The Free Beer Economy

Why is FREE! the world's best-selling noun, verb, adjective and adverb, yet so hard to credit as a foundation for business in the Internet Age? And what will happen when business folk finally grok the abundant opportunities that FREE! provides?

Dictionary.com lists 49 meanings for the word free. Here in the World of Linux, there are two main ones: 1) the presence of liberty, 2) the absence of price. Or, as Richard M. Stallman drew the distinction, free-as-in-freedom and free-as-in-beer. Both kinds contributed enormously to the development not only of free and open source code, but to the Internet —  the place where most of that code was written and on which most of it runs.

Within the Net's vast environment is an abundance of free and open building materials, all growing in number and quality. There is plenty of infrastructure you can pay for here, of course (with most of the money going to your cable or phone company), but the Net's nature is essentially one of abundant liberty and minimal cost.

Still, a decade and a half have passed since the first graphical browsers appeared, and most of us still barely understand what all this freedom and abundance does -- and can do -- for our economy.

The Internet itself could hardly be more widely used yet less well-understood. Here we have a form of infrastructure that embodies both free-as-in-freedom and free-as-in-beer, that has much in common with the purely public goods we call gravity, sunlight and atmosphere, and is still seen by those who bill us for it as a valved "service", on par with call waiting and premium TV channels.

Way back in the Web's Paleozoic, I wrote my first piece for Linux Journal (actually for its short-lived sister/insert, WEBsmith). It was titled "A Bulldozer Through The Intersection". The title played off a Newt Gingrich line: "The key to a monopoly is to get in the middle of an intersection and charge rent." Today no sentiment could hardly be more Old Skool. Yet the New Skool is barely in session. Urges to valve abundance and package it as scarcities still run strong. In some cases this makes sense. It really does cost money, for example, to connect homes and businesses to the Net's backbones, and ways must be found to pay for that. (Not saying the carriers have found the right ways, just that they have capex and opex, both of which need to be covered, somehow.) In other cases, such as with free and open source software, no "business model" is required. Yet the absence of one is still hard for many to grok.

For example, all of us encounter folks in business who understand the warm and fuzzy reasons why developers write free and open code — for the esteem of peers, for example — while missing the plain practical purposes, and their cumulative effects.

This is why a mountain of free and open code has grown in our midst, and people can still say they don't understand how you can make money with it. They miss the central point: that you make money because of it. Your business is not selling software. Your business is something else that is made possible by software produced in liberty and free for the taking. (And for you to improve, if you like.)

Several years ago Steve Larsen of Krugle (a code search engine) told me there were already more than half a million open source code bases in the world. I asked Steve recently what the number is today. He said he had no idea. The sum is beyond estimation.

So we have an ecosystem of abundant code and scarce imagination about how to make money on top of it. If that imagination were not scarce, we wouldn't need Nicholas Carr to explain utilities in clouds with The Big Switch, or Jeff Jarvis to explain how big companies get clues, in What Would Google Do?

So, to help close that same gap, we here at Linux Journal came up with an idea for a panel at SXSW in Austin, which starts tomorrow. The title is Rebuilding the World with Free Everything, and it'll happen at 3:30 next Tuesday, following a keynote conversation between Guy Kawasaki and Chris Anderson, Editor-in-Chief of Wired, and author of both The Long Tail and (most significantly for our purposes) Free: The Future of a Radical Price. I first met Chris many years ago when he was an editor for The Economist. Since then I've come to know him as an economist who gets tech, a techie who gets economics, and an original thinker who breaks both molds.

Chris will be joining our panel, along with Katherine Druckman (webmistress here at LinuxJournal), William Hurley of Invisisoft (and much more), Dave Taylor (of FilmBuzz, Linux Journal and intuitive.com), and yours truly, who will serve as the moderator. Also joining us will be everybody in the group we used to call "the audience". And you: Readers here who can get a jump on the conversation.

Here are a few questions to help get us started...

  • Why is it that people find "free" so hard to understand?
  • What are the connections between free code and free beer?
  • What are the advantages, in a crashing economy, to free?
  • Yes, it's not "free everything", but it's still free lots-of-stuff. How do we decide which forms of free we take advantage of?
  • How is the abundance of both free-as-in-freedom and free-as-in-beer changing the field of economics?
  • What, if any, investors out there understand the opportunities with free?
  • What does all this do both to the concept of "intellectual property" and what wisely can be done with it?
  • Where are the engineers (besides Google's founders) who have leveraged understanding both free-as-in-freedom and free-as-in-beer into big-as-in-business?
  • What are some of the Big Business opportunities that are yet to be exploited by those who know the real value of free?

