A discussion of hybrid open source and proprietary licensing models.

[Rob Myers <robmyers AT mac.com>]

On Tuesday, August 24, 2004, at 03:12PM, Marshall Van Alstyne 
<marshall AT MIT.EDU> wrote:

>How about also:
>
>Time (needing it soon and someone else is a better programmer)
>Opportunity (as a lead user experiencing a problem, you sense a market 
>niche and want to capture it)

These are both good. "Opportunity" is interesting because it is a motivation 
for the immediate producer rather than for the immediate consumer. Opportunty 
can come from a lack (a gap in the market) or a surfeit (corporate or 
academic research spin-offs).

>Interesting.  But, the folks who are capable of copying an SUV are 
>relatively few in number.

They consist of 100% of the possible competitors. :-)

>So let's take an idea put forward in the recording industry debates.  Is 
>the pirate copy a complement or a substitute?  If the copy is sufficiently 
>imperfect, it's more of an appetizer, a sample of the main course that 
>leaves you hungry for more.  This would be a complement.
>
>But if the copy is perfect, as it could be for most information content, 
>then it could sate an appetite and limit sales.  This would be a substitute.
>
>So the real implication would be a measure of complementarity or 
>substitutability perhaps in turn measured by precision and completeness of 
>the copy...

I have met many people who argue that software downloaded illegally is not 
lost sales as people wouldn't buy it anyway. I think Larry Lessig's four-way 
split of users of P2P networks from 'Free Culture' is useful here as it 
provides some context for this (usually self-serving :-) ) claim.

I'm baffled as to why the music industry doesn't tear itself apart with 
"trade dress" suits over the endless stream of interchangeable boy/girl 
singers/bands on MTV. :-)

>There's another critical observation here from von Hayek.  The "market" 
>broadly construed as a means of allocating resources does so in a hugely 
>decentralized fashion based on information contained in prices.  Each 
>person, knowing his or her own needs and wants, can decide what to 
>consume.  In so doing, scarce resources are automatically conserved 
>(because they're expensive) while abundant resources are automatically used 
>(because they're cheap).  Systems that destroy price signals can lead to 
>the misallocation of resources, as seen in many centrally planned economies.
>
>What this means for open content is that we may not want to destroy price 
>signals entirely...

One reason why Open Source is (theoretically, possibly) a good match to the 
Market is that it is also hugely decentralised and based on information 
(requirements). Both are theoretically self-organising systems, although it's 
easy to see the limitations on this theory.

>Really interesting post.  I'll have to think more about the connectedness 
>possible via sharing (perhaps RMS' "freedom to share") as a distinct source 
>of value apart from innovation per se.

Possibly the distinction that Edward DeBono (amongst others) makes between 
Western and Japanese innovation is useful here. The West has a "Eureka!" 
model of giant leaps of innovation. The Japanese  make constant small 
innovations (in his description, I have no first-hand experience of this). If 
you share, you will get lots of small optimisations, additions, corrections, 
and modifications. These all add value, and may add up to larger innovation.

Incidentally, this weeks guest Lessig poster has some good stuff on expanding 
Fair Use to countere the Induce act and other legal hacks. Lessig's blog is 
excellent.

>How do you mean gamed to affect competition and considered in terms of 
>efficiency?  I'm curious.

Gaming (as I'm probably mis-using the term here) means using a system 
correctly by the letter but not the spirit to cause harm. "Submarine patents" 
and "patent war chests" would be extreme examples in the patent system. So 
one uses the system to extract royalties after widespread adoption of the 
technology described in the patent, or to exclude competition that doesn't 
have their own patents to cross-license. Neither is techncially wrong, but 
both harm innovation and competition.

When a Copyleft-ed project is released, the code is available with it, and in 
practice it is available during development as well. This allows the 
immediate adding of value by users and external contributors. When you get 
enough external interest in an Open Source project it reaches critical mass 
and gives more value to individuals (individual working for companies 
included) than it takes. Reducing the efficiency of this process by building 
in time locks will reduce the ability of the project to reach this critical 
mass, IMVHO. I don't have a model for this. ;-)

- Rob.