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Re: [ox-en] Germ of a new form of society or germ of a new form of business?

On Sun, Jan 25, 2004 at 02:45:05AM -0000, Niall Douglas wrote:
It still surprises me that people find the phenomenon of free 
software surprising. It would be more surprising if it didn't happen.

Agreed - _very_ surprising. It was the original form of software,
according to Stallman.

However, I can see really very little substance to this assumption.
Niall in particular is busy in pointing out how the GPL stops people
from making money (buy selling the work of other people). In fact
there is little practical evidence that making business with Free
Software *as such* does lead anywhere to any substantial degree.

You misquote me Herr Merten! - I said that the GPL prevents 
entrepreneurship which is far more than just making money - it's the 
*potential* to make money, ie; the motivator. Whether you actually 
make money or not is not particularly relevent - so long as you feel 
you can be rewarded for having taken a risk.

Hmm... what about Red Hat, for example?

You might say they are a special case, and I'd agree with you. Not
many companies can maximise profits for their shareholders while
following a Red-Hat-type business model.

However, I have been thinking a lot about how to make a profit or at 
least a living while writing free software, and I believe that a
privately-held company could take a subtly different approach to Red
Hat and still make a profit (although again, there would not be
much space for many companies of this sort, probably).

I would very much like to be paid to work on a programming project of
mine, a new programming language incorporating a number of "step changes"
which would put it head and shoulders above Java and C++. However, I
am only willing to enter into such an arrangement on condition that it
all be released as free software (possibly after a fixed, short time
of being proprietary software, say 3 years - but ideally immediately).
Call me crazy, but that's my terms.

Typically, investors will only invest in a company on the understanding
that the company will attempt to maximise profits - within certain
regulatory or contractual - or risk-averse - constraints. However,
occasionally what one might call an "angel investor" (if the phrase
didn't already mean something different!!) can step in and agree to the
company being allowed to follow various ethical constraints. Such as
releasing everything as free software. Even if those ethical constraints
would reduce the expected profitability of the company.

The most common example of this is where the "company" is in fact a
not-for-profit organisation - e.g. the Open Source Applications Foundation,
with the "benevolent investor" in that case being Mitch Kapor (founder
of Lotus, and later OSAF), who donated several million dollars.

However, it could in principle work with a for-profit company, or
a not-for-profit co-operative aiming for a return on investment (as
opposed to charity-type-things like the OSAF or the Mozilla Foundation
which just spend money and do not expect to sell anything significant).
It's not unthinkable for an investor to come along and say "I'm willing
to do a part-philanthropic, part-capitalistic, deal here: give me a cut
of your profits as set out in this here contract, but in return I won't
prevent you releasing anything as free software."

And of course the profits can come from the familiar area, services:
support, training, etc.; and trademark licensing, potentially.

The only big-picture difference with Red Hat here is that Red Hat is
legally obliged to maximise profits for its shareholders irrespective
of its employee's and its management's ethical beliefs, so if its
shareholders decided Red Hat could make more money by going partially
proprietary (for software they write themselves, the installer and so on,
and maybe for BSD-licensed software), they could force a management
takeover to enforce that. Whereas with the arrangement I proposed,
the investor(s) would have absolutely no power to do so.

(IANAL - I'm assuming there is enough freedom of contract in most/all
jurisdictions to write this kind of contract. I don't see why not.)

Of course, Red Hat's shareholders haven't done that yet, and that's because
they realise that being 99-100% free software is one of Red Hat's biggest
selling points, and it would be a big risk of losing most of the customers
for poor returns.

By contrast, a publically-traded company developing a totally new codebase
would face much more acute shareholder pressure to go proprietary, unless
it could demonstrate "paradoxical profitability" through staying open source.

So anyway, if there are any rich investors on this list, please get in
touch - I've got a fantastic FLOSS-devel proposal for you ;-)

Indeed and it's why I am a post-capitalist. I think I know how free 
software - all software - gets written and I think I can base a 
revenue model upon a system which combines the best parts of the 
volunteer system with a touch of entrepreneurship. Entrepreneurship 
far predates capitalism, and in my mind any successful post-
capitalist economic model will perhaps place entrepreneurship even 
more at its heart than it is now within capitalism.

The result I would still call free software though it won't fit the 
OSI definition. Put it this way - it's close enough and I don't think 
anyone other than the GPL zealots will complain.

Fascinating - care to share the general idea, or is it top secret? ;)


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