Some open source FUD is too lame to deserve a response

Watching Andrew Keen mercilessly beat up the strawman he creates for open source, I was tempted to leave the flame-bait post alone. But then I realized that Keen doesn't mean to beat up on open source - he actually agrees with it. He simply doesn't understand how it works. He is about a decade behind the times in terms of understanding open source, so consider this a Primer on 21st Century Open-source Economics.

Keen writes:

Mass unemployment and a deep economic recession comprise the most effective antidote to the utopian ideals of open-source radicals. The altruistic ideal of giving away one's labor for free appeared credible in the fat summer of the Web 2.0 boom when social-media startups hung from trees, Facebook was valued at $15 billion, and VCs queued up to fund revenue-less "businesses" like Twitter. But as we contemplate the world post-bailout, when economic reality once again bites, only Silicon Valley's wealthiest technologists can even consider the luxury of donating their labor to the latest fashionable, online, open-source project.

It's unclear when Facebook and Twitter came to be even remotely connected with open source, but here's a clue, Keen: open source doesn't depend on peace-loving hippie radicals with either free time or free cash to burn. Open source is a free market, capitalist phenomenon that depends upon M-O-N-E-Y. It has been for at least a decade, and the economic downturn only sharpens its value to money-grubbing capitalists.

Will an economic downturn slow open-source development? No, because open source is an effective way to undermine competitors (give away what your competitor values, and charge for your own differentiation), serve customers (lower prices, better software), and get software into prospective customers' hands cheaply and widely.

Are there people that contribute open-source software without expectation or realization of payment? Sure. But they're in the minority on the projects that matter most. For example, Linux isn't going to get hurt by a downturn: IBM, Red Hat, Intel, Novell, and others will probably increase funding to Linux kernel development, because Linux lowers the cost of selling other services or hardware (Intel, IBM) or provides the basis of a software business (Red Hat, Novell).

In short, it might keep Microsoft and others comforted at night to imagine open source getting hurt in a downturn, but dreams don't put food on the table. Open source does, and that's why it's going to have a happy, healthy life during an economic recession.

[daverosenberg]

Bam!

[jrepenning]

I'm not quite clear when this golden era of Web-2.0-boom altruism happened, can we get a more precise date? What I do know is that I had a standing waiver to contribute anything at all to GNU Emacs in the early 1990's, signed by my employer, because they were paying me a regular salary to contribute to it. So, I guess this "Web-2.0 boom" must have been before, say, 1991? That would put it before Web 1.0, an interesting time warp.

[aintnorainbowdorothy]

FUD? Think Microsoft doesn't have it? They realize Open Source is here. I think that those Enterprise companies such as Novell, Oracle, Sun will be winners, along with Microsoft. Certainly Intel and other chip makers use open source but they keep the software propriatery. Microsoft is opening up, finally. They invite people to make changes they think will help the software and then make a decision as to whether it will help. Is this so different from Open Source companies? Altruism is great, but cash is king. Remember that Venture Capitalists, and the lst word in VC'sis the imperative, expect returns. It's not that Open Source will be damaged. It's that funds for many projects, quite a few worthwhile, will dry up. Bank on it.

[The_Decider]

An intelligent business plan and a small team of good developers can start up a business and grow it during their off time.

New OSS products will come out and thrive with or without VC funding.

I tend to look at VC funding negatively, it is just like going public. Once you do it, you have lost control of your company and your products.

[MarkRadcliffe]

I agree with Matt. I represent about fifteen open source startups and this "strawman" is so far from the reality of open source companies that you can only be amused. Most open source companies develop most of their software internally. It continues the myth that open source is some type of commune. No venture capitalist would invest on that basis. Moreover, the description of Twitter as an open source company demonstrates a lack of understanding of the market. Open source companies do face challenges, such as competition for their "commercial" product from their "open source" product. Yet, Matt is right, this caricature is not worth refuting.