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Woebot
26-06-2005, 10:39 PM
The mechanics of todays computer economy are incredibly curious.

Isnt it strange the way Google is a free service? Isnt it essentially weird that you can download browsers like Firefox (even Internet Explorer!!!) for free? Why would a company like Skype offer a completely free telephone service?

Obviously the answer is that they all make money through what amount to quite tiny spin-off operations that given the scale of their operations roll into multi-billion dollar sums. But where does this leave normal online business? Does it mean the amount of giant companies shrinks? Are these companies ever going to turn tail and start charging?

Are there any arguments for this kind of business model as being some post-capitalist utopia?

DJ PIMP
27-06-2005, 04:05 AM
I think its more that a lot of internet related technologies are based on software that was developed by the academic community and made freely available for the benefit of all.

Google like businesses aren't post-capitalism, they're hyper-capitalism. i.e. The move from selling goods/product, to selling a service/intellectual property. A non-internet example might be Nike turning into a brand/advertising/design company and outsourcing all the manufacturing.

If theres any utopian element to the equation, it lies in the possibility to remove the middlemen and go direct to customers. Anyone with great ideas and a little capital can create a winning service or software product. If you make something excellent or really useful, people will use the net to do all your marketing for you.

Network vs heirachy.

That aside, my favourite aspect of the net is that its a giant working model of the subconscious.

DigitalDjigit
27-06-2005, 06:36 PM
It is also pretty easy to offer stuff for free when your operating costs are pretty low. It probably costs Google something like 0.001 cents to render a service to a customer. Another problem is that there is no way to make micropayments. They could charge people 0.5 cents to search and have about the same demand but there is no way to accept that payment, the transaction costs are higher than that. So it is easier for them to have a free service.

I am not sure how Firefox works. I guess they are subsidized by their partners (IBM, Sun etc.) who have an interest in counter-balancing Microsoft's monopoly and therefore they do not need to charge for their product.

So, I do not think that we are moving into some sort of post-capitalist utopia.

joanofarctan
29-06-2005, 11:48 AM
Yes people expect a lot of free shit when it comes to the web. I think it's healthy though (and i'm a developer!).

Looming business models for the age of the web as a distributed OS hosting applications/services can already be evinced. Roughly categorising the nature of these services/apps (I know, bear with me) you can make the following (basic) observations:

- Subscription, subscription, subscription. An API key. And a license. Sometimes.

- Web applications by flexible subscription (Basecamp - flexible, Movable Type - not so flexible, but will buckle)

- Services grant graded API licenses (Google adsense, amazon, ebay etc). Smart services build knowledge bases. Access to knowledge bases brings in $$$. Services team up (commercial partnerships) for useful piping of results from one to another.

- Smaller software/services go for donation model. "Feature ransom" tactics (won't implement X unless gain ŁY in donations) will encourage user-centric evolution of new bedroom web apps and plug-ins.

- Smart social networking applications to be assimilated by established internet behemoths. The most valuable asset of a social networking service is it's accumulated user profiling data. This acquires great value within a larger framework of commercial services. Yahoo buys flickr. AOL buys delicious (joke). You get the idea. Social networking services remain free, with enhanced services at a subscription rate.

- Micropayments die. They are impractical.

- Banner ads get a contextual makeover. Highly targeted through user profiling. Everyone with a brain blocks them. So companies go basic XHTML strict on them again. Google adsense leads the way.

- Oh, and anything that doesn't adhere to web standards dies a slow, painful death. No matter what the marketing strategy.

The thing with Firefox being free is it's trying to gain market share in a ridiculously monopolised market. I don't think it has anything to do with it being open-source (as many infer).

I think the general trend is that of the Internet as a site for the knowledge economy to take off. And i don't mean patents and lawsuits. Hopefully. Though the EU is not going to help us on that. (The phrase 'Knowledge economy' is to me synonymous with "ways to make money by taking people to court").

I agree that there is no post-capitalist space emerging here, but potentially new forms of capitalism are visible through the open-source iniative. I'm no big marxist theorist, so i'll leave it there. It's a radically new production model. It threatens established forms of organised commerce.

BTW what is up with the forms here? They are all black bg. I can't see my cursor!

DigitalDjigit
29-06-2005, 03:33 PM
Google working on a payment system:

http://today.reuters.com/sponsoredby/VerizonNewsArticle.aspx?type=internetNews&storyid=2005-06-22T010114Z_01_N21641206_RTRIDST_0_NET-TECH-GOOGLE-DC.XML

This could be that micropayments thing. Joanofarctan, please explain why you believe they are impractical and how they can die if they never really existed in the first place.

joanofarctan
29-06-2005, 11:11 PM
There is a catalogue of attempts (late nineties mainly) to implement micropayments for digital content consumption. This is distinct from pay-per-click advertising. Which is thriving on the whole. Incidentally Google's transaction service is more of a threat to Paypal than anything.

So i'm with <a href="http://www.shirky.com/writings/fame_vs_fortune.html">Shirky</a> on micro-payments. Jakob Nielsen has argued otherwise. Shirky also discusses (a little) the psychology of FREE content in that there article i've linked to.

