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The Economics of Open Source

The Economics of Open Source

Exploring the relationships between open source and economics, with an emphasis on personal fame and fortune.

Jim Van Fleet

November 15, 2012
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Transcript

  1. When was open source invented? First called the GPL in

    1988 I’m going to skirt a lot of history regarding the invention of the Internet, which is the most meaningful event in the open source story. Imagine a mishmash of academia, corporations, government, the courts, and professional standards bodies doing their thing. That should be easy.
  2. Richard Stallman James Gosling What’s probably less easy to imagine

    is distributing software. It was harder! Physical constraints like no hard drives, no public networks and people constraints like workers are like worker bees. Richard Stallman wrote the bulk of emacs, James Gosling wrote some more and sold it. The buyer came after RMS successfully, and forced him to reimplement. RMS then swore never to let his work leave his control again, and wrote the GPL.
  3. The GPL was about “guaranteeing freedom,” primarily access to the

    source code. The GPL requires modifications to be made available under the same terms, and that’s where “copyleft” comes from.
  4. <No picture available> BSD One year later, summer of 1989,

    the Unix authored at Cal-Berkley desired to free itself from the licensing strictures placed on it by AT&T, who really hadn’t been that involved in awhile, especially in the networking code. Demand from their user community was great for the same freedoms Stallman had granted his GNU community. They did their reimplementations, but they were going up against AT&T instead of some small-fry, so BSD was tied up in lawsuits for several years.
  5. Linus Torvalds "Without net access, the project would never have

    even gotten off the ground" The BSD was entangled in that litigation when Linus Torvalds uses a textbook as the inspiration and guide to write his own operating system under the GPL. Stallman’s GNU project was always aimed at providing a userland, so their projects got on famously. Stallman still insists on calling the project GNU/Linux, but I’m guessing most of you haven’t heard about that.
  6. Computer programmers at this point have had their work bound

    by hardware vendors and pledged to university politics. The opportunity to ensure that their work is shared by their brothers (that they have never met) and forever available attracts a lot of volunteer labor. You have my assurance this is more socialist than communist (or anarchist).
  7. Linus Torvalds "...mostly amusing." "...quite legal." "I wouldn’t want to

    bother." on selling Linux With this kind of quantity and quality going into the Linux operating system, it began to attract commercial attention. Linus allowed and ignored it. We’re going to come back to that. http://gondwanaland.com/meta/history/interview.html
  8. Marc Andreessen Tim Berners-Lee With more computers of all shapes

    and sizes coming on line, including PC’s, there was a lot of demand for better ways to exchange information. As it happened, Tim Berners-Lee invented HTTP, and a student at UIUC led a group that wrote the first popular web server and web browser.
  9. Unlike when BSD had to rewrite a bunch of code

    with vested interests, the UIUC team was able to take interest in their software and take it to market. They reimplemented their browser software and destroyed “walled garden” ISP/Content hybrids like Compuserve, Prodigy, and AOL. They owned the browser market until Microsoft illegally interfered with them, and even after that, sold to AOL for in a stock deal for $4.5 billion that actually closed at $10 billion.
  10. But they were “free as in beer”, not “free as

    in freedom”. They did distribute source to some groups, but while users were free to use the Mosiac browser as much as they wanted, the source was only available on terms closer to existing proprietary licenses. Heady from their work on Linux, the software programming community now rallied around the Apache HTTP server to regain control in this crucial niche. The PHP language began almost immediately afterwards and as we moved beyond counters and guestbooks, open source tools were available to create entire web applications.
  11. Now what? With the popularization of the Internet as both

    a replicating mechanism and beacon of interest for open source software, where did it go from there? How did it become the $100 billion juggernaut we know today?
  12. The one theme I mentioned on the first slide that

    hasn’t come up at all yet is liability. The programmers among you are aware that companies that do business on the web want their website to run, usually. But without warranty, there was no way to guarantee the software worked! RedHat was the first popular Linux distribution to stand behind its work, and ensure maintenance, distribution, and support for open source software. They started in in 1995, did an IPO in ’99 as a part of the dot-com boom, and now have a market cap of $9b. They are also headquartered in the RDU area.
  13. Distributed version control in 2002: FAILURE But not everyone capitalized

    on this rising tide. Responding to the difficulty of having so many engineers working on the same codebase, Torvalds moved development of the Linux kernel to a proprietary tool called BitKeeper in 2002. Stallman was apoplectic, and Linux did lose at least one major contributor over the philosophical issues. Development pace on the kernel doubled, but the tool didn’t catch on commercially. The parent company stopped giving freebies to the Linux folk, and that effectively ended the business, with the Linux team implementing their own replacement: git.
  14. David Heinemeier Hansson "a wealth of free education that would

    shame any university. Programming languages, database systems, web servers, load balancers, operating systems... all there for the taking." creator: Ruby on Rails Here’s what the author of Ruby on Rails had to say about the value of open source at around that time. DHH is one of several open-source authors to use open-source as a marketing tool to attract developer attention to commercial offerings in which they might be interested. By decreasing the financial cost of this software, authors are free to “bootstrap” their companies-- focusing on revenue first rather than the need to attract outside investment. http://37signals.com/svn/posts/3324-commercial-freedom
  15. Facebook and Twitter are famously built on open-source materials. They

    represent the first wave of companies that are performing “web-scale” engineering out in the open while complying with the licenses requiring them to share their work with the public.
  16. Distributed version control in 2009: SUCCESS Using an array many

    of the tools featured here, GitHub worked on bringing the usage of the git library online. Their results were much different than BitKeeper, yielding in a $100m investment from Andreesen-Horowitz (yes, that Andreesen)
  17. So what? I find these narratives fascinating, so simply to

    explore them for you was a pleasure for me. But let’s see what we can learn together from the examples. Let’s explore this together.