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A new funding model for open source software

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Re: A new funding model for open source software

#11

Post by jacques_chester »

I termed this model "microsubscriptions" when I was pursuing it in the context of website funding.

There are difficulties.

Gaming the system

Folks will absolutely distort their software, buy fake github stars, spam out bazillions of typosquatting packages etc. We know this because there is already a weak financial incentive to subvert: supply chain attacks for cryptominers. Direct cash will be a much stronger incentive for fuckery.

Banking

In general, financial institutions don't like services that aggregate and transmit funds. They attract extensive regulatory burden and more importantly, they attract fraud and chargebacks.

Chargebacks and fraud are expensive to deal with, banks hate it, so they generally tell you to just sod off entirely.

Regulation

You are on the hook too. Anti money laundering laws are complex and can come with criminal charges for failures. Taxes are complicated and you need to keep correct books. Got it wrong? Too bad, you owe the taxman cash you don't have.

Credit card money laundering in general

This is where someone with a stolen card uses your service to launder money taken from it. They sign up with the card, patronise their own software, then run off with the cash. Later a chargeback arrives which is levied against you, not the attacker.

The easiest defense is to limit the subscription amount, so that an attacker with a stolen card can't benefit much. But they can still use you to test that the card is active. A second defense is to hold the funds for a period of time, so that you can pay chargebacks. Even so, you will be looked at poorly by any banks or processor companies if your chargebacks pile up, regardless of whether you could cover them or not.

Trusts

This one is the biggest mistake I see, and I see it again and again.

If you receive money from person A so that you can pay it to person B on A's behalf, you are a trustee. You generally don't need a document to become a trustee and you don't even need to intend to be a trustee. Trusteeship arises from the facts.

What does trusteeship entail? Fiduciary duty. That is a high bar and you almost certainly don't meet it.

Mingling funds from multiple donors without incredibly scrupulous accounting? Problematic. Mingling donor funds with your own funds? You're in deep shit.

Further: trusts have purposes, which the trustee has to abide by. These again can arise from the mere facts. If you said you would take funds from A to pay to B, that's all you can do with it. Can't find B? Stiff shit. B doesn't want the funds? Stiff shit again. You now have money that is like radioactive waste: it's dangerous, you are responsible for it and it won't go away.

----

In general I like microsubscriptions as a model for some things. I spent a lot of time, emotion and treasure on doing it myself. But it is harder than it looks.

Re: A new funding model for open source software

#12

Post by colinmcd »

wolco wrote: post #9
colinmcd wrote: post #5

Earlier quoted context omitted.

That page argues (convincingly!) that open source is growing faster and faster in terms of contributors, projects, commits, etc. This is definitely the case, despite the fact that the funding problem is unsolved. But who knows how much faster OSS would be growing if it was solved?

Want a new idea? Sell direction of the project. Offer roadmap milestones. Sell priority over features maybe even bug features. Sell hats/logos/branded hosting environments. Sell access to internal conversation. Sell invites to internal product Zoom meetings. Sell access to private jira boards/trello cards.

One of the projects I had in mind when writing this post is the "color" module on npm. It's a fantastic utility for reading in colors in different formats (hex, decimal, CMYK), applying transformations, and getting a modified color back (in your format of choice).

For all intents and purposes this module is "done". It's extremely mature and has already implemented everything it set out to do. It has 3.3k stars and 8M monthly downloads.

When I look at your list of proposals, none of them really apply to "color". The projects you have in your head are big, ambitious projects, not the smaller utility projects I describe in the article.

Re: A new funding model for open source software

#13

Post by quadrangle »

colinmcd wrote: post #2

OP here. I'd love to see something like this exist. Let me know if it does already, or if someone is trying, and I'll link it below. EDIT: This model is used by Flattr [0]. Unfortunately Flattr isn't targeted at open-source software; an OSS-specific approach (ideally implemented by a highly visible, established player) is (probably) necessary for something like this to reach its potential. [0] https://flattr.com/

What you propose exists. It's https://flattr.com/

It hasn't made enough impact over its long history. That's not necessarily because the model doesn't work. However, it does set up a zero-sum game. Each click to another project takes away from the ones you already support. Thus, it won't really change the overall economic situation much.

There are also foundations that sponsor multiple projects. E.g. Apache. There are meta-level projects like Ubuntu. In principle these larger downstream projects should do what's necessary to support their upstream dependencies. That doesn't always happen though.

Tidelift does funding that emphasizes awareness of upstream dependencies and supporting them.

## On microdonations and fees

This is a payment-processor issue. I believe that Stripe and some others have the capacity to process aggregate charges without all separate. So, if in a platform, you donate $10 to 15 different projects and so do many others, they could charge you the one charge of $10 and give the recipients their single payment from everyone. Each donor would get one processing fee, not one for every project they support.

This is key. And it cannot be solved at the platform level because holding funds in escrow is only feasible if you are a limited specific set of incorporated projects (that's what Open Collective helps support, they can do this approach with one donation fee for each Collective you donate to, even though the Collective could include a lot of projects. A specific Collective there could offer your system.

