Open source, free markets, and the capitalist urge for $0.00

Should open source worry us because it drives software pricing to zero? Not at all: that's what is supposed to happen in free markets.

Slashdot asks a provocative question: "Is Open Source Software a Race To Zero?"

Over time we've seen our business model eroding as other open source projects produce free versions of the same extensions and utilities that are our bread and butter. Something that was worth $5K last year is suddenly worth $0 because the free version is just as good as the paid. This same cycle is obviously having an impact on pure-play commercial software vendors. Is open source ultimately a race to zero?

It's a good question, but the answer is the same as if asked about free-market economics: yes. Yes, open source is a race to $0.00, because that is what free-market capitalism is all about.

Indeed, the "free" in "free and open-source software" is really about free markets, more than anything else. This is why Tim O'Reilly has been urging the open-source world to stop fixating on bits, whose price point is dropping to $0.00, and focus instead on data and higher-value services around data.

Open source is a free-market, capitalist phenomenon. It's all about driving yesterday's value to $0.00, and forcing the market to innovate new ways to discover and price value.

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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