IP-Watch has an in-depth article on the economic impact of free software and its effect on development, written by UNU-MERIT’s Rishab Ghosh and Karsten Gerloff (i.e. myself). Drawing on the recently published FLOSSIMPACT report, it argues that free software enables a more effective kind of technology transfer: By providing an informal training environment, it lets people everywhere develop valuable IT skills.

As money is spent on services instead of licence fees, free software allows most of the value added to be retained locally, instead of being transferred to large corporations in the global North.

Policies that level the playing field for free software will by no means lead to the breakdown  of the software market:

In the software market, by far the most money is made in services and the development of tailor-made software. In the EU and in the US, under one fifth of software investment is in (proprietary) packaged software; the rest is in custom software and in-house software.

In terms of jobs, firms selling proprietary packaged software account for well below 10 percent of employment of software developers in the US. Custom software developers and service providers account for about a third. But the majority of programmers work for “user” organizations such as banks, the retail and manufacturing sectors and government.

The common argument against the use of free software in development – “what’s the economics if you can’t sell software you make” – is demonstrated to be false even for the US, with the largest information technology (and proprietary software) industry. As the software jobs and investment figures show, a small minority make money selling software. Most organizations – and a vast majority of programmers – make money selling their time spent writing or supporting software, but not selling the software itself. This is in fact the economic model of free software: sell potentially everything other than the software itself. The report shows that it is the proprietary software industry that is an anomaly in today’s software market, with which the economics of free software is more in tune.

You can find the article here, and the full report here.

The Financial Times has a piece by James Boyle talking about a way for writers and publishers to take advantage of the Internet. He talks about a number of authors who have made the text of their books (remember? those bulky paper things with no power cord?) available online, to be downloaded at no cost. Somewhat counterintuitively, this did not only make them better known, but actually increased the sales of hardcopies.

Cory Doctorow, a sci-fi writer — among other things — and long-time advocate of this strategy, points out that “my biggest fear as an author isn’t illicit copying, it is obscurity.”

While the ideas described in this story have been around for some time, it is somewhat comforting to see them published in the Financial Times. May they help authors and publishers take on the challenges of the present rather than continue longing for a supposedly golden past.