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The strange economics of open-source software

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Re: The strange economics of open-source software

#71

Post by crdoconnor »

brc wrote: post #55
crdoconnor wrote: post #37

Earlier quoted context omitted.

>Utility is a well-known concept in economics. It's well known but it still has a circular definition. Why do people spend $X on goods? Because it provides $X worth of utility. Why does it provide $X worth of utility? Because they spent $X on it. Ultimately it therefore ends up being rather meaningless. It's also non-disprovable which makes it non-scientific.

It's not meant to be scientific. It's a tool for abstracting a situation down to understand the intent rather than the details. Your first mistake here is to try and assign a '$X worth of utility' - utility is not a unit which can be expressed in another unit. Someone can spend $x on something which gives them utility, but equally they can go for a hike in the mountains which provides greater utility to that individu…

Utility is the underpinning of rational choice theory, which is what neoclassical economics is based upon.

Neoclassical economics definitely does make a pretense of being scientific. As does Marxism.

Re: The strange economics of open-source software

#72

Post by brianmcc »

gaius wrote: post #66
chadnickbok wrote: post #34

Earlier quoted context omitted.

Its been my experience that there's a second part to the TCO argument that answers the question of why companies allow their employees, on company time, to work on and contribute OSS. Essentially, open source provides a mechanism to share the cost of the long-term maintenance of a project. By contributing back, you can leverage the resources of the community to ensure that your new features continue to work against n…

Consider IBM. They want to flog you hardware and consulting. They need an operating system to sit in the middle of it, and right now, riding the Linux bandwagon is more profitable than AIX so thats why. There's no actual ideology involved, it's pure calculation.

+1 - if you're selling cars, you want fuel/gas to be free!

Re: The strange economics of open-source software

#73

Post by arethuza »

brc wrote: post #53
danharaj wrote: post #26

Earlier quoted context omitted.

I know what utility is in economics, my problem is that you can always just say that the reason why people do X is because they are rational and X maximizes their utility. It doesn't tell you why that is their preference and why X satisfies their preference. It is not like the action or hamiltonian in physics which come with equations of motions that can be checked against experiment. Why is open source good for ever…

I don't think you understand utility properly, and sounds like you have a hard sciences bent. The point of utility is that everyone is different. They will all behave in chaotic and unpredictable ways. The only way to make sense of why people exchange is to make the assumption that each participant in the exchange gains something greater than what they give up. Since the thing they gain and the thing they give up are…

"sounds like you have a hard sciences bent"

As someone who does come from a hard science/engineering background I tend to find that every time someone tries to explain economics to me the more alarming it sounds.

Re: The strange economics of open-source software

#74

Post by pjc50 »

erikpukinskis wrote: post #11

I think it's important to note the strange duality of this moment: 1. This is a cambrian explosion of open-source infrastructure tools 2. This is the dark ages of open-source UI I think it's important to be aware that on this front the Open Source movement has completely stalled. When I was in College, I used Abiword, Evolution, and Rhythmbox. Now those things have been replaced for me with Google Docs, Gmail, and Am…

The main advantage of OSS is for developers and power users, who are able to understand, modify and engage with the software itself. From the pure end-user point of view, it doesn't have this advantage.

Then there's the question of "customer acquisition". Low-commitment people don't seek out the best software, they have a range of options thrown at them and they pick one. Hence the current business model for startups: take people's personal data and sell it so you can spend the money on advertising your free service to them.

"You can't compete with free" is a double-edged sword: libre non-exploitative software has to compete with "free to play" software that charges with your privacy and exposure to adverts.

Re: The strange economics of open-source software

#75

Post by notNow »

mikekchar wrote: post #51
elektromekatron wrote: post #14

I know that this will annoy some people, and believe me, I mean this with a very small 'c', however I think that the open source movement is far and away the most successful communist experiment in history.

It doesn't annoy me, but I have to say that I think you are wrong ;-). My google-fu gave me the following definition for communism: "a theory or system of social organization in which all property is owned by the community and each person contributes and receives according to their ability and needs." I suppose there is some superficial resemblance, but I consider communism a means of doling out limited resources in…

I agree with you. This is not communism at all. Two of the most defining characteristics of Communism are power centralization and common ownership while modern FOSS fortunately don't possess of these qualities.

