The End of the Software Gold Rush

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For many years, the software world has been dominated by increasingly powerful multinational corporate vendors. These have all succeeded based on an exploitative business model that exploits:

  • the market's unfamiliarity with digital abundance, e.g. by using methods of artificial scarcity
  • exploiting the market's general obliviousness to privacy issues in an era of pervasive surveillance,
  • exploitation of proprietary knowledge via government granted monopolies like Copyright, Patents, protection from reverse engineering, and
  • the "network effect" - which allows the big to get bigger, and their lead increasingly unassailable.

These models can result in businesses  that are insanely profitable - whose profitability has only been seen once before in history: during colonial expansion and full exploitation of entire cultures and civilisations. The software industry of the past 25 years has been a gold rush, and the effects of the virtual tailing piles and contamination are still be discovered. That said, the long term effects on the virtual world may not be obvious for quite some time - thankfully, those models are being challenged - and soundly beaten - by something quite different and far more admirable.

I believe, though a combination of gradually increasing market savvy and rapidly increasing commoditisation of the tools for software innovation via Free and Open Source Software, we are on the verge of extinction for exploitative software business models. We should be welcoming and hastening this end.

Free and Open Source Software (FOSS) exists in part as a response to this exploitation. FOSS, though not at all non-commercial, has the property of being inherently non-exploitative. It does this, in part, by commoditising software and software capabilities. It also commoditises the ability to innovate - it lowers the bar to participatiion in the online marketplace to "access to computer connected to the Internet."

Exemplars of exploitative proporietary business models like the Microsoft Corporation are now having to accept that their ability to exploit software has dimished by the web, which is built almost entirely on a FOSS foundation. It is where the innovation in software now emerges through collaborative marketplaces like

We can see the end for the exploitative model is nigh as we watch the newer generation of emerging corporate giants adopting FOSS from the ground up, and building and exploiting only thin veneers of proprietaryness on top - GitHub is a poster child of this approach... but their leadership, too, is under threat of commoditisation - see for example this almost equivalent service, created by one person in an afternoon.

An other interesting indicator came to light at a recent meeting of a Javascript developers group - Javascript is FOSS and is perhaps the most commodity programming environment available, being built in to every modern web browser. Most of the participants were commercial software developers employing Microsoft's proprietary ".Net" framework. These developers waxed lyrical about the vibrance of the Javascript community and compared it very favourably to what they had experienced in the relatively staid ("dead") .Net corporate monoculture. They said that at a recent Microsoft-sponsored .Net conference, fully 80% of the programmer presentations concerned Javascript rather than .Net. It should be unsurprising therefore that Microsoft has finally capitulated, and has (with great fanfare) announced that it is "open sourcing" .Net. That announcement is effectively an admission of defeat for their previous business model.

The inherent benefit of FOSS is not profit by the developer - remember, the developer is the user - it is passed up the chain to those who use the software to improve tangible business activities. The software becomes an enabler of value creation, and less a source of value. This is similar to the commoditisation of shipping in the physical world, although the anology breaks down because while shipping has real, actual costs for moving physical things around, software innovation can have very very low costs.

FOSS, while in no way anti-commercial, does offer in-built protection from market exploitation. The fact that it is a common tool set with a very low barrier to entry means that if any one commercial entity becomes too successful (in terms of profit margin), any other entity can compete with them. This provides a built-in market-benefiting safety valve, and it hastens the push of new, innovative services towards commodity level. While this is deeply unwelcome news for the few (1%?) of the market profiting from the current exploitative software environment, it should be celebrated by everyone who uses software, as it means their ability to do whatever it is they use software to do, will inevitably be made less expensive and better.


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