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software movement, I would argue, has many attributes that are quite similar to the academic setting. It started from academic origins in the 1960s and 1970s as collaboration between university and private foundation scientists. It benefited from some visionary leadership on the part of Richard Stallman and Linus Trevault, who had a vision of promoting software in an open-source way; that is, the stock of knowledge regarding software should be allowed to pass unfettered or unrestricted to downstream users and developers. Not only was the spiritual leadership and the institutional infrastructure in place, but there was also a very important contractual relationship established, the so-called general public license, which provided the legal mechanism for having this knowledge pass downstream for use without any restrictions.

Aside from this, there are a number of supporting factors in the open-source movement, many of which have academic types of characteristics. For instance, the developers of software often benefit directly from extending and modifying the software. Often the developers are working with the users. With openness it is possible for the developers of software to delegate to the users decisions as to how to improve the software. After all, it is the users who ought to have a much better idea of which aspects of the software code should be developed and changed. As a result of this interaction between users and developers, there is an interesting and valuable cross fertilization of ideas.

We see the same needs for gratification among programmers. They enjoy sharing their latest challenges in solving software problems, just as academic scientists derive similar benefits. This is important because, like academic scientists, there are probably relatively few people who can appreciate the efforts that programmers put forth and the value of their products. Thus openness—the ability to share new ideas and to document new approaches— allows the workers in this industry to gain personal fulfillment. It also allows programmers, like academics, to signal their abilities in the marketplace so that potential employers recognize their capabilities and value.

One interesting question for economists is to ask, “Would there ever be any corporate support for open software?” They already exist in the marketplace. There are firms like Red Hat, who derive benefit from supporting open software because they can sell complementary products, they can manage the software in such a way to make it more accessible, and they can provide instruction manuals and information to move the software from the developer to the user. There are other firms such as IBM who find it in their best interest to support open software because they can use that open software with their own proprietary hardware and software products to offer a much improved product to the marketplace. So there is a combination of the open product and the proprietary product to produce an even better product. The existence of side-by-side open software and proprietary software brings into question whether open software will survive and, if so, in what segment of the market.

Open software has some inherent advantages over proprietary software. As I mentioned before, it gives rise to greater progress and cross fertilization because it is open and because users of the software give direct feedback to the developers as to the kind of products that they want. A second major advantage, which I have already mentioned, is that it is more pleasurable for a programmer to work in an open-software type of environment. He gets more feedback, he gets more direct gratification from sharing his exploits with his peers, and he is also more mobile in the marketplace because his strengths and capabilities can be signaled more directly to other employers.

There are, of course, advantages as well for proprietary software. One is that proprietary software companies can directly recoup revenues from the sale of their product. They do not need to develop complementary products, as is the case in open software. Proprietary software is more likely to appeal to a general audience because the processes of developing the software, explaining how it is used, and making it more user friendly are activities that a proprietary software manufacturer can afford to undertake as the costs can be recouped from doing so. Open software, however, tends to be more difficult, less accessible, and is a product that in reality is confined mostly to information technology professionals.

Taking all this together, what we would predict, and I think what we are seeing so far, is that there will be a continuing role for open software. Most likely, it will be in the information technology professional segment of the market, but proprietary software will probably exist side by side with open software in a different market segment—the more general user segment. This certainly is an interesting example of how some of the norms of openness we find in academics may survive in nonacademic or corporate types of settings.

Another example I will talk about briefly is the experience of the early days of Silicon Valley in the 1970s and 1980s. During that period, Silicon Valley was an exceptional region in the sense that there was an unprecedented era of technological progress and innovation. It was characterized by free exchange of information whereby



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