We were young and we needed the money
Applying open source collaboration models to other creative endeavours
[this article originally appeared on the now defunct iCommons.org website on 2007–06–28, thanks to the Internet Archive Wayback Machine it’s being re-run here]
With iCommons pimping up their look and feel with a new website we thought we would join the party with a new article from your miserly hosts, yup, Schmatler and Waldhead are back for all your money. If you are new here, then this is a great article to start reading our thoughts on why people contribute to open source projects, and if the model can be applied to other fields. If you absolutely have to, you can read this and this and this first.
Why is this a good starting point? Because this week we won’t hold back. We know why all of you do-gooders are really doing good and we are not afraid to say it. It’s the cash! It does not matter what you call it — money, bling bling, dough, benjamins, cream, cheddar, dineros, greens — you will be forced to admit that most people have at least a peripheral interest in it (and if they don’t, then their wives usually do). Since a champagne and oysters lifestyle does not come cheap, Schmatler and Waldhead are of course no exception to this. So, then, the question we want to discuss this week is “how on earth do you make money by giving away stuff for free?”
As usual in this column, things are nice and simple in the open source software world. A lot of people get paid to write open source software. A recent study prepared for the European Commission surveyed job postings for software developers, and found roughly a 30:70 (with some overlap) breakdown between open source positions and proprietary software positions. Given the thousands and thousands of computer geeks that are needed to keep everything working, those 30% add up to a pretty large number of jobs. Some companies pay their employees to write open source code, because they need software to run their businesses (banks, car manufacturers, shipping companies) and find that by sharing code with others they get better results faster. Other companies share the development effort because they need a certain open source application as the basis on which they can sell other services and products. Sun Microsystems and IBM both bankroll the development of open source development tools which they hope will in turn lead the people using these tools to buying software or hardware from them. RedHat sponsors many open source Linux hackers to write code that they then repackage and sell support for. Government institutions may pay developers to write custom software with tax money and have no reason to keep this code to themselves and instead open source it so that more people benefit and they can claim that taxes are being put to good use for a change.
A popular argument against giving away stuff for free, says that in the long run you need to offer people some kind of monopoly right (for example a patent) for their ideas, or they will stop coming up with new ideas. Even if we ignore for a second that most people come up with new ideas because they can’t help it, or they find that trying to come up with new ideas is a brilliantly exciting way to spend their life, then we still cannot fail to notice that open source developers have been coming up with a whole bunch of great ideas, without monopoly rights. If we look at the history of innovation (and Waldhead’s wrinkles indicate that history is a field we should know something about) there have been many other mechanisms including prices for inventions, or public funding for research, or eccentric rich patrons that enjoyed supporting wacky inventors and intellectuals, all of which have worked quite well.
Since we are trying to apply what we see in the open source software world to other fields, let’s do just that, and look at content more broadly. It is actually quite easy to find other examples of how people and organisations make money by providing free and open resources. For example, the Human Sciences Research Council in South Africa started giving away PDF versions of all of their books online, and ended up selling more print copies than before. It turned out that people were quite willing to pay for things they like, and because the HSRC started letting people read their books, more people noticed and talked about them, and finally ended up buying them. There are a few other well-known examples, including our very own Larry Lessig, who gives away electronic versions of his books and still sells thousands of copies. Finally there is a huge amount of content that the public already pays for through their taxes. This includes a lot of university research, and pretty much everything that is funded with development aid money. There is generally no reason why the outputs of such work should not be available to the public — after all, how many times are we supposed to pay for them? In the case of academic journal articles, we are currently expected to pay for them roughly 4 times and many developing country universities struggle to afford them.
Another popular model, especially for musicians, is to give away a few songs and then cash in by selling the rest. I bet that a few million pounds in the bank will help make even teenage boys from the North of England look good on the dancefloor. Or sound. However, even with all that money, they don’t even come close to Schmatler’s gypsy party polka moves, which we can’t show here, since most of our readers are female and under 18. Unfortunately most of the people that comment are old men.
So, in a number of cases, by giving away something, you get attention in return, which you can then transform into sales. Some people call this the attention economy. In such an economy, what better way could there be to get attention than to give away stuff for free (except maybe forgetting to turn on your hearing aid in the opera, but I have not heard anyone mention the hearing-aid economy).
On that note, it’s time to say farewell. Go and spend some money!
“You know, the older I get, the more I appreciate good music.”
“What’s that got to do with what we just heard?”
“Nothing, just thought I’d mention it.”
Schmatler (Philipp Schmidt) and Waldhead (Mass Dosage)