When I made this statement it struck me after reading a comment (thanks Dan .. grrr), that this needs more exploration.  Why is open source a good thing, and is it contradictory to traditional business?  This was all prompted by Chris’s post where he says

I question any institutional trend towards consolidation, crystallization, centralization or the locking up of naturally occurring resources or readily reproducible resources (like digital data)

I ended up stating this, and realise this needs more thought. (normal programming will resume after I finish this)

In general, the hypothesis here is that naturally ocurring information and data should be free. Old world thinking would assume everything is owned by someone, and is available for sale at a profit. The new economy breaks that hypothesis apart.

Source: Open: the path through disruptive times « The Bankwatch

I still don’t think Open Source is contradictory to traditional business.  Its all about the role of Open Source.  If we go back to the master on this, Adam Smith, courtesy of Wikipedia;

Up until The Wealth of Nations it was generally accepted that in any economic transaction one side always “won.” In other words, either the buyer or seller got to “put one over” on his “opponent.”

Smith rejected this notion, and famously stated that “a voluntary, informed transaction always benefits both parties.” …. when the buyer gives something of value to the seller in exchange for something else of value, both parties “win”.

This is because the buyer values what the seller is selling more than what he is giving to the seller in exchange for it. And, for his part, the seller is all too happy to part with what he is selling for the buyer’s property, because he values that more.

…..  they both benefit.

This premise is important in these days of argument about DRM, and setting data free.  What about both seller and buyer valuing the transaction?  Internet makes certain things as simple as a click.  It introduces such convenience, that the click has no value per se.  So don’t try to charge me for that. 

I went back to the definition of Open Source.

The idea of open source is then to eliminate the access costs of the consumer and the creator by reducing the restrictions of copyright.

Open Source originated from the code base for Netscape (Mozilla) which happens to be the underlying code for many browsers.  Even IE spoofs the use of Mozilla (“Mozilla/<version> (compatible; MSIE <version>...“) in order to ensure all sites will accept it.

Anyhow the theme emerges of public goods.  These are things that are universally available, such as water, or more practically, defense, law enforcement, or property rights.  Any attempt to privatise those results in anarchy.

Wikipedia defines examples of public goods thus:

Common examples of public goods include: defense and law enforcement (including the system of property rights), public fireworks, lighthouses, clean air and other environmental goods, and information goods, such as software development, authorship, and invention.

Now Open Source begins to make rational sense and more importantly, it makes sense for specific items that are best managed as public goods, otherwise we have (internet) anarchy.  Consider Iraq or Mexico.  If you have people running around freely operating local armies as governments, you have anarchy.   Certain things have to accepted as norms, and that framework allows us to carry on our lives.

The anarchy that derives from feigned ownership of that which cannot be owned, is unworkable.  This results in a combative relationship which is the result of someone trying to sell something that is or can easily be freely available.  There is no win – win when the buyer sees no value in the goods sold, because its easily available for free.  Music is the classic example.  Just because it has recently (last 75 years +/-) been sold doesn’t mean it will always be so.  Its worth noting that people see value in a music management system, but not necessarily the music.  That’s how I view my ipod.  Its a system, and while I pay $9.99 per album, I see the value in the system, back up, laptop playing, file management, etc.

Conclusion:

Open Source is essential for transition into the true information economy, from the industrial economy.  The items that should be Open Sourced, are those that are necessary for people to work and interact in rational ways.  Of course the fact that internet transcends borders, and legal schemes makes this hard.  Welcome to disruption, and new business models.