boomberg bloopers

[Seth David Schoen]

Brian Behlendorf writes:

> Bullocks - you may agree or disagree with the
> contention that swapping someone else's IP against their will is theft,
> but you can't claim that someone who writes software and *intentionally*
> gives it away for free is a threat to anyone.

That person is a threat to the revenues of the people selling
comparable software.  That threat is real, even though it arises from
totally legitimate activities (from the point of view of many
different political philosophies and legal regimes).

If there were a big market for some kind of labor and a lot of people
began to do that same labor as volunteers, or as a hobby, the people
who did it for a living would see their livelihood threatened, even
though the activities of the volunteers or hobbyists are totally
legitimate.

Imagine for example that on a certain street there are two Internet
cafes, run by starving entrepreneurs who think an Internet cafe is an
honest business with some growth potential.  Now along comes a retired
hacker who made three million dollars from the exuberance of investors
(I won't say whether it was rational or irrational) about a project to
which he made major technical contributions.  This retired hacker has
_always_ wanted to have his very own Internet cafe, so he buys a
warehouse, renovates it (sparing no expense), and opens it up.
Possibly he doesn't have a huge amount of business sense, so his
Internet cafe is not very profitable.  In fact, maybe it loses money.

But the retired hacker doesn't care -- he's got his own Internet cafe!
And he doesn't feel a need to charge high prices, or to pay low wages;
he's happy to offer reasonable prices to his customers, and reasonable
wages and benefits to his employees.  The customers are happy; they
keep coming back.  The employees are happy; they don't leave.
Everybody enjoys the Internet cafe.

Except the proprietors of the _other_ Internet cafes, which are
rapidly losing business.  Those Internet cafes are being run for
profit; their owners need to make money!  If they don't, they're going
to go out of business, and lose their own investments of time and
money.  They can't afford to be unprofitable for more than a month or
two; they wouldn't be able to pay their Internet service bills or
order food and dozens of kinds of exotic coffee.

But since customers are flocking to the retired hacker's Internet
cafe, the for-profit cafe owners are starting to feel the pinch.  They
feel threatened because they realize that the retired hacker is free
from the vagaries of market forces and competition; he's mostly doing
it (as the autobiography of a certain famous non-retired hacker once
suggested) "just for fun".  And in the process, he's likely to
bankrupt the cafe owners with traditional business models.

If you look at bottom lines instead of ethical or legal principles,
_any_ competition -- especially competition from competitors who
experience fewer costs -- is undesirable and harmful.  It doesn't
matter to the bottom line whether the competitors are thieves,
"dumpers", ideologues, hobbyists, or corporations.  From a certain
point of view, further, certain participants in a given market are
likely to appear "subsidized" (they have a whole _category_ or a whole
_level_ of resources completely unavailable to other participants), 
and so it will be hard for other participants to conceive of any
kind of meaningful and "fair" competition.  (The sense in which they
say that the other participants' "subsidies" are "unfair" will depend
on a lot of factors.  You can see a few different examples reflecting
very different perspectives.  And consider how different firms would
react to the idea "You must fundamentally and dramatically change your
business practices or business model by ____ in order to compete
with ____", depending on the nature of the change and of the
competitor.)

To be somewhat concrete, even if every single Linux company went out
of business and you and I both lost our jobs, Microsoft would _still_
not "win"; they would still face very substantial competition from
Linux and free software which would still undermine their revenues
(relative to their early and mid-1990s market share).  One reason
for this is that the free software thus produced (as Martin Pool
pointed out) will _still be available_ and _still be useful_ even if
the companies which sponsored its development go out of business.
This is almost always not true for proprietary software companies: if
Corel goes broke, Microsoft has simply lost a competitor in the market
for office suites.  But if Sun drops out of that business, OpenOffice
is still going to be around, still going to be just as available as
before, and probably still as actively maintained.

That gets into the second reason: many of us would keep producing free
software or contributing to the maintenance of free software even if
we were never paid to do it.  So free software development can
continue apace (for some values of "apace") without software companies
doing it commercially.  I mean, lots of the software I'm using to type
this message was written _by a 501(c)(3) charity_ and _using
tax-deductible charitable contributions_!  What kind of competition is
_that_, to be a for-profit company competiting head-to-head with a
501(c)(3) offering directly analogous goods and services to the
general public?

So one possible consequence that some people foresee is that the
"pure-play" proprietary software companies are just going to go out of
business, because they can't compete against charities and hobbyists
once people realize that the charities and hobbyists can write and
support really good general-purpose software.  And this is a
possibility which is not an unusual prediction in the free software
community, and I think we can see from the statements we're discussing
that some people in the proprietary software world _definitely_ see it
as a real possibility.  (This is not to say that there is not going to
be specialized proprietary software and lots of niches of some sort
for software which is not published -- but a trend toward a world
where Richard Stallman's vision of "generally useful software" being
free is realized.)

Going out of business is a real, time-honored, traditional market
response to changing conditions.  Some people (Schumpeter?) have
written entire books on how it's supposed to be a really good thing
that firms can go out of business.  But surely those firms would have
to see that (by whatever means it might happen) as "a threat", surely
they would have to feel threatened by that.

-- 
Seth David Schoen <schoen at loyalty.org>  | And do not say, I will study when I
Temp.  http://www.loyalty.org/~schoen/  | have leisure; for perhaps you will
down:  http://www.loyalty.org/   (CAF)  | not have leisure.  -- Pirke Avot 2:5