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Home business models

This Week’s Clue: An Open Source World

by Dana Blankenhorn
May 5, 2006
in business models, economics, futurism, Internet, journalism, open source, Web/Tech
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This week I have many of the thoughts you have been reading here for a week, only in a condensed, early version. (I usually write my columns a week ahead of time.)

Please consider subscribing to A-Clue.com. Subscribe here. Always free.


Zdnetlogobig
When I first agreed to do an open source blog at ZDNet my beat was "the enterprise." I wrote about corporate policies concerning open source software, about open source licensing strategies, about indemnification, and questions about whether the whole idea was legit.

Gradually I chose to expand the beat. I began looking at the open Internet, at open spectrum, especially when the current threats to them rose.

I began seeing open source everywhere. I saw open source journalism, a new open source politics. I called open source a business model, a political movement.

It is all that and more.

Open source is the greatest driver of economic growth since the plane and the automobile. Where those devices brought people and goods together, open source brings minds together. All over the world.

The principle is simple. When we work on the basics together, competition can exist on a higher level. Stop worrying about the operating system and start worrying about applications. Stop worrying about basic applications and start selling services.

The open source principle has worked wonders in the past. The Interstate Highway system is open source in action. The Apollo program represented open source in action. The Internet itself was one product of the Space Race. To call it "socialist" is to brand it, and falsely.

And branding is what its enemies need to do. Open source does have enemies. Many enemies. They are right to fear it.

Right now, the U.S. government is dead-set against the open source
principle. They hold up a proprietary principle as being the only
freedom. Absolute intellectual property, absolute closed spectrum, and
absolute freedom for monopolists to choke off the free Internet. The
government calls these things capitalism.

In fact, they are fascism. Worse, they are inefficient.

For a capitalist system to succeed, it must be efficient, competitive and transparent. In a word, open to change.

The last generation has seen this openness replaced by a proprietary
system. It is time for balance to be restored. Open source is the
principle that can restore the balance.

That’s because open source creates a commons. The wealth of a
society becomes determined by the wealth of its commons. The more
freely we can use knowledge and code, the more we can learn and invent.
And to meet the problems of energy and the environment, we will need to
learn and invent a great deal.

But there is a problem. It’s the problem I’ve been writing about
here since this newsletter launched. It is the thread that ties
together every subject I have addressed here – from e-commerce to
Moore’s Law to Always-On to politics and economics.

It’s the business model problem.

The business model for open source software is now relatively
straightforward. Instead of hiding code and selling code, you share
code, then sell services and support.

In journalism and entertainment it is less clear where the business
model lies. Ad revenues alone are not sufficient to support most of the
people working in these areas now. As I have written many times before,
ways must be found to increase the value of page views beyond what even
a targeted ad is worth.

The same problem exists in telecommunications. An open source pipe
is not worth nearly as much as the services that ride it. Bits may be
bits, but phone calls and cable channels are billable events. This is
why 99% or more of the available bandwidth is being hoarded, why the
Bells seek monopoly rents and control of our networks.

Those who advocate open spectrum and open networks know that the
gross economic activity arising from these wonders will mean more
markets for writers and artists of all kinds. It will mean a growing
economic pie. What they have failed to do is address these business
model problems – how do we get from here to there?

Jschwartzsun_1
In the end we either leap or we get pushed. The example of Sun
Microsystems here is instructive. They have seen their proprietary
hardware and software dry up revenues for years. Then they finally saw
a glimmer of hope with open source and decided to leap, naming Jonathan
Schwartz as CEO, pushing founder Scott McNealy aside.

Will Sun survive? Fact is it doesn’t matter.

The best historical analogue I can make to this period is the turn
of the last century. The old economic order of protective tariffs and
small-scale production was being threatened by advertising, mass
production, and industrialization. Many did not survive the transition.
New rules had to be put in place to make sure those with power did not
abuse it.

The present changes reverse all these processes. Mass production
means less. Mass advertising means less. What matters is what what each
individual mind can do with the open source tools available. And how
they can attract enough attention to their work to get paid for it.

We need to tear down the present hierarchies, and reward those who
find the economic models we need. Protectionism will not work, any more
than it worked 100 years ago.

Fact is, this column is not a political call to arms. Whether
America accepts the open source principle in the short run makes little
difference.

Because, as I’ve said here for a decade, the Internet is a worldwide network, and a national law is just a local ordinance.

Those economies that embrace open source, open networks and open
spectrum will prosper at our expense, unless we act now to protect
those values within our own economy.

The time for action has come. It’s the great story of our time. And it’s the story I now intend to follow, full-time.

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I'm Dana Blankenhorn. I have covered the Internet as a reporter since 1983. I've been a professional business reporter since 1978, and a writer all my life.

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