Harvard Business School on the Value of Open Source Software
canopic jug writes:
At the beginning of last year, Manuel Hoffmann, Frank Nagle, and Yanuo Zhou published a working paper on the Value of Open Source Software [PDF] for comment and discussion only.
The value of a non-pecuniary (free) product is inherently difficult to assess. A pervasive example is open source software (OSS), a global public good that plays a vital role in the economy and is foundational for most technology we use today. However, it is difficult to measure the valueof OSS due to its non-pecuniary nature and lack of centralized usage tracking. Therefore, OSS remains largely unaccounted for in economic measures. Although prior studies have estimated the supply-side costs to recreate this software, a lack of data has hampered estimating the much larger demand-side (usage) value created by OSS. Therefore, to understand the complete economic and social value of widely-used OSS, we leverage unique global data from two complementary sources capturing OSS usage by millions of global firms. We first estimate the supply-side value by calculating the cost to recreate the most widely used OSS once. We then calculate the demand-side value based on a replacement value for each firm that uses the software and would need to build it internally if OSS did not exist. We estimate the supply-side value of widely-used OSS is $4.15 billion, but that the demand-side value is much larger at $8.8 trillion. We find that firms would need to spend 3.5 times more on software than they currently do if OSS did not exist. The top six programming languages in our sample comprise 84% of the demand-side value of OSS. Further, 96% of the demand-side value is created by only 5% of OSS developers.
The working paper is especially interesting when considered in the context of similar, earlier works such as Ghosh et al in Study on the effect on the development of the information society of European public bodies making their own software available as open source [PDF] published by the European Commission back in 2007. One would think that both sides of the pond would be very interested in this valuable commons and work to not just protect it but cultivate it further, rather than work to saw the legs from under it by advancing software patents instead.
Previously:
(2025) Open Internet Stack: The EU Commission's Vague Plans for Open Source
(2023) The Four Freedoms and The One Obligation of Free Software
(2023) Opinion: FOSS Could be an Unintended Victim of EU Security Crusade
(2021) European Commission's Study on Open Source Software
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