In other words: Open Collective could do what you're asking somewhat. You donate to a Collective. They don't just have the money for any of their members, the Collective offers a tool for you to vote on which of the members you want to support.

That's another way to see your proposal: An org that accepts donations and you get to vote on which projects they give grants to.

## On downstream vs upstream funding

Anyway, the bigger problem in free/libre/open funding is that it relies too much on proprietary end-user products that have paywalls or ad-driven business models. If a product is designed to reach all the way to downstream users, everyone can freeride. So, freerider problem, game-theory dilemmas.

You might be interested in the ideas at https://snowdrift.coop which is aiming to build downstream patronage via crowdmatching.

The wiki there also has reviews of the issues:

https://wiki.snowdrift.coop/about/existing-mechanisms https://wiki.snowdrift.coop/about/economics

and this is a thorough review of all the existing funding platforms: https://wiki.snowdrift.coop/market-research/other-crowdfundi...

There's a long history of failed efforts, some mentioned at https://wiki.snowdrift.coop/market-research/history/software

Cheers

Re: A new funding model for open source software

#14

Post by jacques_chester »

quadrangle wrote: post #13
colinmcd wrote: post #2

OP here. I'd love to see something like this exist. Let me know if it does already, or if someone is trying, and I'll link it below. EDIT: This model is used by Flattr [0]. Unfortunately Flattr isn't targeted at open-source software; an OSS-specific approach (ideally implemented by a highly visible, established player) is (probably) necessary for something like this to reach its potential. [0] https://flattr.com/

What you propose exists. It's https://flattr.com/ It hasn't made enough impact over its long history. That's not necessarily because the model doesn't work. However, it does set up a zero-sum game. Each click to another project takes away from the ones you already support. Thus, it won't really change the overall economic situation much. There are also foundations that sponsor multiple projects. E.g. Apache. There ar…

One thing that Flattr and many others like them got wrong, in my view, was collecting too little and levying too little from it. Too many schemes were $5/month or $3/month, then collecting 10% or thereabouts. You cannot build a sustainable business with high risk exposure for less than a fraction of cup of coffee per customer per month. But people kept bloody trying.

Re: A new funding model for open source software

#16

Post by edoceo »

jacques_chester wrote: post #11

I termed this model "microsubscriptions" when I was pursuing it in the context of website funding. There are difficulties. Gaming the system Folks will absolutely distort their software, buy fake github stars, spam out bazillions of typosquatting packages etc. We know this because there is already a weak financial incentive to subvert: supply chain attacks for cryptominers. Direct cash will be a much stronger incenti…

You sound like my legal council, accountant, financial advisors, investor friends and former colleagues from the bank used to work for when I was having the same thoughts about building a micro-payments service.

I wish I had more than one upvote to give.

Re: A new funding model for open source software

#17

Post by wyattpeak »

z3t4 wrote: post #15

The problem with OSS funding is that it becomes a popularity contest. There need to be a model that is not zero sum.

I think this is probably inherent to donations, at least if you're targeting individuals. My priorities can be shifted with respect to what I might donate to, but I'm not likely to substantially increase the total amount I donate in a given year.

Re: A new funding model for open source software

#18

Post by tixocloud »

jacques_chester wrote: post #11

I termed this model "microsubscriptions" when I was pursuing it in the context of website funding. There are difficulties. Gaming the system Folks will absolutely distort their software, buy fake github stars, spam out bazillions of typosquatting packages etc. We know this because there is already a weak financial incentive to subvert: supply chain attacks for cryptominers. Direct cash will be a much stronger incenti…

One of the most enlightening blog responses I have ever read and so important because there are so many issues where one that hasn't dived deep into the topic likely will not have uncovered going in. Especially from a technical perspective.

Many mock engineering challenges in banking but boy, given the complex environment that they operate it, you can see why the technology stack is a mess that mirrors that environment.

Re: A new funding model for open source software

#20

Post by C50VGicCxmHC »

I think the open source model is fundamentally flawed and enables the big corporations to profit at the cost of the little people. The large corporations benefit disproportionately from open source as opposed to the maintainers. I thing what would be useful would be a programmer's "guild".

* There is a yearly due - say $100/year

* When you write software, you assign a license to anyone in the programmer's guild to be able to use that software. The requirement is that you have to contribute back changes.

* Only people in the programmer's guild can use that code.

* Anyone can join the programmer's guild, as long as they pay.

* A guild member can allocate up to half their year due to support a guild open source project or projects.

* You use the annual dues, to support widely used infrastructure that a lot of programmers are using. A big example would be NNTP

This has number of very nice benefits. First of all, it ensures a massive pool of money to support worthwhile open source projects, that everybody is using (think NNTP, or projects like that). With that pool of money, we could add benefits for guild members such as employment contract legal review, immigration assistance, etc. If you increased the annual dues, you would be able to do more, but at the cost of excluding more people.

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