[tcaudilllg]

Your opinion.

[Rainer Deyke]

"Economic growth" is a dumb concept.

Imagine there was a source of infinite food that everybody on the Earth had access to. There would be no more world hunger. People would no longer have to work long shifts in sweatshops in order to feed themselves and their families. People would work less. The economy would slow down. This would be a good thing. We would be one step closer to living in paradise.

Open source software is like that, except for software instead of food.

[Ninkazu]

They wouldn't work less. They would work on something else.

[Rainer Deyke]

Most people won't work 20 hours a day unless they will literally starve if they don't.

[RampantCoyote]

Does it inhibit economic growth?

No. I don't think it does. Not inherently. Competition is good (for the consumer), and open-source software provides a very low cost (hard to beat free) competitor for several products. In turn, these products - painful as it may be - have to innovate and be that much better than the free alternative. If you expect people to fork over $900 per seat for 3DS Max instead of getting Blender for free, you are going to have to provide $900 / seat more of value. Customer support, training, third-party deals, better features, whatever.

So Open Source software forms something of a "pace car" for the industry.

I'm not really threatened by Open Source, even though software is my livelihood. I think there are many ways where it works and can work well, as it either doesn't need to be monetized directly (for example, a shared tool that generates enough interest to attract many contributors), or it can be monetized indirectly (selling service and expertise to support the system). But its very nature prevents Open Source from becoming a major threat in the long term.

To invoke Rainer Deyke's example, let's say food is free... it rains mana from heaven every morning. It's "free" - but I might still pay somebody for mana if they'll gather it for me and save me an hour of mana-gathering. And I may still pay premium bucks for a good steak dinner. Maybe some parts of the food industry might be wrecked by free mana. But on the whole, in the long term, it can continue to thrive. And grow.

I should note, as something of a counter, that the standard of living in the U.S. is still near the best in the world, with virtually no citizen in danger of starving to death. And yet it remains a relatively industrious country. You have a mix - some folks still work extremely long hours even when they are making six-digit figures, and some people are happy to sit back and collect welfare checks.
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Tales of the Rampant Coyote - Old-School Game Developer talks Indie Games, RPGs, and the Games Biz

[RedSlash]

People profit off open-source software, so no, not really.

[Hajo]

I feel economic growth to be a bit of a misconception, since our planet has limited resources and at some point further growth will be very difficult or impossible.

We should rather try to find ways of living well without need for economic growth. I don't know if this is possible, but I think it is worth being researched and tried.

Open source software in my opinion does not inhibit economic growth, though. Companies make money from it, have employees that work on open source software. Other open source software is made by hobbyists, and they create something of value in their private time. I don't see how that'd inhibit economic growth.

I still think open source software can support living well in a world without economic growth, because of it's free and shared nature. So to me it seems to be a good thing, independent of the premise in the original question.

[RampantCoyote]

I disagree, Hajo. Otherwise we'd still be a hunter-gatherer society spending nearly 100% of our waking hours trying to survive. The fact that we've got time to devote to making and playing RPGs is an artifact of economic growth.

The classic fallacy is the belief that the economy is a zero-sum game. In order for me to prosper, your own prosperity has to be sacrificed. A lot of big business tycoons view the world that way, but it's really not.

Economic growth is - at its heart - making people more efficient and productive with their time. Then they can either bank the savings on a more leisurely lifestyle (hey, I'm a fan!!!!), or spend the same amount of time doing more / making more. That's why technology has enjoyed such an exponential growth over the last two hundred years.

Open Source software, in that way, really just enhances economic growth. I benefit from Open Source software. In theory, creators of Open Source software also derive some benefit - if only in that they get their workload lightened by many hands, with the downside being the potential loss of competitive advantage (since the same tool is shared by all). But if that tool isn't the source of your competitive advantage, there's really no sacrifice at all.
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Tales of the Rampant Coyote - Old-School Game Developer talks Indie Games, RPGs, and the Games Biz

[Hajo]

[RampantCoyote]

My feeling is that if you are spending nearly 100% of your time just surviving, that doesn't leave much time for innovation. But you are right, there is kind of a chicken-or-the-egg problem there.

But economic growth, to me, doesn't mean more factories. Being able to take advantage of working together via the Internet, instead of commuting long distances daily, is to me a factor of "economic growth." It increases the efficiency of production, and costs less in terms of energy usage (I'm pretty sure...)

Esoteric, I agree. I'm not an expert either. I just play one on TV. Well, no, I don't do that either.... ;)

Oh, and so long as I'm spouting off opinions (absolutely free and worth every penny) and I will throw in my opinion that software piracy, as opposed to open source, CAN and DOES negatively impact economic growth.
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Tales of the Rampant Coyote - Old-School Game Developer talks Indie Games, RPGs, and the Games Biz

[Rainer Deyke]

Piracy creates wealth from nothing. From a global perspective, it's clearly a net win. It just sucks to be the creator who doesn't get any part of that wealth.

