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Open Source-onomics: Examining some pseudo-economic arguments about Open Source

It may well be true that no one can make money from Open Source. That only serves to discourage suppliers of software. However, on the demand side, consumers are saving tons of money by using Open Source. Since a penny saved is a penny earned, there is a strong economic basis for the success of Open Source after all. Anyone who is saving money will fight to keep the savings.

The demand side is the one that should drag the rest of the market to a regime of drastically lower prices. Vendors will see their margins shrink, many will close down, and newer, leaner ones will spring up. Vendors in other market segments will provide software, and eventually, the market will adjust itself to the new reality. Dollar volumes will go down even as unit volumes go up. The transition could be quite painful for suppliers of software, but no law of economics says it cannot happen. It is not a law of nature that vendors must continue to make the revenues and profits they are used to.

"Not paying for software will ultimately kill the industry"

There are the long-term worriers who don't like this scenario at all, even as they accept that it may happen. Yes, they say, customers will save money in the short term, but they're eating their seed corn. Customers need financially healthy vendors to be around to support them and continually improve their offerings. A herd of gnu may be happy at the disappearance of the local lion population, but the herd needs predators to cull its ranks of the weak and the sick, and to keep its gene pool healthy. Saving money by starving your suppliers is not in your own long-term self-interest.

This is a strange suggestion from people who probably describe themselves as market capitalists. When customers make a purchase, should they think about their own savings or should they worry about the supplier or the economy? Is it reasonable to ask them to choose costlier products because that will ultimately and indirectly serve their own interests? The argument smacks more of Marx than Adam Smith-"The State above the individual."