Gift economy data
From iA wiki
See also: Gift Economy
(The infoAnarchy weblog has a running Gift Economy topic, from which things could be brought here)
On this page and sub-pages, we will try to collect hard facts about projects that fall into the following categories:
- Projects where contributors gave money to make the project succeed, although they didn't have to
- in advance for a project that just exists in the form of a proposal
- for a running project that needs funds to continue to exist
- Similar projects where contributors paid money to support the project and received only minor services in return
- Projects where contributors paid money in order to change the "intellectual property" status of the project (e.g. contribute any content to the public domain).
We refer to these projects as "gift economy" projects or as "unconventional markets".
Our goal is to establish what is necessary for such projects to succeed (there is already enough data to support the claim that at least some gift economy projects do succeed). To this end, we will try to collect all available data, both through public sources and by private inquiry.
If you want to contribute data, please respect our general wiki Style Guide. We will create summaries of the projects discussed on this page. If individual descriptions get too detailed, we will link to the details on a subpage.
Goal: Collect 100,000 Euro (approx. 100,000 US$) for a non-profit Blender Foundation. Once this amount of money is reached, relicense the 3D rendering application Blender, currently closed-source freeware, as GNU GPL "free software", so that anyone can modify the source code and redistribute modified versions.
History and current status:
- July 5 2002: Initial Slashdot story
- July 18: Fundraising campaign starts. 12,000 Euro in pledges and payments collected within the first 24 hours.
- July 20: Campaign slashdotted. 18,000 Euro before slashdotting.
- July 25: "Over 40,000" Euro in pledges and donations.
- August 1: Blender starts offering special downloads for supporters who have joined the Blender Foundation: "a full functional Publisher 2.25" (any details?)
- August 2: Update on funding status in Slashdot Slashback story (Slashbacks are collections of stories, individual items do not have as much exposure). "Over 65,000 Euro" as the story hits the net.
- August 8: Over 74,000 Euro in pledges and donations.
- August 13: Over 85,000 Euro as another Slashback story hits the net.
- August 19: Over 90,000 Euro and yet another Slashback mention.
- September 7: Over 100,000 Euro in donations, goal reached. (Last Slashdot story)
Slashdottings obviously greatly helped the campaign. Relatively little coverage otherwise. Some Google searches (Aug 8 2002):
The Blender-related Elysiun 3D community existed before the funding initiative, with moderate to high activity in the forums (9100 posts in the main forum, 1600 posts in the Blender Foundation forum as of Aug 8 2002). This community was also used to promote the initiative.
Campaign uses a "money meter" which has been very successful for other similar projects.
The money meter was put directly on the front page. Unfortunately, there was no direct link from the money meter to the donation and membership pages. It was also not immediately clear that there was a difference between donations and membership. There were three different links on the frontpage that led to different sub-pages:
- A link called "Campaign pages". These pages described the project and explained ways to contribute.
- A link called "Donators / Members". The purpose of this link was not immediately clear, it could be seen as leading to a list of people who have contributed. Instead it was a page that was also linked from the "Campaign pages" that explained the difference between donating and becoming a foundation member.
- A small Paypal link, on the opposite side of the webpage as the money meter under a headline just called "Links / Sponsors"
Blender is a Dutch company and the English on many pages was not the best, although usually understandable.
The Blender campaign pages contain no details about the product in question, such as feature list, comparison to other 3D tools, info about implementation (programming language, design style). How can someone who is not already intimately familiar with Blender 3D be motivated to donate?
From a usability standpoint, the Blender campaign did many things wrong. It was obvious that they did not conduct any tests on the usability of the fundraising site. The money meter may well prove to be one of their best ideas, but it is unfortunate that it was not directly linked to the different ways to donate. There were too many different links with too little explanations of their meaning.
Freenode nee Open Projects
a " micro-patronage" proposal for authors. Here's a report on the first week.
update Nov '02 - 4-month report on PayBITS performance.
Affero is distinct from the projects
above in that it is a company designed to facilitate provisioning of cash gifts. Think of it as a gateway between the money
economy and the gift economy.
Just to let readers of this wiki know, we've started an open research project building computer models of alternative economic systems, including gift economies, at Optimaes. Anyone who wants to play with simulations can download the code, and anyone who wants to discuss the results can comment on the wiki.
