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Home business models

The Business of Pissing People Off

by Dana Blankenhorn
July 13, 2011
in business models, e-commerce, ethics, Internet, open source
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AngryTwitter So we find ourselves, once again, debating two Internet companies pissing people off.

Facebook is blocking tools that might let people move to Google+. Netflix is forcing through a price increase.

What reporters don't understand is that these moves are necessary, part of a balance between acceptance and rejection any proprietary company must engage in. Proprietary advantage is an asset. If you don't monetize your assets, you are leaving money on the table. So it's vital that all proprietary companies do this little dance, pushing customers for money or power, pushing as hard as they can, risking their ire in the name of profit.

Contrast this with open source. And with open source ideals.


Google earth_day_doodle It's true that in the early days of open source, this kind of proprietary pushback was practiced regularly. SugarCRM did it most publicly with its "badgeware." The controversy had some questioning Sugar's open source bonafides, and it eventually caved, moving to a standard GPL v. 3 license.

An important lesson was learned by the whole industry in this. Pissing people off doesn't pay. A lesson the market took from this was to avoid open source entirely — if they can't push their customers around where's the money going to come from, folks thought.

Analysts were confusing money and value. Money is held, value is created. In open source most of the value goes to customers, not producers. These are often the same people, although the best projects are often consortia of producers, organized through a framework like Eclipse or Apache.

Analysts of selling, like Seth Godin, like to write about various types of permission that start with "transaction permission," your putting some money up and taking the product. But in open source there are many levels of permission below transaction permission, levels that drive the software forward in meaningful ways. The point at which consumers can deny something important to producers is thus lower, and, again, the incentive to piss people off declines.

I have never understood the cry of "socialism" against open source, a cry I still hear, but I think it comes as much as anything from this lack of producer power.

Not all the currencies in open source represent money. This drives some people crazy. But it's more like life.

Tags: business ethicsFacebookInternet marketingNetflixopen sourceproprietary advantage
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Dana Blankenhorn

Dana Blankenhorn

Dana Blankenhorn began his career as a financial journalist in 1978, began covering technology in 1982, and the Internet in 1985. He started one of the first Internet daily newsletters, the Interactive Age Daily, in 1994. He recently retired from InvestorPlace and lives in Atlanta, GA, preparing for his next great adventure. He's a graduate of Rice University (1977) and Northwestern's Medill School of Journalism (MSJ 1978). He's a native of Massapequa, NY.

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