The Free Software business model … and how it could save the world?

To me, the most interesting Free Software business model is where people who are interested in a project contribute money directly to the people who work on it. Some equate this with “Tipping” and don’t see it as sustainable. I’m inclined to believe it’s something quite different.

From time to time I daydream about lofty topics such as politics and economics. Fields I have no qualification in, and truly know very little about. I shape my opinions from random chats on irc and the occasional stroll around wikipedia along with the odd series of lectures generously provided by universities as podcasts. In rough terms, my understanding is that the Left aims to protect the weak by distributing wealth and resources and the Right aims to protect the strong by letting everyone fight for their own position.

The Left claims to support the cause of the downtrodden Working Class. According to the literature, the Working Class are kept in their place by the rich elite who pay the workers as little as they can. The logic goes that if people were to organise themselves there would be no need for this upper class at all because the resources would be pooled. This would greatly improve efficiency since there would be no need for “wasteful” competition. There would be so much more to go around that the majority would have to work less and less and be able to enjoy all the benefits of the shared effort in their free time.

The Right claims that people are hampered by high taxes which are being wasted to keep l
azy people comfortably housed and clothed. I guess they also believe that there is some kind of natural order in society and that without wealthy people ruling over the lazy masses there would be chaos. I often wondered why the right has such a strong following among poorer people, since it would seem that they stand to benefit the least from a hierarchical society ruled from above. I can only conclude that the leaders of the Right just take advantage of the poor education and desperate situation of the poor and manipulate their fears and prejudices to gain support.

Central politics seems to be what people mostly vote for and presumably want. People want to have some security i.e. they won’t starve if they loose their jobs and that they will be able to see real benefit in proportion to the amount of effort they put into their careers. Naturally, some people abuse the social welfare system to be lazy and some abuse the economic and legal system to get rich. Both at the expense of the majority of people who contribute to the system.

We’re in an interesting economic situation at the moment which seems to have left people feeling helpless, and misled. Not so long ago, everyone was going crazy trying to invest in property. I looked into it myself too, but luckily I found the idea of paying so much interest to the banks for such a long time unappealing. If I hadn’t been so stingy I would have paid for a flat with money I didn’t have, and at this stage I’d probably be bankrupt, and the taxpayer would be paying off my debt to the banks so that they don’t lose their own savings. But it begs the question, who’s to blame? An awful lot of normal people participated in the mania, driving the prices up as they went. It’s all very well to blame the bankers, but if they didn’t have such eager customers things wouldn’t have gotten so exciting.

I love the welfare state because it gives us a reasonably fair shot at getting any position we want in society through hard work, and we are supported if we are unlucky or unsuccessful. We have a (very small) say in the political system but we are free to choose how we spend most of our money and therefore responsible for the businesses we support. If everyone took their money out of the banks and put it into credit unions instead then the banks would go out of business and that would be that.

Some say the greedy rich are to blame and we just need to tax them more to even things out. There is no doubt that they’ve been making the most of the situation and rewarding themselves with generous bonuses to boot. Capitalist economists argue that this will cause growth to slow because there will be less capital available for investment. The idea here is that the small group of ridiculously rich people have that money because they are talented at making money i.e. they invest in “successful business ideas” which work, create jobs (as a side-effect) and allow them to accumulate more wealth. Since these people create jobs for the masses, the wealth they generate trickles down eventually. Capitalist economists believe this is how it should be. Perhaps they would concede to some regulations here and there to make the act of “making money” be somehow related to providing real jobs rather than simply playing a game in which they make the rules, which they can’t lose, with our money.

So that’s about as far as my understanding goes of how our politics and economics work. Now for Free Software business models as I understand them. There are quite a few and some have already proved themselves well. For niche custom applications it seems to make a lot of sense to share a core set of libraries freely and improve it collaboratively since the developers can include improvements to the core system as part of the cost of creating the custom applications. Everyone wins, everyone gets paid, the solution the client has invested in is constantly improved, they have a selection of providers etc. The Plone Content Management System is a nice example of such a project that is very close to my own heart (and wallet).

Other business models that are working well for free software are the sale of secondary services such as customer support, and advertising. While these do generate revenue, it’s not really very exciting. The less established business model which interests me relates to applications which are consumer oriented. Why would a consumer pay for something which they can have for free? Why would a developer ever work on some boring application that needs to be updated regularly e.g. for doing tax calculations? Many projects have experimented and the voluntary subscription/donation business model seems to be having some success. Ardour (Digital Audio Workstation) earns enough to pay the lead developer to work on it full-time (although not nearly as much as he deserves) and Mandriva (Linux Distribution) has been doing something like this for many years. Blender (3D) has it’s own very interesting spin on this, the project asks the community to regularly pay for a movie or game before they create it, the money is invested directly into the improvement of the software so that this movie or game can be realised. The latest project, Sintel is only a few months away from being released, and the whole community is very motivated and excited about it, watching every step and even helping create some of the content in a series of sprints. Recently http://www.wolfire.com/humble had such enormous success by allowing people to pay as much as they wanted for a collection of their games that they decided to release the source code for them.

