Free Software as a model for Commons Based Peer Production and its Policy Implications Overview The challenge of free software Peer production all around The incentives problem Coase s Penguin an information opportunity costs theory of peer production increasing returns to scale for agents resources and projects The trouble with commons Ecological competition and its institutional manifestation The stakes of law Free Software Getting harder to ignore success Apache market share 1995 09 2001 Source Netcraft Survey Sept 2001 Free Software Getting harder to ignore success Source Netcraft Survey Sept 2001 Free Software Getting harder to ignore success Current explanations of open source software Detailed description of the phenomenon Explanations of what is special about software Explanations about hacker culture Free Software Proprietary software depends on exclusion Use permitted in exchange for payment Learning often prevented altogether to prevent copying and competition Customization usually only within controlled parameters No redistribution permitted so as to enable collection by owner Free Software Proprietary software depends on exclusion Free software limits control Use for any purpose Study source code Adapt for own use Redistribute copies Make and distribute modifications Notification of changes Copyleft Free Software Proprietary software depends on exclusion Free software limits control Identifying characteristic is cluster of uses permitted not absence of a price free speech not free beer Anatomy of Free Software Raymond Moody One or more programmers write a program release it on the Net Others use modify extend or test it Mechanism for communicating identifying and incorporating additions patches into a common version led by initiator leader group Volunteers with different levels of commitment and influence focus on testing fixing and extending Peer Production All Around Peer production various sized collections of individuals effectively produce information goods without price signals or managerial commands Peer Production All Around Peer production All Around Old academic research The Web Content Mars clickworkers MMOGs Relevance accreditation commercial utilization Amazon Google volunteer open directory project slashdot Distribution physical Gnutella Freenet value added Project Gutenberg Distributed Proofreading The Incentives Problem Why would anyone work without seeking to appropriate the benefits Open source software literature Moglen Homo ludens meet Homo faber Raymond others reputation human capital indirect appropriation The Incentives Problem Why would anyone work Open source software literature Two propositions Given a sufficiently large number of contributions incentives necessary to bring about contributions are trivial e g a few thousand players a few hundred young people on their way and a few or tens paid to participate for indirect appropriation will become effective The Incentives Problem Why would anyone work Open source software literature Two propositions incentives are trivial Peer production limited not by the total cost or complexity of a project but by modularity how many can participate how varied is scope of investment granularity minimal investment to participate cost of integration Emerging mode of Information Production Organizations as mechanisms for reducing uncertainty of agents as to alternative courses of action Markets price to produce information Firms use managerial algorithm to separate signal from noise Each departs differently from perfect information information opportunity cost relative to perfect information Emerging mode of Information Production Human capital highly variable time task mood context raw information materials project Difficult to specify completely for either market or hierarchy control Emerging mode of Information Production Human capital highly variable Difficult to specify for market or firm Peer production may have lower information opportunity costs than markets and firms in terms of identifying human capital and assigning it to resources Emerging mode of Information Production Human capital highly variable Difficult to specify for market or firm Peer production may have lower information opportunity costs Agents self identify for and self define tasks Have best information about capability at the moment Mechanism for correcting misperceptions necessary e g peer review or averaging out Emerging mode of Information Production Human capital highly variable Difficult to specify for market or firm Peer production may have lower information opportunity costs Larger sets of agents resources and projects increasing returns to scale of each set because of variable talent Increasing the sets is core information processing strategy and has improved assignment characteristics Emerging mode of Information Production Human capital highly variable Difficult to specify for market or firm Peer production may have lower information opportunity costs Larger sets of agents resources and projects increasing returns to scale of each set because of variable talent Higher probability that best agents will collaborate with best resources on project best suited for that combination Emerging mode of Information Production Human capital highly variable Difficult to specify for market or firm Peer production may have lower information opportunity costs Larger sets of agents resources and projects Declining capital cost of information production communications may make relative advantage in human capital assignment salient The Commons Problem Different kinds of commons have different solutions Information only a provisioning problem not an allocation problem Primary concerns Defection through unilateral appropriation undermine intrinsic and extrinsic motivations Poor judgment of participants Providing the integration function The Commons Problem Primary approaches to solution Formal rules technological constraints social norms to prevent defections GPL Slash LambdaMOO Peer review iterative peer production of integration redundancy averaging out technical plus human reintroduction of market and hierarchy with low cost and no residual appropriation Ecological Competition Free Republic IP differentially effects different information production strategies increases appropriability in some forms increases all input cost shoulders of giants effect particularly valuable to large inventory owners that integrate new production with