Some ideas on the gift economy are presented in a paper called "Distributed Patronage".
Never went too far with this but the central ideas are sound ...
Also see Potlatch, which is entirely about the Gift Economy
From our paper, "An Economy for Giving Everything Away", http://www.ms.lt/en/workingopenly/givingaway.html in the public domain. Our laboratory has a working group for organizing an economy for working openly http://www.ms.lt/openwork/ Let us know if you'd like to join. Andrius Kulikauskas, http://www.ms.lt
The years 1998 and 1999 saw the creation of six very different markets for open source software. Let us examine the nature of each market, and consider in what sense did they profit from the openness of the software?
Free Software Bazaar
Math professor Axel Boldt established the Free Software Bazaar in 1998 because he believed that it was better to directly induce open source software creators rather than pay middlemen like Red Hat. His Bazaar worked on the bounty system, with offers made on the honor system, and payment given for the first solution. A few dozen projects were completed, mostly for about $50, one for $1,000. Developers found ideas for truly needed projects, and users gave back to their community. "The Software Bazaar kind of died - I lost my web access and was too lazy to organize something new." "It wasn't that much work: I maintained the site by hand and spent maybe a couple of hours per week on it." [Boldt, personal communication]
Bernie Thompson and Norm Jacobowitz founded CoSource, "a collaborative reverse-auction site for funding open source development". They encouraged software users to pool contributions to sponsor the creation of drivers, for example. They received a lot of good publicity from the open source community press. In the first six months there were 14 projects completed, with the largest for only $1,300. They relied heavily on a developer in Russia. In December, 1999, Bernie Thompson was able to sell his company for an undisclosed amount to Applix, and Cosource drifted into its product support center SmartBeak, closing its doors around August, 2001. Bernie Thompson was put in charge of Applix's Linux division, which at that time had about $1.5 million dollars in revenues. Within six months Applix had spun off that division, with Bernie Thompson in charge, into a separate company with $6 million dollars in backing. And a year later that company was sold, and changed direction again, for many millions more.
Open Avenue received a $4.6 million investment in December, 1999. It had 60 small and medium sized projects that it was ready to find workers for. At first, Open Avenue intended to distinguish itself by embracing programmers using Microsoft's Visual Basic and Borland's Delphi: "We will bring more mainstream developers into open source by lowering the barrier of entry, allowing developers to work in projects with their tools and platforms of choice." But Open Avenue had trouble winning acceptance from fans of open source. A year later, it focused on making the open source model available as a development option for enterprises. It offered to organize "gated" communities that would respect the need of enterprises to protect information. Open Avenue sold web portal software for such collaborative communities. It closed in 2001, unable to raise a second round of funding.
SourceXchange was the brainchild of Hewlett-Packard's corporate IT department, which wanted to shield contractors from the complexities of its contracting process. They wanted to outsource all projects that didn't need to be part of HP's intellectual property. They wanted access to great talent, and a time-to-market advantage, but they needed a predictable market. HP wanted their competitors to be able to participate as well. HP approached O'Reilly Associates, offering some funding as well as dozens of projects in the $5,000 - $40,000, six man week to four man month range. They recruited Brian Behlendorf to lead CollabNet as an subsidiary. CollabNet launched SourceXchange in the summer of 1999, but it closed in March, 2001 due to lack of volume, with only 11 completed projects. Perhaps SourceXchange was overshadowed by CollabNet's portal for collaboration. CollabNet's portal was itself open source, in contrast to that of its competitor SourceForge. A key reason might be that CollabNet's portal was cobbled together, whereas SourceForge's was cut from whole cloth. CollabNet hosts specialized developer communities sponsored by Motorola, Hewlett-Packard, Sun Microsystems, Oracle, etc.
