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The Cost Of Free, Revisited

At the New Yorker, there's a review of Chris Anderson's new book Free: The Future of a Radical Price by Tipping Point author Malcolm Gladwell. The points made in the article, while not aimed directly at die-hard open source advocates, might well have been. Free, as Gladwell puts it, is just another price.

The whole article is worth reading even if you haven't read Free yet (something I plan to do), and despite my initial hesitation for Gladwell being the reviewer -- I wasn't crazy about his brand of theorizing in his own books -- he makes a good case for why "free" is not really free. What we call "free" from the outside is simply a shifting of burdens, as will be familiar to most anyone who has studied the software market. Or any market, really.

Most of us are probably familiar with this in the form of a company who gives away a core product and charges for support and maintenance and patent-licensable cost-plus add-ons (SugarCRM, Ubuntu/Canonical, etc.). The stuff that's free has just had its cost moved around, like a car you buy with no money down. What matters is two things: 1) Can you continue to pay everyone involved with the money you're only making from a part of the endeavor? and 2) Can you do at least as good as, if not better than, people who charge both up-front and after the fact?

Gladwell describes one of Anderson's key points as "when prices hit zero extraordinary things happen". The problem is, as Gladwell points out, prices never really hit zero. Someone, somewhere, is still paying for all of this. They may not be paying for it up front, but you can bet your bandwidth bill someone's getting an invoice for it.

Here's another way to break all this down.

1. Everything comes with a price.
2. That price, in one form or another, is your time.
3. A person's time (the "raw" form of the price) is generally far more valuable to a person than their money (the "refined" form). If you're spending money, then that's time you worked to earn that money that's being re-used in another context.

With open source, the development costs can be trimmed by re-using other people's work, but it takes time and effort to cobble those pieces together into something other than their disparate, disconnected parts. It takes further time and effort to test it, to create a delivery mechanism for it, to write documentation for it, to solicit and process user feedback, etc. The price of acquisition may be effectively zero, but that zero is masked by a lot of other things. It's not that the idea of giving things away is bad -- it's just that it's going to be governed by the same economic forces as anything else.

Most sensible people, I think, are aware of all this even if they don't articulate it openly. Companies that get into the open source game and do it responsibly -- for themselves, their stockholders, their customers -- know about these things and act on it. Those who tout open source as a panacea or speak of it in revolutionary terms

I once read that the Vietnamese language has no superlatives; there is no way to say something is "the worst", just very very very bad. A lesson might be drawn from there: there is no free, just really really really cheap. It seems like there's no difference, but it is in fact all the difference there can be.

InformationWeek Analytics has published an independent analysis of the current state of open source adoption. Download the report here (registration required).

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