Tuesday, 6 May 2008

The Non-Profit Business Model for Open Source Development

There are two schools of thought on the open source ecosystem. The first is the community, non-profit approach, where things are done for the common good, and in the name of overall progress. The second is the for profit venture that tries to develop a business model around open source components—so that providing the free open source services can also support those who keep it running and incentivize others to join the business.

Let’s start with the non-profit approach as it applies to open source generally. People collaborate in their spare time with a number of non-financial motives:

1) Working with others like themselves
2) Feeling of contributing to a greater shared interest
3) By inviting collaboration, they may receive a refined product serving their specific purposes
4) The size of the contribution can be marginal (e.g., on par with any other hobby or pastime)

Yochai Benkler puts forth a thorough analysis of this phenomenon, and how it could progress in the future. See his full treatise in HTML here (in particular, Chapters 2-4). Information serves greater societal purpose (and is more “efficient” in fueling the production of more information) when producers give the public free access to this information. The idea is that information begets information, and the fewer access barriers there are to information exchange, the more rapidly concept development will proceed. The same concept applies to open access to software and hardware—the underlying information is shared with the public, allowing for more rapid progress.

The natural response is something like this: “I’ve got to keep my work proprietary so I can sell it and feed my family!” This is the productivity problem. Why would someone work for free? And even if they are willing, they’ve got to pay the rent.

In light of this, Benkler proposes a model that takes advantage of the Web 2.0 phenomenon of distributive co-creation. If you take a task and break it down into modular units, each unit being small enough to be considered nominal work, you can farm it out to a large number of people, each of whom can contribute as much or as little as they are able. Spread one task across a large enough number of people, and the effort becomes trivial. As such, it becomes a hobby or side project for those who contribute. Contributors pay the rent with their day jobs, and their open source contributions do not detract from their lifestyles in any way, and may even add to it. So you don’t need to turn a profit or incentivize open source production, as it can be completed via non-market collaboration.

Still then, many argue that though Benkler’s model may work in theory, it is only suited to a very specific set of tasks, and that complex projects requiring higher degrees of organization that cannot be broken down into such granular components will inevitably require centralized direction.

Fair enough. So maybe a few people could be paid full time to provide the centralized direction necessary to organize the broader, decentralized community? These people would have to be funded somehow, but it may be a small, non-profit group funded through private donations. I’ll speak to the for-profit approach in a later article.

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