Open Source, Open Market for IdeasBy Edward H. Baker | Posted 07-05-2005
Why would a professional political scientist be interested in the open-source movement? For Steven Weber, a professor of political science and director of the Institute of International Studies at the University of California at Berkeley, it was the chance to investigate a technological issue that had what he saw as political ramifications. "In the political science world, I work on large-scale political action problems. And when I first learned about what was happening in the open-source community, I thought, 'That's a problem I recognize. I ought to see if I can understand what's going on there,'" says Weber. Better yet, he observes, "The best part of it for a researcherit's really profoundly, astoundingly wonderfulis that your data is all archived. It's like having access to every classified document you could ever imagine."
How does Weber define open source? In the introduction to his book The Success of Open Source (Harvard University Press, 2004), he writes, "Open source is an experiment in social organization for production around a distinctive notion of property." As academic as that might sound, Weber says the movement's distinguishing characteristic is its concept of intellectual property, which is centered, in his view, on "the right to distribute, not the right to exclude." This spring, Editor Edward Baker spoke with Weber about the open-source movement and what it means for intellectual property rights, corporate management theory and globalization.
CIO Insight: Why does the open-source movement matter?
Steven Weber: I would make two claims about that. One is that in the IT space per se, open source is changing the economics of information technology at the software level rather than the hardware level. And that's a big deal. Because whether or not you believe that information technology or information processing is a core piece of competitive advantage for many companies, what happens in that space really does matter a lot. So I think the commoditization of a big piece of that infrastructure is pretty significant, for lots of different industries.
The second claim I would make, which is a little more speculative, is that it puts a significant question mark over the claims made by companies like Microsoft Corp., and by industries such as the pharmaceutical sector, that the only way to have a sustainable value-creation system, whether you're dealing with software code or white powder, is to tightly protect the underlying intellectual property.
The argument they make is that if we experiment at all with the patent system for drug molecules, innovation in the pharmaceutical sector will drop to zero. I don't think the success of the open-source movement has proved that argument to be wrong, but I think it certainly places a pretty big question mark over that argument. And that is probably of broader significance.
Let's begin with the first claim. Is open source really posing a competitive threat?
Consider the Firefox browser. As you know, the Mozilla.org project, which led to Firefox, grew out of an attempt to turn the innovation ecology around and undermine Microsoft by making Netscape an open-source product. And Firefox is a good product20 million people [now 64 million] have downloaded it, right?
Meanwhile, Microsoft had not released a significant update of Internet Explorer in some time, because there was no competition. Well, Firefox comes out and suddenly Microsoft has started to goose up the amount of effort it puts into IE. Is this a good thing or a bad thing? I think this is a good thing.
And that's my response to guys who say the open-source stuff is a cancer on the software innovation ecology. If open source didn't work, then you wouldn't have to fight it. It's quite common for incumbents to say new entrants in the marketplace are playing unfair. Of course, some people call that competition. And competition is good, right? It may not be comfortable for Microsoft, but it's good for the industry. And in the end, I believe it's good for Microsoft too.
Do you expect competition for the desktop to increase with the advent of open-source desktop software?
Despite what some people say, the open-source folks aren't all that interested in fighting to take over the desktop. That's because desktop software is very much a personal thing. Once they learn Windows or Apple, most people don't want to switch to a new system.
What the open-source community does see as being the next real big growth market for IT infrastructure is embedded software and devices and utility grid computing. And they feel they have a real advantage in that space, because it's about the underlying engineering guts, rather than the user interface piece.
But there are large, powerful proprietary organizations that have their eyes on these areas, too.
Well, we'll see how that plays out. But the battle is joined and the market should be allowed to sort it out.
Let's return to the second claim. What makes the pharmaceutical industry so interesting?
The underlying economics of the business are in some ways very much like the software business. Enormous amounts of research and development money are poured in. But at the same time, much of the budgets of the big pharma companies go to marketing and packaging and so on. And, increasingly, the actual innovation infrastructure is similar in that more and more of the pharma sector work is getting done in silico, as opposed to in vivo, yet not a lot of new molecules are coming out.
But what if we were to think about developing therapeutic molecules in an open-source-style innovation ecology? How would that work? How would we license it? Who would own what? And how would companies make money? Where in the value chain would they be able to extract rent if not from the molecule?
Could you, within a proprietary system of distribution such as the pharmaceutical industry, create an open-source innovation process?
Sure. Just like any infrastructure can have commodity elements as well as value-added controlled and owned elements. The fact that the fiber in the ground is infrastructure, and is open to everyone to access on equal terms, doesn't mean that the movie that gets piped over that fiber into my house is open to everyone on equal terms.
Then is it a question of centralized versus decentralized innovation processes?
I don't think so. I think the open-source community operates most effectively in a decentralized way, but you can imagine having proprietary decentralized innovation systems. In fact, lots of companies do that now.
