IP in an Open Source Society; who is paying who?

Kebede Mergia asks me the question, who is paying who in the Open Source society?

Unfortunately it’s impossible for me to answer this open question in the length it deserves, but I can point to a few resources on which I build my own understanding of the topic.

Intellectualy property and the societal concept of Open Source.

To understand the societal implications of Open Source, you need to understand the difference of Free Software and Open Source.

Free Software, the concept put forward by Richard Stallman long before the term Open Source was invented, tackles the freedom aspect. This is well documented in the book by Mr. Stallman, entitled “Free as in Freedom”, available online.

To understand intellectual property, there is probably no better source to turn into other than Lawrence Lessig. In the roots of the philosophy of Free Software there is the requirement to understand the importance of free culture, how it’s preserved and how it develops further based on earlier generations. IP can be an enabling or disabling factor depending of how it’s used. This is further examined in Lawrence Lessig’s book, “Free Culture”, available online.

While Free Software is about freedom, Open Source is about practical use value of the source code and the shared production model. It was also invented to satisfy as a term the business use of free software, as FS until 1998 was politically very colorful, almost like a religion and as such not very suitable for business types. The practical use value and the birth of Open Source is well documented in the book by Eric S. Raymond, “Cathedral and the Bazaar”, available online.

The financial flows, in other words, who pays who.

Yochai Benkler coined the term commons-based peer production, which examines the economics behind Open Source development model. He analyses this concept in his paper, “Coase’s Penguin and the Nature of the Firm”, available online. This concept is furter investigated in his book, “Wealth of Networks”, also available online.

He gives much credit to Ronald Coase, who invented the transaction costs theory. For anyone who wants to understand the transaction costs in any business, should look in the work done by Ronald Coase, further improved by Oliver Williamson.

The absolutely central thing to understand here is that production logic of the industrial era is changing from centralized (central IP control, centralized production, controlled distribution, few developers) to decentralized (decentralized production, distributed costs, lots of developers, IP in the commons). The driver here is that as you benefit from the commons, you are likely to contribute something back to the commons. This is enabled by the licensing, which often requires that you give the next person the same rights you received in the first hand. It’s a gift economy but driven by economical benefits. It supports free markets by creating an open market, rather than a closed market. Bruce Perens, the author of Open Source Definition has also written about the economics of Open Source.


Graham Attwell wrote a follow up, correctly underlining that Open Source and Open Content is not only driven by capitalism alone, but other values are at stake as well.  Preserving and improving culture has never been driven by sheer value propositions alone. We all have dreams, stories, ideas, conversations and joys to share, and that’s what we are doing with openness in heart.

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  • services sprite IP in an Open Source Society; who is paying who?
  • services sprite IP in an Open Source Society; who is paying who?


  • Teemu

    Thanks Teemu. A Great post! Will be part of the learning materials in my courses at the Media Lab. But why don’t you post this to the FLOSSE Posse, as well?