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Distributed Business Based On The Open Source Model

An essay by Tjaart Blignaut
Completed Tuesday, August 8, 2006 3:53 PM

Introduction

One of the major downsides of open source programming is the fact that there is little or no monetary compensation. It has been suggested that companies could start businesses supporting open source software. The fact is that this business might exclude the programmer from the loop completely. He will still be getting nothing for his project, and his hard work. Open source builds on the fundamental idea that software is more of a service than it is a product.

In the case of the GPL, this is 100% true. A typical traight of a service over a product is that a service comes with a binding agreement, whereas products, in the traditional sense, do not. The GPL binds the user to the copyleft agreement by limiting what that user can do with the source code.

Open Source employment

A larger amount of businesses are realising that the open source business model has many advantages. For example. Software that is necesary for all businesses in a particular field, and is unrelated to the business process, can be devoloped alongside competitors without ugly consequences, such as one company turning other's hard work into their own propreitary product. Programmers are employed, payed, and gain not only monetary compensation, but also have the advantage of sharing their work with the rest of the world at no cost to them. They also keep right of access to it even if they are retrenched, thus meaning all their effort is not reduced to nothing but a memory.

End user desktop applications

When I speak of end user desktop applications, I am reffering to things that aren't neccesary in any business process in any company, or adds some sort of anonymous function to a system, an example might be media player, or an instant messenger. These applications are very unlikely to be written by funded programmers, and more then often generate little to no monetary compensation. How do we then make these applications serve some sort of profit to the programmer, and at the same time keep it free and without proprietary constraints?

Bundled software

If an operating system package, like Mandrake, Mandriva or whichever one you can think of choose to bundle a specific piece of software, they can pay the programmer who maintains the code for a certain application to render certain services. These services might include intergration with non standard features of that operating system distribution, assured deployment and installation, bug fixes on request and so forth. All of the previously mentioned services could be set out as tasks to programmers, the programmer than grabs a task and completes it, and recieves monetary compensation for the service. There are of course alot of kinks in a system such as this, and it could end being unrealistic, but this way there would be a device, a reward, and better applications for all the world to use.

Charging for support

There are several problems with charging for support. The main problem is that end users who have non critical needs, such as getting a game to function or compile, can always search the internet for a patch/solution or post the question on a message board, an irc chat room, or a forum. There are answers to 90% of the support questions on the web for free. The truth is that it comes down to asking the right person.

Time is money...

Often when support is required, the only knowledgable person on a specific piece of software will be the actual developer(team) developing it. Every minute a developer spends on support costs them time, ultimately costing productivity. If I had a mission critical piece of software, I would like to think that the developers are spending maximum time on developing it, rather than answering questions about it. If support is free there is also a tendency for users to take advantage and ask stupid questions, often unrelated to the software.

Paying for support

Initially you might think that paying for support is a bad idea, but if you really want a problem solved now, and it has to do with detailed source code or compilation/runtime problems, you would shurely come to a point where you'd be more than willing to pay for support, considering that your time and productivity is now being lost. In the case of a POS this would be especially true, people could be breathing down your neck to solve a problem that you can't.

But if support is paid, then developers would only do support.

Here is the catch. A developer can probably support his software, and make some money, therefore losing productivity to gain profit. The solution to this is based on the simple problem of running more that one process on the same cpu.

Time Slicing

If time is divided between developers, a developer could make himself available for say.. an hour everyday as a support technician. He would recieve calls and answer questions for an hour a day, making an hour of support payment.If there are 24 developers in different timezones all doing support at the same hour according to their local time, then there would be 24 hour support for the given piece of software. It doesn't end there. One developer can only recieve one call at a time, so more people would be encouraged to gather around a project that requires support.

Hand holding support could even be done by people who use the software frequently and have experience with it.

Dividing the profit

Profit division is probably a major concern in a model such as this. How do we fairly divide small amounts of money between developers who are coding for free? I can give an idea here for a hierarchial commision structure, where the core team, gets most of the profit, or an equal division, which could leave developers only get a small slice of their own pie. This remains an open question. Money always complicates matters. Everyone needs money, even if they don't ask for it.

The End of proprietary software?

I have compiled a simple equation to show the workings of proprietary software, and how time and money are involved. In a usual equation we would say that :

net profit = gross_profit - units_sold x(production_cost_per_unit + labor_per_unit) ( Typical production business profit model)
profit = gross_profit - labor - production_cost - units_sold x (bandwidth_cost_per_unit + support_cost_per_unit) (Typical proprietary software profit model)

If you can convince yourself that the bandwidth cost per unit is more than labor and production cost per unit, proprietary software might be the thing for you. I put those variables in to appose the retorts proprietary followers would have towards the cost of software. Cost of media cannot be mentioned, as Free Software is also distributed in this manner. The fact of the above equation is that a proprietary software company can create one unit, and duplicate it for an almost negligible price. If the cost of distribution was evident in the software price, pirating would not exist.

#EOF