We all rely daily on free and open source software, whether we know it or not. The entire Internet is held together by open source software. The cheap router that powers you Wifi network at home uses the Linux kernel. Your android phone is based on the Linux kernel. Google servers run Linux. In 2014, almost everyone is a Linux user.

For most people, the financial value of this software is an abstract concept. I think that most people assume that open source software must be cheap.

On the contrary, producing quality open source software is tremendously expensive. And the financial investment grows every year.

How much did it cost to write the millions of lines of the Linux kernel? García-García and de Magdaleno estimated the cost of the Linux kernel, as of 2010, to 1.2 billion euros. That is how much it would cost of any one company to redo the Linux kernel from scratch.

You might assume that programmers working on the Linux kernel are hopeless nerds who live in their parent’s basement. In fact, most of them are highly qualified engineers earning 6-figure salaries or better. So the financial estimate represents real money. It is not a virtual cost.

Of course, the Linux kernel is a tiny fraction of all the open source software we rely upon. Most open source developers will never contribute to the Linux kernel: it is reserved for a small elite. According to the Linux foundation, the cost of building a standard Linux distribution (in 2008) would have been over $10 billion.

So what is the value of all open source software beyond Linux?

It helps to realize that software is a huge business. In Europe, companies and governments spend over 200 billion euros a year building software. To put this in perspective, the movie industry in the US generates about 10 billion dollars in revenues. In the United States, 1 out of every 200 workers is a software engineer. A very sizeable fraction of all “engineering” today is in software.

Of course, not all of the software is open source. Still, Daffara estimates the financial value of open source software, for Europe alone, to over 100 billion euros a year.

So why don’t we have more open source drug designs, movie content, textbooks, and so on?

The common argument is that nobody will be willing to invest, in say, a new textbook, a new drug or a new show if anyone can copy and redistribute it for free—the investment is too large.

But I think that the real difference is cultural. In the software world, entire businesses grew surrounded by open source software. They learned to thrive with and through open source software. Companies that entirely reject open source are at a competitive disadvantage. The same happened in the fashion industry. Designers assume that other people will copy them. In fact, designers hope others will copy them.

Other industries, like the pharmaceutical or education industry, have internalized the patent and copyright systems. That is why college students have to pay over $100 for a typical textbook whereas they can get an operating system that costed billions to make for free.

I think that if we had had a world where it is fair game to copy and distribute a textbook for free, we would still have textbooks. I think they would still be excellent. I also think that textbook authors would get paid, just like the programmers do.

Would the overall result be better? I do not know but it is fascinating to imagine what such a parallel universe might look like.

Credit: Thanks to Christopher Smith for useful pointers.

7 Comments

  1. At least in Finland they have begun to make textbooks available under permissive licenses. Example: http://avoinoppikirja.fi/ . I am sure you can find examples such as this elsewhere.

    Likely at least some of the business models we’ve seen at open source work in these sort of domains too. You can still print the books for instance and make money out of that. The writers get some padding for their CV and maybe earn some opportunities they would have missed otherwise.

    Just having things open doesn’t mean there cannot be business. Openness enables new kind of ways to collaborate and in some ways raises the bar higher. I would say that’s the greatest benefit.

    Comment by Juho Vepsäläinen — 14/4/2014 @ 13:31

  2. There is a list of open source books for tech:
    http://www.freetechbooks.com/

    Comment by Ghislain Hivon — 15/4/2014 @ 13:16

  3. I think it’s worth remembering that there are plenty of corners of the software universe where there is no open source. And plenty of others where the open source software that exists is a pale imitation of the closed alternatives.

    Though there may be substantial cultural components to these variations, I think there are “harder” business model issues at play too. That is, _someone_ has to pay the bills for the hard, dirty work of software development and maintenance.

    I agree that it’s interesting to think about non-traditional approaches to intellectual property (or whatever you want to call it, for those who are in the camp that dislikes that term). However, I disagree with your implication that existing arrangements in various industries are mere accidents of habit.

    Comment by Ben — 15/4/2014 @ 16:34

  4. All these things that can be free, generally have some industries/companies that support these works as an investment. Like Linux Kernel: Google, IBM, …
    http://www.linuxfoundation.org/publications/linux-foundation/who-writes-linux-2013

    Many books were made free in order to increase the interest in some product/service.
    Maybe a fiction writer could be paid to make a free book, so they can release a TV series after that.
    I have no idea how they can benefit in the pharmaceutical industry.

    Comment by newbie — 15/4/2014 @ 17:48

  5. @Ben

    That is, _someone_ has to pay the bills for the hard, dirty work of software development and maintenance.

    Absolutely, but people have to pay the bills whether it is open source or not.

    And open source software works because people do the hard and dirty work. Sure, there is lots of hobby projects… but this is not what my post was about.

    The Linux kernel is the real thing… not a hobby.

    Comment by Daniel Lemire — 16/4/2014 @ 8:30

  6. [Sorry if I'm picking nits here, but ...]

    I understand that there are tremendously successful open source projects (Linux, language implementations, databases, network servers, web browsers, …).

    There are also good, but persistently marginal open source projects (lots of desktop apps).

    And there are software domains where open source is beyond marginal (games, boring corporate bookkeeping, specialized manufacturing stuff, …).

    My understanding of your main hypothesis is that the “real difference” between domains where open source flourishes and those where it does not is cultural. That is, some markets are populated by people who get the value of open source and some are not. While I agree that culture is important, any project or business needs a viable funding model to thrive.

    An example from a market I know something about: The licensing costs for semiconductor design automation software are astronomical. There are open source cousins of the closed tools, but very, very few people use them for designing real products. Are these (closed source) tool vendors at some kind of competitive disadvantage? If so, I don’t see how.

    What’s really important to me is smart advocacy for open source. In general, I like open source a lot. I’ve contributed to open source software. But I think it’s incorrect to assume that open source is simply and universally a better model than closed source. And starting from that assumption doesn’t seem particularly productive to me.

    If I found myself in conversation with a leader in the textbook market (or an entrepreneur who wanted to get into the textbook market), I would definitely not say “look, open source is successful in domain X [which has no connection with textbooks], therefore you should give open source a try in your domain”.

    Ben

    Comment by Ben — 16/4/2014 @ 10:33

  7. @Ben

    Are these (closed source) tool vendors at some kind of competitive disadvantage?

    No. But that wasn’t my claim.

    Rather my claim is that once everyone adopts open source software, once it is part of the culture, in some domain, then it becomes very hard for competitors to reject it.

    But I think it’s incorrect to assume that open source is simply and universally a better model than closed source.

    That’s not what I wrote. Read my closing paragraph again.

    I would definitely not say “look, open source is successful in domain X [which has no connection with textbooks], therefore you should give open source a try in your domain”.

    I agree.

    Comment by Daniel Lemire — 16/4/2014 @ 10:49

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