More fodder:

Look forward to seeing you there — in spirit if not in the flesh.

______________________

Doc Searls is Senior Editor of Linux Journal

Comments

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

How to get free beer!

Free Beer's picture

Hey,

Check out the article i wrote. 12 ways how to get free beer
http://fr.ee/article/12-ways-to-get-free-beer

Free Beer!?

Chris Simms's picture

Wait, did someone say free beer?? Haha.

"Coming at this same issue from the opposite direction, there seems to be a widely-held tenet that making money from "free" software goes against the principles of Free Software."

Interesting. I know there was a recent takeover of some widely used message boards a few months ago in a niche market I do business in. Some of the members of the boards were actually pretty upset when they learne their posts were going to used to make money for another person. They boycotted the forums and made their own.

It's interesting how people will react in these situations.

--Chris T
Golf Blog

#Free 2.0

Andy Gibson's picture

Hey Doc - I really enjoyed the SXSW panel, although I like your list of starters here more. My conversation with Chris A continues here - I can't tell if I'm talking crap or not though so very grateful for some fresh perspectives.

Thats a great one. Enjoyed

Richie1223's picture

Thats a great one. Enjoyed reading it thanks.

Hello? It's opportunity knocking!

A nony mouse's picture

Coming at this same issue from the opposite direction, there seems to be a widely-held tenet that making money from "free" software goes against the principles of Free Software.

Google is not an ideal example

Wladimir Mutel's picture

It is steadily becoming a typical greedy corporation with all ensuing jerkdom. The future should not belong to corporations and big businesses. The time of these models and patterns has passed. However that's only my opinion. Whoever would like to share it with me.

Some possible discussion points

Jose_X's picture

-- There is a strong lure to mint money using this same system. Everyone can't be a gazillionaire, but everyone considers that potential to be tempting to some degree.. to leverage the free system to create a lock-in world with super-low overhead except for the artificially created ones you own. Eventually, everyone finds out only so many monopolies can be supported and they decide that playing nicely (to some degree) might not be a bad idea. Once enough are playing nicely, it makes it more difficult for others to abuse the system. Surely, they'll keep trying, however.

-- Let's do a FOSS/wikipedia thing to document all the problems with patents, at least of the software kind. Hint: we should not pretend software is different from other intellectual pursuits.. but it is cheaper than manufacturing industrial products.. "promote the progress of the sciences and useful arts" -- monopolies don't really do that, esp, for software.

-- [With wikis, etc] Putting our collective heads together on the same blackboard, we can help put an end to broken laws like software patents and any other. Being a legislator, judge, etc, will be much easier to get right in the future and less forgiving for not getting right, because citizens will go along for the ride. We document the desired features of the law (in some case, complementary either/or features) and every argument pro/against the various sections or related arguments. [I'd like to see someone patent that.. to prove a point.]

[There is a great paper that came out recently arguing extensively against intellectual property. Any fair compromise should be much closer to freedom than to monopolies. The burden of proof should be on the monopoly-seekers. [The US laws are broken since their tests to grant monopolies are inconsistent with the US Constitutional requirements.] Also RMS has done great video presentations against patents. Search youtube for a particular 11 part series from not too many years ago.]

White Paper
Linux Management with Red Hat Satellite: Measuring Business Impact and ROI

Linux has become a key foundation for supporting today's rapidly growing IT environments. Linux is being used to deploy business applications and databases, trading on its reputation as a low-cost operating environment. For many IT organizations, Linux is a mainstay for deploying Web servers and has evolved from handling basic file, print, and utility workloads to running mission-critical applications and databases, physically, virtually, and in the cloud. As Linux grows in importance in terms of value to the business, managing Linux environments to high standards of service quality — availability, security, and performance — becomes an essential requirement for business success.

Learn More

Sponsored by Red Hat

White Paper
Private PaaS for the Agile Enterprise

If you already use virtualized infrastructure, you are well on your way to leveraging the power of the cloud. Virtualization offers the promise of limitless resources, but how do you manage that scalability when your DevOps team doesn’t scale? In today’s hypercompetitive markets, fast results can make a difference between leading the pack vs. obsolescence. Organizations need more benefits from cloud computing than just raw resources. They need agility, flexibility, convenience, ROI, and control.

Stackato private Platform-as-a-Service technology from ActiveState extends your private cloud infrastructure by creating a private PaaS to provide on-demand availability, flexibility, control, and ultimately, faster time-to-market for your enterprise.

Learn More

Sponsored by ActiveState