I saw this fascinating post today in TechCrunch. Apparently 37signals are facing free competition from an open source alternative created by a Serbian PHP developer. My question is WHY? For some reason the post discusses what would happen to 37signals business model if someone decided to build a free alternative and give it away. Duh! What would happen to any business model if somebody came in and gave away their product for free? Cars for example. Would Honda survive if a group of un-enterprising students decided to build a high quality free alternative and give it away to everybody? Oh, but wait, they can’t because there is an intrinsic cost to building cars, the parts cost. The only intrinsic cost in software, is the cost of the equipment on which to write it. This always has to be paid for by somebody, but it may be very small, or it may be paid for by educational institutions in an attempt to educate their students. So, unfortunately software CAN be given away for free, especially now that the web is allowing virtually instantaneous virtually free distribution.
I just don’t get this. To quote from the article above: “Is it just me or is it crazy to think that the 37signals business model could be wiped away by one weekend of hard work between a group of developers?”. But why would you do that?
Lets not bandy words. What we are talking about here is stopping the 37signals guys from earning the money to put food in their mouths. That’s not a funny joke. Its not as though 37signals is a huge mega-corp grabbing everything they can, there applications are based around Ruby On Rails a free framework for web development built in Ruby. 37signals developed that framework and then gave it away for free, they also give away free versions of all of their products for people who can’t afford or don’t need to afford the paid for versions. From the outside, this looks like just about as far from a greedy mega-corp that you can get.
So, given that you have a product to compete with Basecamp or any other easily copyable application, why not do that? Don’t give your code away, compete with them. activeCollab could have a niche for the people who want to run their project management apps internally and don’t trust web alternatives. The advantage of paying for something is that you can get upset when it doesn’t work. But maybe this is too much of a challenge. If your open-source application is of low quality, you can just say “OK. So its free. Don’t use it if you don’t like it”.
My advice to everybody out there with the skills to develop software: Don’t take other people’s ideas and throw free alternatives out there. One day you might be relying on the money from similar business models. Let’s stop devaluing our profession by shooting ourselves in the foot. Go out, find your own ideas and feel free to give them away for free, or better still, why not make some money out of it? No need to be greedy, but why work for nothing?
There is much more to say on this subject and I expect to say some of it over the next few days and weeks
Please tell that to Sun Microsystems who is creating OpenOffice.org.
I think that is an interesting point. I am personally not in favour of large corporations giving away their wares for free, after all it really isn’t free. Somebody is paying for it in increased licenses for other products, hardware costs or reduced payouts to share-holders (And before anyone says why should shareholders be paid out, don’t forget that the biggest shareholders are pension funds). Generally speaking in the wider world, such an appoach might be seen as anti-competitive. Clearly Sun is building a product in a market where Microsoft dominates, but is that any reason to make it more difficult for smaller players to make a buck?
However, I am also not entirely sure whether office falls into the category of application software any more. Virtually every PC user on earth will have a requirement for the word processing functionality in “Office” type products and a huge number will use spreadsheet and presentation facilities. Maybe office suites should be considered as systems software these days.
The point I was really trying to make is that if free replacements are built by copy cat open source developers for every good idea that comes along (and they are successful in upstaging the original company), there will be no financial incentive to build the good ideas anymore and developers will have to go into some other profession to put food on their tables. Is it in anyone’s interests to turn our new (barely) profession into an amateur hobby that can only be done by those with enough money (or rich enough parents) to support themselves?
You started from the wrong assumptions.
First, I’m not a student but a freelance PHP developer. Been that for past 2 years. Second, activeCollab was never targeting Basecamp directly. Users makes it look that way with comments like yours.
aC is made to feel the gap Basecamp left. Let me quote a part from comment I posted on Techcrunch:
>> activeCollab is all about alternative. There is a lot
>> of people that find closed nature of Basecamp pretty
>> limiting. Your data is not in a place you can control,
>> you can’t customize the solution to fit your specific
>> needs, it can’t be integrated with system you already
>> have in place etc. activeCollab is targeting that group
>> of people + the people who like open source or just
>> want a free solution to solve their organization problems.
Its simple. Alternative, customizable and free. Nothing more… I really don’t know why anyone thinks that activeCollab can be a threat to Basecamp. Its simply targeting different group of users.
Please read this: http://37signals.com/svn/archives2/growing_in_vs_growing_out.php
Thank you. If you have any further questions you can reach me on Ilija.studen@activecollab.com I’m always open for chat
Btw, when I read your post I look like a bad guy
Ilija, my apologies and thank you for correcting me. I have no wish to demonise anybody and have edited my article so that it more accurately reflects the facts which I missed/mis-read/mis-quoted. I think I saw the red mist descend when I started to read the TechCrunch article. However the general point still stands. If people give away their work, it devalues both what they are doing and everybody else’s work.
I agree with you that there are limitations in Basecamp and that does mean that there are other niches to fill. But why are you doing it for free? Do you feel that your work is so bad or so easy that it has no value (I’m sure you don’t)? We are not talking here about a product which will be used by individuals very much. Project management is something done by corporations and corporations will generally be in business to make a profit. By giving away your product to companies who use it to make a profit you are simply improving their profit margins. Why do you choose to do that?
