Friday, April 23, 2010

Open Source: A Symptom of our Own Nirvana?

This week's columnist is Julian Egelstaff from Freeform Solutions. He writes:

Which is more incredible? That a group of people who have never met face to face can build a piece of software together over the Internet, or that the economics of the situation actually work to make that activity sustainable?

We spend a lot of time in open source circles navel gazing about the technology and how cool or incredible it is. But the technology doesn't exist in a vacuum. New business models arise because of some peculiar economics that are literally the opposite of everything that came before, and they don't just affect the Internet and open source. Our whole world is changing as we gradually turn many aspects of our lives from being based on scarcity into being based on plenty.

About 18 months ago, comedian Louis CK became the latest Internet meme with his "Everything is amazing, nobody's happy" story. I think it's another perspective on this same issue. He says: "Everybody on every plane should just constantly be going, 'Oh my God! Wow!'" Air travel is just one example where we now have a plentiful, accessible solution to a problem (long distance transportation), which used to be very difficult and impractical for most people to solve.

This inversion of scarcity is the economic hallmark of the Internet and open source. A lot of traditional economic models are built on premises about scarcity: things have a value because they are in demand, because there isn't enough to go around. This is a proud tradition in human society. Archaeologists tell us that some of the earliest writing and mathematics was basically an exercise in accounting, to keep track of what was yours and what was mine, since there was a limited supply of pretty much everything. Cognitive psychologists have learned that human beings have a naturally keen sense of what is fair play and what is cheating, and evolutionary psychologists theorize that this is a product of developing complex social structures where successful interactions with others are a key part of survival.

In the past, it would not only be technologically impossible for people all over the world to collaborate on producing something, it would be completely unsustainable for them to then give away the product of their labour. But that is exactly what open source developers do every day.

One major reason why they can do this is that digital media is infinitely reproduceable at essentially zero cost. The artifacts produced by the labour on open source projects, have no intrinsic scarcity. The labour may be scarce, but the products of that labour can be shared infinitely.

It's not that simple though. CDs were first introduced in 1982, and from that moment onwards, music was available digitally, and infinitely reproduceable in theory. But it wasn't until the late 1990s that a few other conditions were met, which in turn led to the seismic shifts in the music industry over the past ten years:

1. affordable home computers

2. large enough hard drives

3. a compression algorithm (MP3) that made the digital media small enough for easy transport

4. commonly available high speed internet connections

Whether you're talking about music or open source or something else, rest assured that once infinite reproducibility pairs up with a technological infrastructure that enables sharing on a mass scale at low or zero cost, scarcity is on the way out and plenty is on the way in.

All this sharing produces another kind of plenty: plenty of knowledge. Successful open source communities do not hoard knowledge, they put it out there for all to see and contribute to. Keeping secrets has been, and still is, an important part of many value-producing systems. But in open source, secrets are bad.

In open source, the way to get ahead is to out-share and out-contribute everyone else. In such an open economic model, value comes from being embedded as deeply as possible in the ecosystem of the software or project that you're working with. Being at the epicenter means that you have the most opportunities to connect with others.

We live in an amazing world full of examples of the transformation of scarce resources into plentiful ones. It's not just open source and the Internet, although they provide the most radical examples to learn from. The green revolution in agriculture is another example where drastically altering the availability of a resource changed the whole world. Renewable energy sources promise a world of truly limitless power. When that happens, will the economics of plenty be unstoppable?

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