Woebot
30-06-2005, 08:19 AM
That aside, my favourite aspect of the net is that its a giant working model of the subconscious.

And dont we all spend alot of time out here these days!

Good points bleep.

I suppose its not just software, UNIX is I guess the best example, but activity in general. Blogs for instance. Some of the more wacked-out blogs are evidence of people expending enormous amounts of energy for no financial reward (I speak from experience!) Also forums, forums are pretty work-intensive (especially in the sense of emotional expenditure) if you're running them.

However, looking at the activity in a cynical way, you could argue that blogs (or even dedicated websites) are good for an individuals "branding". I suppose there is some crossover between one's work that's done for free and self-promotion.

and fascinating stuff joanofarctan.

3underscore
30-06-2005, 04:30 PM
There is a catalogue of attempts (late nineties mainly) to implement micropayments for digital content consumption. This is distinct from pay-per-click advertising. Which is thriving on the whole. Incidentally Google's transaction service is more of a threat to Paypal than anything.

Paypal to this day annoys me hugely. I was in an entrepreneurial competition many years ago - It was 1999 I think. I got to the final of it - it was Europe wide, and my proposition was pretty simple. A secure payments system between parties that did not involve the disclosure of credit card numbers. It is basically an escrow account for typical punters.

I ran them through it, and the main of the questions were around why people would use this when I was taking a hike of escrow, and also proposing charging a pretty cynical fee on it all. There was significant cash on the table, and they didn't bite. The reply was they liked the concept, but couldn't see it work in reality.

That was a bunch of Corporate Finance guys from JP Morgan. I hope some of them have looked at Paypal since and wept, as they could have had that off me for a few grand.

joanofarctan
30-06-2005, 07:54 PM
3underscore: you don't need to tell me about failed pitches. I know all about them. Let's not be bitter hey? The great thing is that i'm probably going to stop pitching and start making for myself. Web 2.0 is right now a healthy place for startups. To put it mildly.

More talk from 37signals on why venture capital is less and less crucial:

<a href="http://feeds.feedburner.com/37signals/beMH?m=410">Entrepreneurs, angels, and the cost of launch</a>

From the horse's mouth. So to speak.

DigitalDjigit
04-07-2005, 02:52 AM
joan: i stand corrected about micropayments.

DJ PIMP
04-07-2005, 09:21 AM
Oh oh oh, Shirky is great!

Thanks joan.

h-crimm
06-07-2005, 06:43 PM
uhhh, i'll not be one of the "many who infer". i'll state it as a fact :)

firefox is free because it is distributed under the GnuPublicLicence, which means it is free to access the source code,
if the source is open you can always compile it yourself for free.
so being free and being open source _are_ the same thing.
surely?


the only way companies with opensource products make money is through "enterprise" solutions (that is tricking business into thinking that 'stable' is better) and support. thats a good thing.
firefox cant be sold because parts of it are owned by alot of different people who wouldnt consent to it.


i know that firefox came out of netscape effectively but isnt the mozilla foundation (or whoever) just trying to raise standards for browsers (IE really is a piece of crap), just like KDE or Apache &c, in the end who ever pays for it gains because
i) they get a better browser
ii) once its open sourced people
- maintain the new browser for free
- fix bugs for free
- make improvements quickly (more people are having a go at improving mozilla than are paid to look at IE) and for free
iii) releaseing it to the public shames IE into at least trying and raise its game, so we might get a better product from them too, they might try and make outlook work before thunderbird gets any hype...

its a gift economy where people contribute in the expectation that that can stimulate something interesting in return. like people post on message boards, offering thier (dubious :)) wisdom for free, expecting an interesting reply, or people participate in neighbourhood watch or throw a dinner party.
the cost of releasing something you were developing anyway is very small, but the rewards can be worth alot.








The thing with Firefox being free is it's trying to gain market share in a ridiculously monopolised market. I don't think it has anything to do with it being open-source (as many infer).

I agree that there is no post-capitalist space emerging here, but potentially new forms of capitalism are visible through the open-source iniative. I'm no big marxist theorist, so i'll leave it there. It's a radically new production model. It threatens established forms of organised commerce.

joanofarctan
14-07-2005, 12:31 AM
Much software licensed under GPL is packaged at a price to include upgrades/support/etc. Yet more is never released to the public and exists on internal systems, paid for by a client as part of a service offered by a software developer. Open-source software is often paid for, or forms part of a paid for service - that's what i wanted to communicate. I guess i was employing the term 'software' quite liberally, to include the services that tend to come bundled with it. Of course the source is always accessible, but most consumers pay for much more than just the bare source.

You could get pedantic and quote the GPL FAQ page on this however,

"If I distribute GPL'd software for a fee, am I required to also make it available to the public without a charge?

No..."

I disagree with the idea that Firefox can't be anything but free. It certainly could be a paid-for product at some point in the future, though the idea of it doing a 'red hat' is a bit far-fetched. A consumer would be paying to help provide resources to an active development community. The source would be available, but away from that development community it would have little value. It works as a donations model now, but it could evolve.