why we have copyright in the first place, not to guarantee some schmuck an income but because art and in more general terms creativity has value in and of itself.

        The more people who see a painting they love, or listen to music they love, or see a play/movie that moves them, or see how things work and can build off that work to create something new the better off we are as a society. This is what they mean by information wanti

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