Hi,
There is a post on activeCollab blog where I explained why activeCollab is free. But, blog is down so post is inaccessible. Here are my reasons:
• It is really hard to put a commercial product online, especially when you are not from the USA or GB. Investment is too large for the budget that I have and chances for success are pretty thin.
• Amount of things you learn when you work on such a project and promote it is amazing. And mean AMAZING!
• activeCollab is my best reference. Its shows what I can do and if it is well programmed, people find value in it and use it than it says something about me, my work and my potential. Something good.
• I get the chance to meat a lot of great people. Amount of feedback that you get from the users is so large that its hard to keep up with it, reply to every email, try to answer to every question. But I really enjoy that.
• Creates a lot of opportunities. When people are looking at something you made and see a potential in it they also see a potential in you and sometimes they make pretty interesting offers.
• I don’t think it would be right to provide same service as Basecamp. Also, I don’t think it would be smart
I am convinced that open source can be a great foundation for business. You have more feedback, whole process is more about users and less about software itself, errors get found and corrected much faster. Level of communication between developers and users is really high.
Someone, especially corporations you are talking about will want commercial support or professional customization services. My plan is to provide that kind of services. Not for free of course. There is a benefit for the customer and for me: I get the job, they get stable software that is customized to fit their specific needs.
Maybe I’m wrong but I think it can work out pretty well, both for me and for the users
Your opinion?
Ilija, thanks for your well thought out comments. I think you raise a lot of valuable points and I will try to discuss as many as possible in my next post…
I don’t see a problem with Open Source software given away for free because in the case of many projects it isn’t free. Many that I see have a collaborative nature (many programmers) and seek a model that looks to benefactors and donations to exist. All of us in the technology field are being pressured to reduce costs and free open source software is a good way to do that.
I tried BaseCamp and found it very limiting. I and many others tried to express our needs and I was told that they weren’t interested in making it more feature rich, that they wanted to keep it very simple. I told them good luck. I have since been checking out Office Live’s PM tool and like it. I am also waiting to see what DevShop is like. I am willing to pay if the product is really good but if a free alternative is available you bet I am going to use it. I think the problem is that some companies can’t build a product that is good enough that people are willing to pay for it. Sometimes that is necessary and good, sometimes it spurs companies to make a better product (MS Office for one).
anyone familiar with 37signals, or DHH and his blog in particular knows that 37s is perhaps most guilty of ‘devaluing’ the work of every other developer out there. they constantly mock anyone foolish enought to be a consultant, or blind enough not to use ruby. in response to criticism on rails performance, DHH’s argument is basically that rails will make developers less necessary so you will be able to afford to buy more servers. look, i really doubt this will hurt 37s as a business (it will probably help them) but if anyone deserves to get their business model taken away, it is 37s.
A perfect example of my previous post is DotNetNuke, it is more feature rich than SharePoint and is way cheaper. SharePoint is something like $40K with all the requirements in place, that is just out of my company’s price range. What are we to do?
Jason Fried is selling a service, and charges not just for software but also for server space, support, new feature adds, etc. There’s nothing wrong with giving out free software, which is an entirely different model. That’s what WordPress and many forum software companies did, and now they’re making money providing support and hosted versions. There’s a lot of ways to make a buck, and getting massive adoption can be a good start.
dizzydev,
You say that developing open-source apps is self-defeating but I don’t think that’s the case at all. Just look at the blogging software you’re using - WP was dev’d as open-source software and it’s been an absolute windfall for Matt Mullenweg and the blogging community as a whole. If it wasn’t for WP, we’d all be locked into MT’s pricing strategies right now. Yet 6 Apart is chugging along just fine alongside WP and all the other free and/or open-source software. No, it’s not self-defeating. Instead what free a/o open-source software does is force paid/closed-source software to find its value. This is a really important point. If the paid/c-s software provides no value added, it doesn’t deserve my time and money and I’ll go with the free/o-s software. Bring on the free a/o open-source software because it’s a powerful driver for software innovation.
But why are you doing it for free? Do you feel that your work is so bad or so easy that it has no value
Would you ask this of Linux or Apache developers as well? How about WordPress? PHP? MySQL? Note that you’re actually using most of these free, open source projects to run this very blog.
Money is not the only motivating force for some people. Ilija touches on some of the reasons people create or contribute to open source software projects, but there are many more. Just something to keep in mind when making these kinds of judgements.
You’ve raised some interesting points here, but let’s take a different look on this situation: the forum software industry. There are lot’s of very good and high quality free forum softwares, and many people use them, but people also go for IPB and vB (paid). In fact, IPB went from free to paid, which is another interesting twist to the way you’re looking at things. Paid forum software companies have survived open-source, and 37s will survive aC and all of the many other open-source project management softwares.
Why?
Some companies just like to pay, some people like the paid support, etc.