The implications of this on the economy could possibly be enormous. By donating to these projects you aren’t “giving away” to a charity to improve the lives of the less fortunate. You are in fact investing in the improvement of the services which effect you directly, as well as everyone else. Through the magic of the internet the masses have become the investors. I see no reason why this should only apply to software. There are open hardware projects e.g. Arduino and lots of creative commons music e.g. Jamendo, Dogmazic. Masses of people could just as easily invest in big-budget movies, games, space ships, whatever.

What is in it for people to invest in something they could get for free? Surely the greedy, who take whatever they can get and give nothing back stand to benefit from such an economy. Could it be that it would be embarrassing to be noticeably more wealthy than your peers because it insinuated you didn’t contribute enough? The less you contribute means the less influence you have, and it’s just much less fun. The Blender example is a particularly good one. It’s such an incredible joy to feel part of the process. To know that because you and enough other people contributed a little money there’s a team of cool people working really hard at something they love, creating something amazing and beautiful to share with the whole world. It’s just not so much fun to pay for a cinema ticket or even to download illegally without paying at all.

Such a culture would have no reason to represent the greedy in an appealing manner. Culturally, the greedy would be worthless and perhaps that alone is enough of an incentive. Could it go further? Would people invest in the social welfare system or health system etc. voluntarily instead of being forced to pay tax? What’s the big difference? Through hard work and violent struggle our ancestors created a free society for us to inherit. They didn’t create taxes to oppress us, they created taxes to support us. We created taxes for ourselves, why don’t we take the next step and pay as much “tax” as we want by financially supporting the services we want?

There is a common notion, especially among societies based on the Judeo-Christian-Islam belief system, that people are born evil and greedy. They require threats and punishments and laws to keep them from doing harm to the whole group. Increasingly, there is a drive to monitor more and more of each others’ activities to ensure nobody slips up and does something evil. This is a very efficient belief system for a hierarchical society. Those at the top can conveniently manipulate the legal system and buy their way out of any difficulties. They can avoid taxes and to a large extent influence the laws regarding taxes and regulations to suit their business interests. In a way, the society at large accepts this, since this upper class are considered important for everyone’s welfare. This is a great system for imperialist nations. The masses can effectively be ordered to kill each other to strengthen the power of those above them. This system has undoubtedly proved its success throughout the world and even though most people are ashamed of the gruesome methods their ancestors employed, people generally accept this system as the way things are meant to be.

Part of what makes this hierarchy so effective is the control of information. By having privileged access to “holy books” and the education required to sell these ideas to the masses, the religious hierarchy had a distinct advantage over them. If a large group of people consistently speak of the exact same fairy tales with a great sense of authority  it makes it increasingly difficult to believe otherwise, regardless of how crazy it is, or what rules they impose on you as a result. Once the system is in place to control the information, it is easy to tweak it to the interests of those at the top.

The internet has changed everything. Information about how the world works no longer trickles down via the clergy or wealthy publishers. They are feeling the pinch now as people increasingly turn to blogs, podcasts, wikipedia etc. as sources of information. We already knew that we could not blindly trust the media. Now we are also perfectly aware that we cannot trust what we find on the internet. Whether a sock-puppet actually has a piece of paper from a university to qualify their “opinion” or is published in a “respectable” source matters less and less. It is up to us to process the information we receive and decide who and what we trust. Even the media companies which aren’t obviously under the corporate thumb find themselves under increasing pressure to mix advertising and agenda into their content in order to survive. They claim they don’t have the resources to spend on real journalism anymore and are more inclined to accept what they are fed as information. The more they do so, the more people will come to see that this “professional” media is worth less than the media and opinions which are shared freely.

At the moment the system is broken. The funny thing is that people like to support and show their support for things that they are interested in. Media corporations, however, are founded on the notion that there is such a thing as “Intellectual Property” and that if you don’t charge people for it before you allow them to use it (under very specific terms and conditions) then you won’t be able to pay people to make more of it. They believe they are protecting the general public interest by enforcing regulations which ensure they will have money to produce more of what (and they know best) people actually want. Sure, people like the kinds of movies that require thousands of people to dedicate significant time, often years, to produce. People want to see these movies. Why not facilitate people to invest in these movies too? So far this model has worked on some independent movies, but it has yet to be attempted with a big budget movie. Instead of market researchers trying to guess what people want, advising a small number of investors, who then do their best to influence the movie to the apparent desire shown in statistical analysis of public opinion, the whole system could work the other way around.

There could be a whole new sector dedicated to facilitating the public’s desire to invest. The products of the work could be distributed freely, since the people who worked on creating it have already been paid. People involved in successful projects would be justly rewarded and be chosen for future more ambitious projects. People could be allowed to freely reuse the work, since this cultural “property” wouldn’t need to be “protected”. Instead of creating jobs in law enforcement and punishment we could be creating jobs in facilitation and communication.

The free software movement didn’t invent this business model, e.g. Pacifica radio has been financed by its listeners since shortly after it was founded in 1946. There’s nothing new about people pooling resources to create something bigger than they could on their own. If the media companies aren’t willing to take a leap of faith (even though many commercial artists such as Radiohead and Nine Inch Nails already have), then the free software movement is in a great position to show how it works, while also providing the infrastructure to make it happen.

I am excited and optimistic that such an economy and society is naturally taking shape. I see no need for a class war, or segregation, or violent revolution. All we need to do to make it happen is to invest in it.

Naïve? Loopy? Freetarded? Heard it a million times before?

What are your thoughts?

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