This is a bit of an op-ed, but given a lot of the events recently, I thought it might be good to think through the pluses and minuses of open source - particularly software, though could really apply to many disciplines.
I am largely convinced - both from commercial experience and personally - that open source is a net benefit at large, but I wanted to try and take a more quasi-academic approach and research the issue. As someone with History and Economic degrees I still value providing my sources, so I tried to put them in the end notes as well.
Open Source: Economic Impact
With a lot of the
world economies on edge due to recent uncertainty, I thought it would
be interesting to think through the economic impact of open source
tools and services.
Open Source
Advantages
Open source software
and its proliferation is one of the greatest drivers of technical
innovation and value that have helped any number of industries and
individuals. The software delivery model has numerous advantages from
the obvious freely available, automatically auditable, and modifiable
for developers, to less obvious advantages such as helping promote
newer and younger developers.
Where Open Source is
Employed?
Open source software
has for years been the unknown, unseen hero of any number of device
manufacturers. Sony, Nintendo, NetApp, EMC, and any number of router
providers rely on open source projects, such as FreeBSD, to help
develop their bespoke appliances. The Top500 largest and fastest
super computers have for decades been entirely running on open source
software, primarily Linux, networking drivers, and lower-level
kernel. The advantage for all of these companies for using open
source software is immensely useful particularly at the low level.
First these organizations do not have to "reinvent the wheel",
the code is available and works to enable either the WiFi or CPU
technology. The second advantage is that much of the lower level
technology stack, while absolutely critical, is often very
unprofitable to maintain. Imagine the type of work that goes into
tracking down memory-leaks or other low-level issues, verse what
marketers sell "cloud, cloud, automation, AI, AI". If
hardware vendors push and maintain code in an open source community,
it helps not only make the code more available, but it also gets
tested by a wider community that essentially puts in additional free
man hours. Intel's Joe Curley summed it up "It’s not a charity
— this work is in everybody’s best interest. If we build
innovative hardware, such as adding additional cores to a CPU, it
delivers more value and causes people to consume more of our
products." ^1
The Snowball Effect
In 2024, the Harvard
Business Review released an attempt to estimate the value of open
source projects. The paper has a lot of assumptions and mathematical
experiments to try and come up with a number.
"The thought
experiment is that we live in a world where OSS does not exist and has to
be recreated at each firm that uses a given piece of OSS. Using the
labor market approach, we
calculate the labor replacement cost of each OSS package. To estimate
the value for each package, we
use COCOMO II (Boehm, 1984; Boehm et al., 2009) at the individual
package level and then
sum across all package values to obtain a supply-side labor market
replacement value. Then, we
scale the supply-side value by the number of times firms are using
each package while removing
multi-usage within each firm to obtain a demand-side value."
^2
What is interesting
about the outcome is a snowballing of the level of effort verses the
achieved value. Ignoring the specific numbers, which again have a lot
of complex calculations and specific assumptions, the total estimated
work involved to create all the commits and contributions to the
Github projects reviewed was in the billions in USD. However, the
value based on where the software was employed was in the trillions.
There was a 1000x explosion in value from the work needed to the
value the software provided.
The snowball effect
in value, while impressive, is by no means hard to comprehend.
Exposing code and knowledge freely for other community members to
then take and build upon helps propagate knowledge, and that promotes
further innovation.
Open Source and
Business
Given the immense,
inherent value of open source, in some ways it is surprising how
difficult it can be to profit or sell open source software.
Practically, however, it is quite easy to understand the dilemma:
"Why pay for something free". The most common answer is the
promise of support, but the real answer is sustainability. Any
enterprise relying on a fundamental technology to run their business
will want to have the project continue, and supporting the project
will help sustain it. As cybersecurity becomes ever more critical at
an exponential rate, it is in everyone's best interest to support and
sustain projects to ensure the latest patches, best practices, and
tooling continues to develop.
Organizations
support open source projects in roughly three major ways: purchasing
commercial licenses, contributing developer resources, and through
donations. Donations of course are almost always welcomed if the
project is set up correctly, though they are always hard to rely on.