I guess Open Source is a misleading term here, as it doesn’t embody a very important aspect of FOSS. Free Software is a better term to address the issue you’re raising (or failing to raise): it’s not about what you pay, but about what you compromise when you go for a proprietary application: your freedom.
The points Ilija makes are completely cogent. In fact I myself am one of those people who after seeing this open source project (and the only reason i seeked it was its free source attribute), expressed an interest for further work with him. I have already contacted him, and not to say that we are working on anything right now. no we are not. but the point is I saw how clean and brilliant this guy can code by looking at his project. i saw the end result and it’s ammazing well thought-out interface etc. After evaluating I can now trust that he will do a great job on what I am trying to develop. And on top of that our company may be interested in customizing this application for an MMS (Media Management System). So it is true that folks evaluate free source projects out there and consider using lead developers for their in-house development. This happens every day in the open source world. And I happen to believe in the power of open source, so if we do end up contracting this guy in a private development to add-on features for our purupose, we will make sure any of those featuresets will be passed on to the open source project for AC.
my 00.02 cents :o)
So you are saying that free software is bad because it puts developers out of a job. That’s like saying that unbreakable windows are bad because they put the window makers out of a job.
Surely we would be better off if we could stop repairing broken windows and spend those resources elsewhere. The window maker will adjust or find another job, and society as a whole would be better off.
Broken window fallacy: http://en.wikipedia.org/wiki/Broken_windows_theory
Its a very interesting point: I’m certainly not saying that good software is a bad thing. Do you think that the only way to write good software is if you give it away? This may be true (although many people would have wasted their careers improving commercial development…
Have a look at the interview with Alan Cooper at he certainly seems to give that idea some credence at the moment (i.e. It is currently very difficult to find somewhere to write good software for money, this is because big corporations can get by making developers do death march development (Same developers tend to do OSS in their spare time because they are disillussioned with the industry (See the title of this blog))).
And who is this WE that you talk about anyway. If we is the human race, very few of the other WEs give stuff away for the good of mankind, why is it that computer programmers seem to be so keen to give their stuff away. (I think I know the answer to that one actually, see Alan Cooper video above, about 17-21 minutes in) In particular, if computer programmers aren’t making money, they can’t spend it so the economy would suffer… Other industries very rarely give stuff away for free, unless there is a direct (or very obvious indirect) benefit. The market won’t stand for it.
Dear Dizzy,
Not to repeat too much what others have already said but just to remember you that you are just using ALL Free Software based products and bashing of the Free Software is not very nice, don’t you think? As we say here you “shouldn’t bite the hand that feeds you”.
The issue that you seem not to understand is something that we’ve been explaining from ages.
The free software movement is a movement of developers and technologists who wish to build software that is free to all. By free we mean free as in “freedom”, software that is freely available under license - a social software license.
People can copy our software, redistribute it, explore, change or modify the code. In most cases people choose to “give something back” by publishing any modifications back to us for inclusion in the core build, thus constantly evolving the software for all.
Our growing network of developers encompasses people from every continent giving Barnraiser a wide variety of talent and cultural diversity.
Read some about “Free Software”:
http://www.zmag.org/content/showarticle.cfm?SectionID=13&ItemID=9350
http://www.fluctuat.net/blog/2008-Free-software-explained-to-my-fellow-European-citizens
And why is Free Software better than Closed Software:
Because it is peer reviewed, for once, and this is its most advantage. Bad code doesn’t go too far for too long.
Because it usually aims to respect open standards and good programming pratices.
Example from a good FOSS project, AROUNDMe, from Barnraiser:
“We develop our social software solutions using the Extreme Programming (XP) methodology which is a deliberate and disciplined approach to software development.
We develop to W3C web standards including conformance level Double-A of the W3C Web Content Accessibility Guidelines. These guidelines ensure accessibility for people with disabilities.”
But, as an important american politician said:
“if we are explaining, we are loosing”.
We must stop explaining and start bumper-sticking:
“Free Software is about choice”
“Publishers are killing innovation”
“Patents exclude competitors, lead industry to standstill
Bill Gates, 1991″
“Earn a buck with Free Software! Ask me how?”
“Don’t Patent My Mind”
“Idea Patents are a Bad Idea”
Many other ideas could be even more hear/eye catching. See what the guys from the Mozilla Firefox are doing for their pet project. It should be done for Free Software as an idea.
And why is this Freedom so important to Culture and Innovation?
A good answer is at http://www.lessig.org/freeculture/free.html
See what others said. Don’t trust on my word only.
Have a nice day.
Need to clear some concepts better here to avoid confusion:
Free Software is always Open Source Software
Free Software is, most of the times, also Free as in Free Beer
Open Source Software is, most of the times but not always, Free Software
Propreitary Software is, sometimes, Free Software
Proprietary Software is, most of the times, Closed Software
Free Software is all about Freedom
Proprietary Software is all about closing the knowledge
Free Beer is all about coolness (altough I prefer portuguese wine)
Software Patents (or as some would wish Idea Patents) are a freak show with the only target to make a few lawyers rich without knowing an inch of what code is all about.
Hope this can give some ligth to the subject