IMO, FOSS is more leaning to the socialist/anarchist/libertarian side of the political spectrum with decentralization, resources sharing and distribution and disdain for authority at its core.

Re: The strange economics of open-source software

#76

Post by mseebach »

xchaotic wrote: post #70
gaius wrote: post #62

Earlier quoted context omitted.

The point of books is to leverage the reputation into high paying consulting gigs. Same with conference speaking.

So it all boils down to high paying gigs then, which you can wing without contributing to OSS

No, "you" can't wing them in any generalizable manner (why isn't everyone doing it, then?). For high paying gigs (not merely well-paid ones), you need a reputation. There are several ways to build a reputation, and contributing to a popular OSS project is one such way.

An interesting, tangential point is that OSS is probably the most pure meritocratic way to build a reputation -- it does not rely on gaining access to a powerful network (which relies on gaining access to a slightly less powerful network, which relies on ...) or other variations of more-or-less controlled luck.

Re: The strange economics of open-source software

#77

Post by mseebach »

crdoconnor wrote: post #64
BraveNewCurency wrote: post #58

Earlier quoted context omitted.

Utility is a unit of accounting that works much better than money. It's actually called a "utility function" because the utility varies depending on the inputs, including time, number of units, etc. For example, let's say you've always wanted to go skydiving. You pay $500 and go skydiving. It's a great value to you. But when you get back to the ground, would you pay $500 to do it again? Probably not, since the utilit…

You're still defining it circularly. How much utility does sky diving give? $200 the first time and $20 the second time, apparently. Why did the skydivers pay $200? Because they got that much or more utility from doing it.

The sky diving gives you more utility that whatever else you might spend $200/$20 on. Money is mere a neutral medium of exchange. You might rather express it in terms of liking sky diving more than your ability to pay rent for x period, or eating out a number of times, or buying books for your next semester or any number of other things that might cost $200, and that you then can't do if you spend the $200 on sky diving.

Re: The strange economics of open-source software

#78

Post by gaius »

mseebach wrote: post #76
xchaotic wrote: post #70

Earlier quoted context omitted.

So it all boils down to high paying gigs then, which you can wing without contributing to OSS

No, "you" can't wing them in any generalizable manner (why isn't everyone doing it, then?). For high paying gigs (not merely well-paid ones), you need a reputation. There are several ways to build a reputation, and contributing to a popular OSS project is one such way. An interesting, tangential point is that OSS is probably the most pure meritocratic way to build a reputation -- it does not rely on gaining access to…

I wonder how true that ia - you could just get hired by a powerful company and sidestep all that. Pottering would be a classic example of this.

Re: The strange economics of open-source software

#79

Post by paulryanrogers »

crdb wrote: post #63
brc wrote: post #5

I don't find it strange at all, and looking at a proper classical economist - they would have no trouble explaining it. Most people, when understanding economics tend to make the jump directly to money/cash when explaining prices and market action. But to be correct you have to look at utility. There's little question as to why companies install open source software - the TCO can be lower. But why do people contribut…

You're missing one more on the company side beyond TCO: there's definitely an element of multiplicative productivity from not only avoiding duplication of effort, but getting the stuff everybody does done incredibly well via a collaborative effort amongst those who all share the same problems, such that they can focus on higher value added work. E.g. database, OS, machine learning libraries... A real life example mig…

> such that they can focus on higher value added work.

If the trend continues until nearly everything is free+open then there may be less and less work which is considered "value added".

Re: The strange economics of open-source software

#80

Post by Retra »

crdoconnor wrote: post #65
Retra wrote: post #61

Earlier quoted context omitted.

Utility is that what is optimized by a moral algorithm. Money only represents an (arguably weak) approximation to it. But someone trying to make economic decisions needs to use a moral algorithm to do so, and money is one of the more relevant quantifiable metrics in that domain. And it's perfectly scientifically sound idea. It's just too complex for us to solve very accurately. (Like a lot of important problems in sc…

Picking a metric because it's easy to quantify is like a drunk looking for his keys under the lamp post because there's more light there.

Yeah, it is, but you aren't likely to find your keys in the dark, so what's the problem?
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