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.comment: Making Money on Free Software? - page 3

Is anybody actually doing it?

  • November 29, 2000
  • By Dennis E. Powell

It has been published all over the place this week that dotcom companies--Internet sites--are firing people right and left because, big surprise, they've run out of money, aren't making any money, and can't find any more venture capitalists loopy enough to dump more bread down the rat hole. Some are profitable, but these are gems indeed.

And it is undeniable that a lot of people dreamt up some ideas for web sites, raised a lot of money from investors who paid no attention to my wealthy friend's rule, partied like it was 1999 (because it was) and essentially squandered the money. Even Amazon.com hit a cash crunch earlier this year; a friend tells me of a golf game interrupted because the others in the foursome, investment bankers, had to rush to an emergency teleconference to come up with several hundred million dollars. Amazon.com decided to rule the world, and that takes money, which it had apparently spent before it actually had.

A whole lot of Internet companies went into business with no plan ever to actually make a profit, at least none that could illustrate in any cogent way how profitability was to come about. Little wonder that they're struggling now. Truth be known, struggling is a sign of relative robustness--a lot are gasping like a fish ashore.

Which brings us back to the fundamental question: How does one make money from free software?

It would be nice to lay out a formula for it, and I expect that in three or four years we'll be able to point to one or two successful ones, slap ourselves upside the head, and say, "but of course!" Right now, it's not so simple. The idea of free software was cooked up by people in windowless rooms in ivory towers who are paid to--well, we don't quite know what they're paid to do, but it's apparently something sufficiently pristine as to avoid offending their delicate sensibilities. At least some teach college, and at least one I know of devotes his class time at an Ivy League school to describing what a wonderful fellow he is (as well he might, because it's not something you'd pick up immediately and it's not something that many of his students pick up after a semester of lectures) and what a terrible thing the idea of property is.

This makes it tough, as does the philosophy that says it's a Bad Thing when companies employ people and produce a product which they sell for money that is then distributed among employees, shareholders, and product development.

But I think that the Linux companies, at least some of them, have a better than even chance of succeeding despite the potholes and barricades. Here's why: They're committed to making it work. They're hard-working. Though some of them were maybe a little profligate after the injections of money, either by venture calitalists or IPOs, I don't think any has an immutable corporate philosophy of reality denial. They'll adapt.

As Kevin Reichard noted this week in his editorial, it would be a very good idea if Linux were to fragment somewhat. I suspect that survival will demand that this take place to a certain extent. Caldera already offers eDesktop and eServer products; problem is, they're not all that different. (And as a practical matter, within distributions there ought to be more choices, better described, as to what gets installed from the CD. A 10-page pamphlet describing these--"With Linux, you are likely to download and compile source code, which is much easier than it sounds. If you add this group of packages, you'll be able to do this." "If you want to have a web site on your machine, or an email server, or otherwise provide services to other computers and have the daemons that are necessary to do so started automatically at bootup, add this group of packages."--could allow much finer granularity to the new and probably clueless user.)

It is a commonplace that the producers of good software are terrible at selling it, and the producers of lousy software are great at selling it. Linux, which has broken many molds, will have to break this one if it is to become an industry. Whether it will remains to be seen. My guess is that it will, though there will be some companies that fall by the side.

But enough of that. I can show a profit. I'm off to prepare my IPO.

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