Steve Elfanbaum got the idea for Asynhcrony from an October 1998 article on "e-lancing" in Harvard Business Review while flying home from Europe. He and his brothers Bob and Dave have backgrounds in finance. They founded Asynchrony in May, 1999 along with CTO Nate McKie. Concurrently, they founded Asynchrony Solutions, an enterprise service company. Asynchrony supports those who have ideas but need help implementing them. They are encouraged to build self-directed teams where people share an interest in making money. A project creator offers percentage shares of future earnings to those who help in any way, such as program, document or debug. Asynchrony sells the completed product as shareware, receiving 10% for noncertified projects, 25% for projects it certifies, and an additional 10% if participants desire marketing assistance. Nate McKie notes in a white paper in February, 2000 that participants may upon creation specify their projects as open source (such as GPL). In practice, there is a high wall of confidentiality that requires, upon registering at the website, the waiver of all moral rights of authorship, and the transfer to Asynchrony of all code, ideas, trademarks, works of authorship (which they presumably are then free to place under the appropriate open source license, or keep them proprietary, as agreed). This is to document and mediate any member disputes. Asynchrony has 31,000 registered members, and 1,200 active projects. The first product was released in October 2000. 28 projects have been completed. Marketing efforts focus on NewzTop and PDA Defense. Asynchrony encouraged corporations to act as project creators for work they want to outsource. It has described itself as a developer training ground, having a job posting board, and presumably finding developers for its own needs at Asynchrony Solutions, where it has focused all but a few of its 30 workers. However, the success of PDA Defense helped it win its third round of funding in July, 2002, $1.5 million, making for a total of $5 million.
CodeSourcery organized contests in 2000-2001 on behalf of the Los Alamos National Laboratory's Advanced Computing Laboratory to design and build in Python new versions (SC Config, SC Build, SC Test, SC Track) of four classic open source software tools. $860,000 was budgeted for this experiment in finding ways to work together with the open source community. In the design competition, 16 prizes of $2,500 were awarded in the first round, and 12 prizes of $2,500 and 4 prizes of $7,500 in the second round. There were distinguished panels of judges. $200,000 was set aside for implementation, not necessarily by the winners.
The markets described above are wonderful in their variety. Yet a first conclusion is that the nature of each market seems almost determined by the monetary size of the software projects. It's amazing that software developers were willing to respond to offers of $50 a project at The Free Software Bazaar. Certainly, there's no margin for profit in such a system, so it must be run by a volunteer under the simplest rules possible. CoSource projects probably averaged $500 to $1,000, and were small for businesses, but large for individuals. The idea was that individuals would pool their money together. SourceXchange had projects that were large enough to be useful for Hewlett-Packard, but small enough to not warrant the contracting process. This evolved into the organization by Collabnet of a community of developers around a corporation. Open Avenue attempted this as well, but too late. Asynchrony encouraged developers to aim for projects that would be hits with a wide market. These larger projects demanded work on speculation, a distribution of shares, and a more protective environment. Software Carpentry had the kind of generous budget that a government agency might allow itself, which needed to be parceled so that organizers could make sure the work got done, but there could also be an attractive contest with many participants and beneficiaries.
A second and even stranger observation is that every market completed roughly 20 projects. Open Avenue had lavish venture capital, The Free Software Bazaar was run by a volunteer, SourceXchange had secured dozens of projects from Hewlett-Packard, and CoSource was adored by the open source press. Asynchrony, the only surviving market, had only 28 completed projects, after 4 years with 31,000 registered members and 1,200 active projects. Even Software Carpentry's budget awarded 16 teams. Why did each market end up with roughly 20 completed projects? We hypothesize that this reflects a limit on the organizer. Each of these markets depends on devoted facilitation. Each organizer must be motivated by their work, presumably by the variety of possibility. After setting up 20 projects, the novelty has worn off. The market must sustain itself. It needs to have proven its point. Of course, if it's a failure, as in the case of Open Avenue, then venture capitalists know it's time to leave. But it seems that SourceXchange proved victim not so much of failure, but of success. It simply lead to the development of collaborative software that was more lucrative then the market itself. Apparently, the market needs an organizer, but also the organizer needs a personal interest in the market, so that they stay with it and don't pursue other opportunity. Perhaps this explains the success of Asynchrony in that its market is just a small but key part of its efforts, inspiring the products that it can market further, and providing a pool of developers.
A third and most important idea is that wealth is relationships. Asynchrony, the only market to survive, was the least open, but focused most on building and harvesting long term relationships. But the other markets were not necessarily economic failures. CoSource had less than 20 projects, and a total market volume of less than $20,000. Bernie Thompson was able to sell his company to Applix, and get put in charge of a division that six months later he was leading as a new company with $6 million dollars in backing! Certainly the wealth of the CoSource market was much greater than the software it generated! Consider also the value of the good press, the business connections, and the highly skilled workers. All of these point to the open process that might be sold.