Consider that company A creates overpriced software product X. There are three things I could do:

1. I could create a competing product, sell it, and put all of my proceeds into advertising so that people by my product instead of product X.

2. I could create a competing open source product and give it away for free. The fact that it's free is its own advertising.

3. I could take product X and give free copies to everyone who wants them. Instead of making a competing product, I would spend my time volunteering at a homeless shelter.

In all three scenarios, company A loses customers. In all three scenarios, I lose my time and gain nothing. In scenarios 2 and 3, the users of my competing product win because they save money. In scenario 3, the homeless people in my town also win. From a global perspective, scenario 3 is clearly more efficient than scenario 2, just as scenario 2 is clearly more efficient than scenario 1.

[RampantCoyote]

I can argue that. :)

Now I agree with you that in many ways piracy may "create wealth from nothing," but I also maintain that it slaughters the goose that lays the golden eggs. You are talking about something that is similar in many respects to a principle in game theory called the Tragedy of the Commons, where the short-term benefit is derived by individuals, but the common good is destroyed in the process.

The counterpoints:

In case 1, what might logically follow (and has followed many, many times in the past):

a) You create a competing piece of software, spend money on advertising (which provides jobs and income for a lot of people, don't forget - it doesn't disappear into the ether).

b) The Company producing Product X (let's call it X-Soft) realizes that the party's over - they have a competitor. Probably more than one, if it's a really cool, wonderful product with lots of commercial potential. So now they have to make their early lead pay off. They take time to improve their product and make it even more awesome. And, in response to market pressure, they lower their price. So they now have a better AND cheaper product. Which maybe does something cool, like revolutionize the Internet, helps doctors cure five kinds of cancer, teaches kids financial literacy, or recreates the feeling of playing your first Final Fantasy game. Whatever. It's better. And there's lots of choices.

c) The combined effort of the advertising for the clashing titans (and wannabes) actually grows the combined market. What was once an overpriced, niche product is expanding, and creating new secondary industries.

d) Four of the people who would have been at the homeless shelter in scenario 3 aren't there now. One of those guys works in the warehouse for X-Soft, which didn't have to go out of business afterall because people actually bought their software instead of pirating it. Two other guys work in town near these two companies that are thriving in this growing industry. And the fourth guy actually used the software you created to compete with Product X to start his own business. And incidentally, HE is also putting in 5 hours a week at the homeless shelter.

I've seen scenarios play out this way several times in the software industry in the past. Not so much in the last ten years (since the dot-com bubble burst), but it happens all the time on lesser levels.

Scenario 2 can run the same way - witness what happened with the browser wars in the early days, which was pretty analogous with free software duking it out in a clash of titanic proportions. Because all sides realized that the opportunity to monetize the gains for having a dominant platform on the back-end. Netscape (now Mozilla / Firefox) versus Microsoft's Internet Explorer. If it weren't for that, we probably wouldn't have Google today; way might not have YouTube or EBay or Amazon, or ... hey, even The Pirate Bay.

Hmmm... come to think of it, while not strictly the case, the browser wars are probably the single best counter-argument to the idea that Open Source software (or, rather, "free software") impedes financial growth.
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Tales of the Rampant Coyote - Old-School Game Developer talks Indie Games, RPGs, and the Games Biz

[tcaudilllg]

Is it a good thing to have an advertising industry? If you think about it, it raises the barrier to entry for new products: you don't just need enough money for production, you need enough money to make sure everyone else knows about your product before the other guy notices.

[Ninkazu]

[RampantCoyote]

Both good points.

I read a book a couple years ago about the fallacy of advertising - how there's mounting evidence that advertising in its purist form does not give the ROI that it claims it does, but most companies stick with out out of fear of the only other alternative they see. So if that's true - they are really throwing their money away with advertising in many cases.

So if that's correct, I guess maybe advertising's biggest success is advertising itself.

The book was quick to point out other, more targeted methods of marketing that work much, much better.

Word-of-mouth is awesome if it works. But while there are many companies that thrive exclusively on word-of-mouth, it's even more hit-or-miss than others. I've seen a lot of great products languish because of solid marketing (not necessarily advertising). And I've seen a lot of mediocre products thrive mainly because the company knew how to market the crap out of it. *cough*Windows*cough*.

Advertising has just gotten a bad name because those guys really don't know when to quit. I mean, I like being marketed to - I like knowing what games are coming out and what they are supposed to be like (all that sounds like news, but it's 99.9% marketing). I like knowing about opportunities that will make my life better in whatever way. But there's a certain point where I invite marketing, and there's a certain point where it's intruding. And your usual advertising dude cannot tell the difference.
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Tales of the Rampant Coyote - Old-School Game Developer talks Indie Games, RPGs, and the Games Biz