November 2006

Linux, Commercialism, and Community Norms

by on November 22, 2006 · 12 comments

I seem to have been unclear in my previous post about software firms as intermediaries. Don Marti objects:

Software developers have to eat, and the GPL is not just about “join us now and share the software”. Homo economicus writes GPL software, too.

Besides acting as a “codification” of science-like norms on information sharing, the GPL is also about making the code itself a commodity in order to drive up the value of the services–support and maintenance programming–that are complements to it. Think of it as a bar: the code is just dry, salty free pretzels without the cold beer of maintenance and support. When a developer decides to release software under the GPL, he or she is typically making an economically rational decision to invest in himself or herself.

I know people who spent several years of their lives, when they could afford it, as “starving hackers” contributing to GPL software, and who are now “Senior Architect” types at various big IT companies, paid the big bucks to support and continue development of software they invested a lot of time in, and that they’re uniquely qualified, technically and social-network-wise, to continue supporting. The incentive that the GPL provides for creating software value is a powerful alternative to the “will work for options” model.

I entirely agree. When I said that the GPL community is non-commercial, I didn’t in any sense mean that it’s anti-commercial. Certainly, many people participate in the Linux community because they expect it to pay off for them down the road, and that’s certainly not frowned on within the community.

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If Thanksgiving Travel Woes Get You Down . . .

by on November 22, 2006

. . . you might want to mark your calendar for December 13th.

The Cato Institute is having a book forum on Overblown: How Politicians and the Terrorism Industry Inflate National Security Threats, and Why We Believe Them (Free Press, 2006). In the book, Ohio State University national security expert John Mueller puts terrorism in the context of other national security threats our country has faced in the past, and challenges us to assess the threat of terrorism rationally.

[Non-D.C. TLFers, it’ll be Webcast.]

Yesterday, security expert Bruce Schneier published a TSA Security Round-Up that might make you thankful just to get to and from your family home this holiday. Our country and government can do better.

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Free Software Firms as Intermediaries

by on November 22, 2006 · 4 comments

In a comment responding to my previous post, engima_foundary makes an excellent observation:

In a nutshell, I consider a Free Software company as a thin membrane, with their clients on one side and the developers and Free Software on the other. They mediate between the two wowrlds, and the value they bring to their clients consists of two things: (1) Service – which is their responsiveness to their costomers & (2) their reputation and integrity.

Well, guess what-they just assinated their own integrity. So all they have left is service, and that means they are at a disadvantage to their competitors.

I think this is an excellent description of what a free software company does. Fundamentally, they create value by serving as an intermediary between two distinct communities that operate on somewhat different norms. On the one hand, you’ve got the free software community, which is organized on fundamentally non-commercial principles. The coin of the realm is code, not money. You gain a good reputation in that community by writing great code and making it available for others to build on, and by respecting the communities strong norms of reciprocity.

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Illogical Fears about Online Gaming & Net Neutrality

by on November 22, 2006

I’ve just finished reading a new report by a research firm called Ramp Rate about Net neutrality and the online gaming market. Now I’m accustomed to Net neutrality supporters employing gloom-and-doom, Chicken Little-esque rhetoric in support of government regulation of broadband networks, but I was shocked to see the same rhetoric laid on so thick in a study by industry consultants.

The sky-is-falling rhetoric kicks off with the very title of their piece: “Every Time You Vote against Net Neutrality, Your ISP Kills a Night Elf.” The authors go on to paint a picture of the coming apocalypse if we do not adopt Net neutrality regs right away:

“What will be murdered with no fallback or replacement is the nascent market of interactive entertainment–particularly online gaming. Companies like Blizzard Entertainment, Electronic Arts, Sony Online Entertainment, and countless others, have built a business on the fundamental assumption of relatively low latency bandwidth being available to large numbers of consumers. … Killing off these blossoming networks, with their own economies (potentially taxable when converted into real-world cash), would result in drastic, irreparable harm to consumers, technology developers, the economy and tax revenue–and even the ISPs themselves.”

Murdered? Killed off? Oh my, who knew the end was so near?! Of course, the end is not upon us and the online gaming market is not about to be “murdered” because of a lack of Net neutrality regulation. In fact, just the opposite could be the case as I will explain below the fold.

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Do FCC Rules Hinder Minority Ownership?

by on November 22, 2006

Communications Daily (subscription) reported Monday that Clear Channel’s upcoming sale of 448 stations will likely be structured in big blocks of licenses–with only about a dozen transactions in all. One reason, according to Comm Daily, is the FCC approval process. With big batches, the article reports, quoting a broadcast property appraiser: “They are not going to want to be involved in 400+ transactions. It would become a nightmare in terms of documentation.”

One consequence of this is that minority owners and small businesses would find it harder to buy acquire licenses, at least in the initial round. In other words, the FCC ownership rules–justified as a way to increase diversity in media–may actually be hindering minority ownership.

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Why There’s No Cure for the Common Cold

by on November 22, 2006 · 2 comments

Phil Windley points us to the reason.

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Why Novell Needs the Linux Community

by on November 22, 2006 · 8 comments

Novell and Microsoft have been spending the last few days releasing dueling statements concerning the implications of their recent agreement. Novell insists that Linux doesn’t infringe any Microsoft patents, and that their patent agreement with Microsoft shouldn’t be interpreted as an admission to the contrary. Which raises the question of why you’d pay $40 million for superfluous protection. Microsoft says that they “have agreed to disagree” on the subject.

