Live Free Or Die Hard ... Er, FreeLive Free Or Die Hard ... Er, Free
Mark Cuban has a way of making people listen even if what he says turns them off. This definitely applies to a blog post he made over the weekend: people who live by free are gonna die that way, too.</p>
Mark Cuban has a way of making people listen even if what he says turns them off. This definitely applies to a blog post he made over the weekend: people who live by free are gonna die that way, too.
The first couple of sentences in his article tell the story:
The problem with companies who have built their business around free is that it is far from free to remain successful. The more success you have in delivering free, the more expensive it is to stay at the top. [*]
Cuban's talking here about companies like Google and Yahoo!, who use ad sales a driver for tons of free content, or find various secret-sauce ways to monetize things. What I wonder is if Cuban's cautionary words apply to open source software. Is there, as Cuban puts it: always a company that replaces you?
Someone out there with a better idea will raise a bunch of money, give it away for free, build scale and charge less to reach the audience. Or will be differentiated enough, and important enough to the audience to maybe even charge more. Who knows. But they will kick your ass and you will be in trouble. ... When their BlackSwan competitor appears, they won't be in a position to compete with the newly presented model, particularly if its free based because their ecosystem has bloated to the point where they can no longer create anything for free.
It's tempting to think of software as just another form of content and to fit it into this analysis that way. It might serve as a warning shot for companies who want to get into the free-to-use, pay-to-support game: Watch out, 'cos you can't play this game forever. But I'm not sure the analogy works there for a couple of reasons.
For one, the competition that happens within the open source software world unfolds differently. It's entirely possible for a free program to be aced out by a for-pay program, simply because if there are features worth paying for that are not availably anywhere else (or not available at that level of quality), then the for-pay app is going to win. Free programs do still lose out to other free programs, but the nature of the competition is not the same -- and they both have for-pay software to contend with. But few people at free, ad-driven Yahoo! are worried, I think, about losing their news-reading audience to the for-pay ranks of the online edition of the Wall Street Journal. It may happen, but it's not what most of their competition consists of.
Another possible argument: free software and free content tend to sit at two ends of a spectrum of consumption. Content tends to be an endpoint or an end result; software tends to be what we use to create that end result. (The analogy that comes to mind, imperfect as it is, is that software is a renewable resource and content is not.)
The final refutation is simple enough. There's any number of companies out there right now who give away their core product, sell support and services, and make a tidy living: Red Hat, Alfresco, Ingres, Automattic, Six Apart, you name it. They may not be pulling down gazillions a year and their numbers may be few, but many can post consistently profitable quarters for themselves and their shareholders (if any), and are not overly worried about being eaten alive by the someone else giving things away for free.
What they sell, and what they make their biggest money from, are things that cannot realistically be given away. And while in theory there are open source projects with community support that might "compete" with paid-support outfits, I'd wager most any percentage of my last paycheck that the two aren't competing in the conventional sense of the word.
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