Contributing developer resources are also a vital source, but often
they are done in the pursuit of the organization pushing its own
agenda, example: Intel offering its C Compiler or drivers to the
Linux Kernel. Purchasing commercial licenses model obviously is
preferred by the developers of open source software since it gives
the vendor more control over budget and terms of the agreement. It
also grants the end customer or organization purchasing the license a
stake in the project with guaranteed support from the vendor. For
purveyors of open source software, unless the vendor is selling
hardware that runs open source software, having a business-level
engagement via a license makes a lot of sense.
Having worked in
companies that sell open source software, the reality is not so
straightforward. Often it can seem that "We're our number 1
competitor" when trying to actually sell. That is true, and
certain customers cannot be convinced of a sale. However, having also
worked in companies that are not open source, I have seen real
benefits. Open source software vendors, if their project is popular
and well respected, are almost
guaranteed sales leads and interest. This organic interest and
trust can help propel smaller organizations to international
exposure, a level of which other non-open source providers of similar
size simply cannot match without significant investment in marketing,
outreach and other areas.
Knowledge Drives
Economic Growth
In economic theory,
a very prominent growth theory is the Solow-Swan model that theorizes
that taking into account capital and labor, a key factor for long
term growth is a factor of knowledge or technology. The technology
could be actual tech, like the adoption of computers and Internet, or
better legal policies, or just general manufacturing or production
know-how. The model has a lot of empirical evidence, particularly
when looking at developing countries.^3
No paradigm better
enables the spread of technology and knowledge than open source. By
definition it removes barriers to the dissemination of knowledge,
making information, including source code, freely available for
adoption, and has become a bedrock for growth and innovation.
TLDR
Open source
technology injects a huge amount of value and economic benefits at
both the micro and macro levels. Businesses large and small can
benefit from open source software, whether its a multi-trillion
dollar multi-national organization leveraging open source tooling and
community hosting and testing, or a small-/mid-size company looking
for more exposure, open source drives down costs for both tooling and
reach. On an even broader perspective, given the value of community
contribution - a 1000X multiplier vs the effort - countries and
regions should be well incentivized to help facilitate and support
open source projects as a broader economic growth driver.
----------------
1. Arun Gupta and
Joe Curley, "How Intel Supports Open Source from the Inside
Out",
https://www.intel.com/content/www/us/en/developer/articles/community/how-intel-supports-open-source-from-the-inside-out.html
2. Manuel Hoffmann,
Frank Nagle, Yanuo Zhou, "The Value of Open Source Software",
Harvard Business Review, (2024),
https://www.hbs.edu/ris/Publication%20Files/24-038_51f8444f-502c-4139-8bf2-56eb4b65c58a.pdf
3. Abesalom Webb,
"Revisiting the Solow Growth Model a Theoretical Examination of Technological
Progress in Developing Economies", SvedbergOpen,
https://www.svedbergopen.com/files/1720763035_(2)_IJMRE11042024PR37_(p_18-24).pdf
---------------
Additional
References:
-
https://en.wikipedia.org/wiki/Open-source_economics
-
http://www.congo-education.net/wealth-of-networks/ch-03.htm#3-1
-
https://opensource.com/article/18/9/awesome-economics-open-source
-
https://www.technologyreview.com/2022/04/21/1050788/the-changing-economics-of-open-source/
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https://www.library.hbs.edu/working-knowledge/the-simple-economics-of-open-source
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https://www.sciencedirect.com/science/article/pii/S0164121221002442
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https://interoperable-europe.ec.europa.eu/collection/open-source-observatory-osor/news/first-results-study-impact-open-source
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https://en.wikipedia.org/wiki/PlayStation_4_system_software
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https://www.linuxfoundation.org/research/open-source-funding-2024?hsLang=en
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https://www.svedbergopen.com/files/1720763035_(2)_IJMRE11042024PR37_(p_18-24).pdf
-
https://en.wikipedia.org/wiki/Solow%E2%80%93Swan_model