It’s not clear where this is going to end up, but one thing that’s absolutely clear is that this has become a PR nightmare for Novell. A lot of people in the Linux community seem to feel betrayed by Novell’s behavior. The agreement has already done damage that will take months for Novell to repair.

Braden asked on Monday how “a boycott would materially hurt Novell.” Below the fold, I’ll see if I can elaborate a bit more on why I think the open source community has so much leverage in this sort of situation.

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A Practical Argument against Copyright Protection

by on November 22, 2006 · 18 comments

Patri Friedman has an interesting argument against “intellectual property”:

An argument by Milton Friedman about “consensual crimes”, however, pushes me more in the anti-IP camp. Libertarians, of course, decry such “crimes” for moral reasons, but his argument manages to be both consequentalist and general. He points out that consensual crimes have a naturally higher enforcement cost and worse effect on civil liberties.

The reason is that for a normal crime, such as theft, there is someone actively trying to stop the crime, and with the interest to report it and help solve it. For a crime such as prostitution, neither the buyer nor the seller are being harmed. Hence neither will report it, and neither will help solve it. On the contrary, both have an interest in hiding it. So to catch someone at such a crime, you need to spy, to mole, to entrap – because the participants aren’t going to help.

Regardless of your moral beliefs, anyone with a practical bent understands that enforcing laws has costs, and those costs must be measured against the benefits of stopping the bad activity. This argument adds some consequentalist punch to libertarian morality by suggesting that the class of activities we think should be legal (consensual ones) will naturally be more expensive to ban than the class we think should be illegal (nonconsensual ones). In the specific case of IP, the copier/user and the copied are engaging in consensual activities – as with prostitution, it is only some distant authority who wishes this activity to stop.

There’s clearly something to this. The recording industry’s war on file sharing does have some similarities to the war on drugs. But even if we were to conclude that it was hopeless and ought to be abandoned (which I’m not willing to do), I think the implications would be less sweeping that Friedman suggests.

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Antitrust Policy – on YouTube?

by on November 21, 2006 · 4 comments

Wow, there’s something for everyone
on YouTube! I have to give props to the American Antitrust Institute for their
slick film on antitrust regulation (to steal from Tim’s recent post, I avoid saying
"antitrust enforcement" or "antitrust authority" – and so should you – because
these phrases impart too much credence to antitrust law).

The film – called Fair Fight in the Marketplace – is an example
of a public policy organization making a difficult regulatory issue easier to
understand, while at the same time persuading the audience to its way of
thinking. Predictably, their film touts the theoretical aspirations of antitrust policy, and leaves out the messes that are often created by antitrust regulation.

The movie starts from a premise that antitrust law actually works for consumers. However, most believers in free markets find that reality doesn’t match this assessment. While the ideals of antitrust regulation might be
appealing, its reduction to practice has been a costly endeavor. Milton Friedman
had this to say about antitrust in a 1999 Cato Policy Report: 

My own views about the antitrust
laws have changed greatly over time. When I started in this business, as a
believer in competition, I was a great supporter of antitrust laws; I thought
enforcing them was one of the few desirable things that the government could do
to promote more competition. But as I watched what actually happened, I saw
that, instead of promoting competition, antitrust laws tended to do exactly the
opposite, because they tended, like so many government activities, to be taken
over by the people they were supposed to regulate and control. And so over time
I have gradually come to the conclusion that antitrust laws do far more harm
than good and that we would be better off if we didn’t have them at all, if we
could get rid of them.

In a classic 1983 article in Regulation magazine, Fred Smith, President of the Competitive Enterprise Institute, has this to say in "Why Not Abolish Antitrust?":

Antitrust laws, in their static way, ban activities for which officials and scholars have not yet discovered the rationale; markets are more dynamic than that. 

One can go on and on about antitrust regulation. But the main point is this: way too many people place too much faith in the antitrust dogma without measuring its real results. Like any form of economic regulation, there needs to be a cost/benefit analysis. It’s fair to say that antitrust regulation has costs that exceed its benefits. Too bad "Fair Fight" left out this fair criticism.

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Wal-Mart to Sen. Edwards: No Cutting in Line for PlayStation3

by on November 21, 2006 · 2 comments

Just like millions of other Americans, it seems former Sen. John Edwards is keen to get his hands on a PlayStation3. So much so that an Edwards staffer last week contacted the Raleigh, North Carolina Wal-Mart to reserve one for Edwards and his family. Later the same day, however, Edwards gave a speech denouncing Wal-Mart, telling a story about how his son chided another student for buying shoes there.

Shoes of course aren’t Playstations, which–it seems–are a necessity. Still, the discrepency didn’t escape the notice of Wal-Mart. The next day, the company issued a press release –tongue firmly in cheek–inviting Sen. Edwards visit his local store. The release went on, however, to note that:

…the PlayStation3 is an extremely popular item this Christmas season, and while the rest of America’s working families are waiting patiently in line, Senator Edwards wants to cut to the front. While, we cannot guarantee that Sen. Edwards will be among one of the first to obtain a PlayStation3, we are certain Sen. Edwards will be able to find great gifts for everyone on his Christmas list–many at Wal-Mart’s “roll-back prices.”

This isn’t exactly your typical corporate PR language. Someone in Bentonville, it seems, was pissed, and wasn’t afraid to let it be known. And rightly so. Wal-Mart has done far more to improve the lives of ordinary Americans than any politician, Sen. Edwards included–yet has long been a whipping boy of those politicians. It was right to hit back.

No word yet, on whether the senator ever got that Playstation.

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