19.1 Michael feldstein - open source, economics, and higher education  (Page 5/8)

In this world, Benkler argues, dramatically reduced friction makes practical certain organizational structures that we simply wouldn’t see in an industrial economy. The less resistance there is to overcome in a system, the less formal structure is required for transactions to happen. I didn’t have to lead an organized movement for my practical joke or the Wikipedia page to succeed. If I did, then neither would ever have happened. But because the costs of participation and coordination were so low, a wide range of people were able to find a wide range of reasons that were sufficient to motivate their useful participation.

And we don’t have to assume only non-financial motives such as the ones in my first two examples. To the contrary, the low transaction costs make a wide range of new business models feasible. For example, we know that that upwards of 50% of the total cost of big enterprise software systems are support and maintenance costs. If a company can invest a small fraction of the total resources required to develop a content management system by contributing to an open source project but sell support and maintenance to their customers, then they may be able to beat their proprietary competition on costs while still making a good profit. This economic model has been particularly successful for a little company called IBM. When business analysts say that IBM has transformed itself into a services company, part of what they mean is that it now makes less of its income selling licenses for its proprietary software and more of its income selling support for open source software such as linux and apache.

Professors in space

This is an oversimplification, of course. Despite the fact that this post is long-winded, I have barely scratched the surface here. The truth is that there are many subtle factors that affect the total friction in any particular open source ecosystem independent of those that are radically reduced in an information economy, and that any of these factors may mean the difference between success and failure. My point (or Benkler’s point, really) is that the success of open source in general seems counter-intuitive only when we fail to examine all of the forces at play. Further—and equally importantly for the audience that is most likely to be reading this post—once you lower transaction costs through the mechanisms of a network-based information economy, it turns out that you have a world in which academics can function rather well. After all, academics are the folks who willingly publish articles for free in journals that turn around and charge the universities for access to those same articles. The academe is built on the economics of prestige. It rewards through recognition, which is often the coin that drives open source projects—particularly open source projects that benefit relatively unprofitable markets such as higher education. It also allows individual programmers—the sort of Lone Rangers who tend to gravitate toward academia—to make part-time or full-time incomes by supporting open source for universities and other schools, either directly by contract or indirectly through the small support firms that the universities often hire. It thrives on the contribution of fractional resources (especially when time and creativity are the primary resources being contributed) by highly skilled knowledge workers.