About economics of open source projects

I am surprised how many advocates of open source software actually don't know why and how the open source development model works. Even some highly educated persons with a PhD in computer science who have been using and promoting Linux for more then a decade, do not understand how the contributors get motivated to work on such projects.

I am a strong believer in swarm intelligence (as it is expressed by bees, fish, birds or crowds of people). People are not willing to work for free or just for benefits of others. When that happens I call it slavery. Even volunteers working for red cross or other organizations, do want to create a better world for all of people - there is definitely benefit of living in a better world, so that implies they are working free of charge, but not selflessly.

Egotistical individuals use, abuse and exploit others. Smart people build a better world for all. Including themselves.

Corporations do know that collaboration is more effective then competition. That is why the management of a company is forcing people to work together. They also fear it the most. Efficiency is enemy of profit. Every human need that is properly taken care of in the society does have very slim profit margins. Efficiency of production does bring down the costs and increases availability of goods. And since we all know that high supply is the worst enemy of profit, efficiency internally in a corporation is praised as a good thing, but outside of a corporation efficiency is the worst thing there is for any company.

The greatest argument for collaborative work that I can think of is the example of Wikipedia's success. People from all over the world are contributing to its growth free of charge - but we have to admit, that having unlimited access to the largest encyclopedia in the world is a far greater value then the effort that is needed to build one. And since collaboration is one of the most efficient ways of production, the effort contributed by any individual is far less then the value he (and any of us) benefits.

Let me rephrase the wikipedia example in more generalized way:
Wikipedia is a tool, and the benefits of creating such a tool provide us with new and more effective everyday processes. If those new processes provide us new products and services with greater value then the invested effort or just save us more effort that what was needed to create it, we have created new value. The produced value (not talking about money, but real value) is even greatly boosted by the product being widely adopted. For an example: the more hammers we use in our everyday life, the more important the tool and the invention of it are.

What I believe I am noticing is the demise of proprietary software and closed development model. Sure I am biased, but I do see people turning away from too expensive products and bad business practices (ie. vendor lock-in).

I was always guessing that the rise of Microsoft is due to high levels of piracy of Microsoft Windows 3.1, 95, 98 and XP and their flagship product Microsoft Word since version 6.0. As soon as they started to enforce anti-piracy policies, the alternatives (MacOS, Linux, OpenOffice / LibreOffice) became more attractive. I believe the biggest problem Microsoft has is the customer discontent because of their power abuse.

Let me list the benefits of open source development model:

• it does lower the needed effort of an individual or organization trough mechanics of collaboration
• there is lower barrier to acquiring the product (usually download for free), thus the bigger acceptance and value of that product
• it empowers the user to actively shape the product for their needs - thus maximizing its perceived value
• it is inclusive to all who can contribute some value
• the product allows and encourages infinite upgrades, improvements and extensions

To sum up: open source contributors are not working for free, they are investing resources and effort into creating new value that everybody will benefit from including themselves. And they do it in a very smart way, by sharing and collaboration they reduce the costs of development and maximize produced value. And due to openness of the process, that value is permanently available for use and also available for expanding it too.

Most of software that is produced by concepts of freedom and openness either has greater value than proprietary software, it is more cost effective or combination of both.

There is now open source hardware for farming and civilisation too,  open source for architecture, books and much, much more.

Next topic I want to talk about is: individual and collective prosperity - how to get there and what are the obstacles.


EDIT:  30.9.2011 
I completely forgot to mention the big sponsors. Those are the companies that support open and collaborative development for higher quality and lower costs of tools and products. As an example here are links to sponsors pages of linuxfoundation.org, sponsors of apache.org and sponsors of eclipse.org .

Sorry about that.