Market Making for the Bazaar

Mr. Thompson presents a bold and innovative business model for paying developers to produce free software.
How Does It Work for Sponsors and Developers?

It starts with an unfulfilled need. Maybe it's a driver for a USB scanner, a plug-in to convert Excel spreadsheets or a port of some game to Linux. The user goes to http://www.cosource.com/ and finds the project to develop this feature. If it is not there, they can add it with a form.

What is it worth to them for someone to develop this software? Whether it is $10 or $1000, the customer sponsors the project for that amount. This is not something done lightly. A buyer is making a firm commitment to pay up if the software is developed.

Other motivated sponsors come along and do the same. CoSource goes out to corporations and seeks to supplement individual sponsorships with a few large ones. Let's say the project is an HP scanner driver. While HP isn't yet ready to pay the full cost of developing a Linux driver, they may be willing to pay for 50% or 25% of the effort.

Developers, meanwhile, browse these same lists to identify projects in their area of expertise. Suppose a developer has done a converter for the Excel file format before. That developer fills in a form to bid on the project, answering the following questions:

  • How much would I have to be paid to do this work?

  • What is my most conservative estimate for time to completion? What license would it be released under (e.g., GPL, BSD, etc.)?

  • Who will judge the final product for completeness and quality (e.g., a known and trusted third-party authority)?

  • What will be the URL of the project's web page?

CoSource then prices the bid for display on the system, marking up the bid for transaction costs, historical sponsor fraud, advance payments, project risk, etc.

As bids are entered, sponsors are notified to evaluate them. They submit a simple yes/no form in response. Voting yes to one or more bids is a final commitment involving a legal agreement to follow through if this developer succeeds. The first bid that gains sufficient sponsorship wins. From that time forward, sponsors are not permitted to back out and shortchange the developer.

The winning developer then begins work on the project, providing updates on their project web page.

At some point, the developer believes he is complete. A release is done and judged to determine if it matches the requirements stated in the original project description. If the release fails, the developer may try again many times until their committed schedule runs out. If that unfortunate event happens, the project goes back to the sponsor/bid phase.

If the release passes, the project is complete! Sponsors are notified to fulfill their commitments. They can easily pay by credit card. Finally, payments are consolidated and a single check is mailed to the developer.

What Are the Goals?

Obviously, this process is more complicated than a typical software-buying experience. In return, the consumer gains much more control over the quality and time frame of work. If you needed one of the new features Windows 2000 provides, you would have to wait two to three years after the initial promised ship date to get them. How can a corporation plan ahead for software rollouts with such uncertainty?

Cosourcing puts more control over features, schedule and quality in the hands of the consumers.

Obviously, this system is not intended for charity or non-profit activity. Rather, it is intended to be the most effective way to outsource development of software and share that cost with other motivated buyers. It is intended to be a way for non-developers to “scratch their own itch”. It is intended to be a fertile breeding ground for hundreds of individual and corporate developers. It is intended to make the funding of Open Source a collaborative effort in the same spirit the development process is in today.

In general, it is intended to empower end users to spend their hard-earned money making free software do what they need.

Making a New Market

On one end of the software market spectrum is “closed” software, where intellectual property is licensed on a per-copy basis. On the other end is free software, where intellectual property is created without payment and voluntarily given to the community at large.

Both of these will continue to grow and thrive. On one hand, closed software will continue to be a billion-dollar market. On the other hand, innovative free software will continue to be developed by students, hobbyists and professionals for various reasons. Both systems make sense and they will continue to compete with each other. But there is a possibility for a vibrant third market. One which blends and bridges the differences between the other two. One that brings the free market to free software.

This market will sell software as a service rather than a product, so it will be compatible with Richard Stallman's original and ongoing vision for public license code. This market will serve the needs of end users by driving innovation in the areas that matter most to them. This market will bring financial vitality to free software, so thousands of individuals and small companies can make their living developing it.

Software in 2010—A Look Into the Future

This vision may turn out to be a pipe dream. Consumer psychology has rarely dealt with a case in which a group of consumers pay for the development of a product, then allow that product to be given away freely from that time forward. Psychologically, this is a strange mix of self-interest and altruism.

CoSource.com and others are going to put it to the test. If you've ever complained about some missing piece of free software, now you can put your money where your mouth is. Will you?

Resources

Bernie Thompson is one of the founders of CoSource.com. He lives just down the hill from Microsoft and believes that a great and healthy rivalry has begun where the big winner will be end users. Send comments and ideas to bernie@cosource.com.

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