Can you imagine a centralized open-source-style innovation community? I think it's hard, because basically what the open-source system does is lower barriers by saying that anybody who feels like they have something to contribute can come and play. And that naturally becomes decentralized. If it's interesting enough that people want to play, then it naturally becomes decentralized.
But the real issue is the challenge open source presents to intellectual property rights.
Exactly. We don't know yet to what degree these closely held innovation processes might work better if increasing elements of the underlying infrastructure were a little bit commoditized, as in an open-source environment. But I can give you one example that friends of mine who work in the biotechnology industry would cite on the downside of holding lots of this stuff in proprietary IP rights.
They call it "the tragedy of the anti-commons." Let's say I'm a researcher working at a small biotech firm here in the Bay Area. And I think there's something interesting I would like to do with a particular molecule and its interaction with a particular gene. Much of this stuff is now patented, and there are so many competing patent claims on so many different parts of the things I would need to work on, that the cost of actually figuring out what permissions I need are astronomical. So lots of small companies simply can't work on it.
They call it the tragedy of the anti-commons in the sense that in order to work on this, they've got to get a permission to use this molecule and a license to play with this gene. That's just too expensive, so they walk away from it.
I don't have a quantitative model that can describe for you how much wasted effort or dead weight results from this problem. But I can tell you, there's a lot of anecdotal evidence. There are companies that patent gene sequences, knowing full well that these patents would never be upheld in court, because they haven't added any value. They also know full well that if a pharmaceutical company decides it wants to do something with that gene, it's more likely just to pay the company $150,000 or $200,000, rather than spend a year or 18 months fighting the patent in court. It's kind of tragic.
And open source can change that?
I think it can help. I think what technology does (which looks like a problem at first but ultimately is a good thing) is to force people toexcuse the jargonproblematize in their minds what they think ought to be owned by whom and how. And that's a healthy thing. Napster Inc., for instance, made a generation of people say, "Wait a minute. Who really owns what in the music business and why should it be that way?" And open-source software is doing that around software. Who really owns source code and why should they keep it secret and what does that mean? The human genome project started that discussion around the knowledge of the genome and the molecules that interact with it.
This is one of the things technology doeswipes away these notions that it is inevitable that ownership has to be a certain way.
All of a sudden, these questions are emerging from the narrow focus of IP lawyers and the Patent and Trademark Office and are showing up on the front page of the business section. I think we're in a period of real ferment around these questions.
Does the open-source movement have much to offer the area of management theory?
I've been asked this question a number of times. Economists are shocked at the notion that people engage in behavior in many parts of their lives for nonmonetary reasons. And then, I'm always a little bit surprised at the degree to which, you know, people say, "Wow, look, these people are working for the open-source community." There's not a clear connection in a direct fashion from the code they write to their salaries.
In some cases there is, of course. If you work for IBM Corp. and you write code for Apache, you get credit for writing that code. But lots of people put in significant amounts of their own time, because they have a little software problem they want to solve at home or at work, or at the end of the day they're interested in trying to work on developing an algorithm, or something like that.
It's an interesting reminder that human motivation is a really complex thing. Monetary rewards are one piece of that. Very few people I know hate monetary rewards. But there are a lot of other things people get out of their work experience as well. It's fundamentally sort of erotic in the Freudian sense. Creativity is really important to people. And taking the opportunity to engage in these open-source communities allows people to stretch their creativity and learn while they're doing it. It's an important reminder to managers that there's a lot of motivation out there that most organizations don't tap into very well.
Some people have compared blogs and wikis to open source. Do you agree?
I think they are different. They tap into similar motivations. But what's unique about the open-source process is the property rights and editing function that surround it. So I don't like using the term "open source" to describe those kinds of things. They're more like high-tech volunteer organizations. So these are diverse phenomena, all of which have been facilitated by low-cost communications technology.
On the other hand, like open source, blogs and wikis challenge incumbents by allowing people to distribute stuff outside of existing channels. They force newspapers, for instance, to ask, "What is the blogosphere providing that we are not?" And that's good.
Might that suggest a larger political context for open source?
Good ideas and innovative thoughts are randomly distributed throughout the human population. It's critical to recognize that if you give people the infrastructure to create their own products, they're likely to figure some out, because they know what they need better than you do. I think the open-source community, at least at the level of underlying operating systems, has done that, not necessarily because that was what they intended to do, but they created an ecology in which that's possible.
So if you go to South Africa, Morocco, Chile, Brazil, you find that the penetration of open source is much greater than it is in the U.S. That's partly a pricing issue and it's partly a customization issue. And it's empowering to folks who have the capability and energy to build products for those particular markets, because they live in those particular markets and they understand what people need. I think that is a significant thing, and I think we're going to see it develop further. But it won't capture people's attention until something interesting and unique that's developed in a developing country, in the IT space, finds its way back into the U.S. market. But that will happen.