Re: Fwd: Wall Street article on a new Cooperative

Adam Turoff wrote:
> As I understand it, it's about N companies coming together to split the
> cost of developing, say, call-center software.  They each pony up 1/Nth
> of the cost, rather each pay $X to a vendor for licenses.  The vendor
> only spends $Y to develop the package, so the premise is that $Y/N is
> much less than $X, even though $Y > $X.
> 
> That's appears to be the logic of it.  None of these systems are
> line-of-business (which no one would share with any consortium).

It's a very sensible way of working together.
Doesn't do anything for free/open source software.

> That leaves the ancillary stuff: HR, asset management, contact
> management, CRM, etc.  Anything these non-tech companies write in house
> is going to be heavily customized to their business models, and
> inappropriate for anyone else to use -- even in the same sector.  
> So the premise of sharing software is bogus from the start.

On the contrary, software which is heavily customised tends to be full
of juicy solutions to small problems which can be adapted for use in
other projects.  Maybe only a few programs familiar with the code
would know which those juicy bits are, but they usually exist.

> It's not so much about sharing software, as much as it is getting
> companies to buy into the open source model.  Add in a $30K barrier to
> entry to make the companies feel better and fund a centralized
> organization, rather than going fully open source.  But once they buy
> into the model, they can cooperatively develop (or fund) the ancilliary
> packages they're going to buy anyway, but distribute the development
> cost instead of paying a vendor to develop something shoddy and
> overpriced.

The trouble is, once they've bought into it, the co-operative as a
whole has a good incentive not to open that source: it's worth $30k
per new member to keep it closed.

I much prefer the model mentioned a week or so ago, whereby an
investment pact is made in which substantial initial funding is
attracted to each new project or work to be done, but some of that
funding is refunded (perhaps more than 100% - an investment) as
further investers are attracted into buying a share in the software:
and in the process, with a committment to eventual or phased release
as free software and eventual decrease in price and amount of funding.

It starts out looking closed and privately invested, it ends up open,
cheap and shared, and everyone involved wins.  As it progresses the
incentives are tilted such that each investor gains by attracting more
investors and helping the project to succeed, starting with the
high-paying high-risk high-financial-reward investors, ending with the
not-paying (or low-paying) zero-risk get-the-software-and-share
people.  Everyone gets what they want (that's why it's not a pyramid
scheme!), every risk is rewarded appropriately, and the incentives are
stacked in the direction which keeps the project moving forward.  It's
also a smart strategy for making money from a microeconomic point of
view: you end up selling to people with plenty of cash as well as
those with very little.

Well, I liked it so much I had to drop an almost off-topic rant in :)

I suppose the Avalanche project _could_ be structured like that, if
they chose to.  It was mentioned in the earlier thread as relevant.
But the announcment doesn't have anything to say along such lines.

-- Jamie