Open Source faces economic challenges

On August 27, 2024, Baldur Bjarnason, a web developer from Iceland, published an article titled The slow evaporation of the free:open source surplus, which raised concerns about the future of free and open source software (FOSS). Four days earlier, on August 23, 2024, Tara Tarakiyee posed a similar question in her blog post: Is the Open Source Bubble about to Burst? These publications have sparked discussions about the economic challenges facing the open source community and its potential impact on the broader technology industry.

Open source software, which allows users to view, modify, and distribute its source code freely, has become a cornerstone of modern technology infrastructure. According to Bjarnason, the value of open source software to the global economy is estimated at $8.8 trillion. This figure, derived from a Harvard Business School working paper, represents the cost companies would incur if they had to recreate all the open source software they currently use.

Bjarnason argues that the open source ecosystem is heavily dependent on what he calls an "industry and labor surplus." This surplus arises from two main factors. First, the software industry has historically enjoyed high profit margins and easy access to investment capital due to low interest rates and investor optimism about tech company growth. Second, many software developers, especially in high-income regions like California, have become relatively wealthy through industry "liquidity events," allowing them to contribute to open source projects without immediate financial compensation.

However, Bjarnason identifies several trends that threaten this surplus:

1. Rising interest rates, which reduce available investment capital.
2. A shift in investment focus towards artificial intelligence (AI) and away from traditional software projects.
3. A reassessment of tech industry growth prospects following the COVID-19 pandemic.
4. Increased layoffs in the tech sector, reducing the time and resources available for open source contributions.
5. Burnout among open source maintainers due to high demands and limited support.
6. Cost-cutting measures in various industries that may reduce support for open source initiatives.

Tarakiyee's analysis complements Bjarnason's observations by highlighting three specific "cracks" forming in the open source ecosystem:

1. The debate over the definition of "Open Source AI," which Tarakiyee argues may dilute the meaning and values of open source software.
2. The rise of "source-available" licenses, which provide access to source code but with additional restrictions that disqualify them from being truly open source.
3. The European Commission's decision to cut funding for the Next Generation Internet (NGI) initiative, which supported many open source projects.

Both authors emphasize the critical role of open source software in the modern digital infrastructure. Bjarnason notes that the cost to replace all widely-used open source software, if it were to disappear, would be approximately $8.8 trillion. This figure highlights the enormous economic value generated by the open source community, often with limited direct financial compensation.

The sustainability of the open source model is called into question by these trends. As Bjarnason points out, companies may increasingly question why they should compete with cloud service providers offering their own open source projects at lower prices, or why they should subsidize projects that don't directly contribute to their bottom line.

Tarakiyee argues that the loss of funding, such as the European Commission's cut to the NGI initiative, could have far-reaching consequences. Open source projects often struggle to attract and retain skilled developers, implement security updates, and introduce new features without adequate financial support. This situation could lead to increased burnout among maintainers and potentially compromise the security and relevance of critical software infrastructure.

The rise of "source-available" licenses, as noted by Tarakiyee, represents another challenge to the traditional open source model. High-profile projects like MongoDB, Elasticsearch, Terraform, Neo4J, and Sentry have adopted more restrictive licenses in recent years. While these licenses still provide access to source code, they include additional restrictions that conflict with the principles of free and open source software.

The debate over the definition of "Open Source AI" adds another layer of complexity to these challenges. Tarakiyee expresses concern that attempts to create an open source AI definition may inadvertently weaken the broader understanding of what open source means, potentially allowing proprietary systems to claim the open source label without adhering to its core principles.

Despite these challenges, both authors acknowledge the resilience and importance of the open source community. Bjarnason suggests that the best-case scenario is a period of decline for free and open source software, while the worst-case scenario could involve a vicious cycle leading to collapse. However, he also notes that some correction may be inevitable and even necessary in certain areas, such as the JavaScript npm ecosystem, which he considers unsustainable in its current form.

Tarakiyee concludes that while open source software will likely survive these challenges due to its fundamental values of openness and collaboration, the potential harm to the ecosystem should not be underestimated. She calls for stakeholders to recommit to the core principles of free and open source software and work together to address these emerging challenges.

As the technology industry continues to evolve, the future of open source software remains uncertain. The economic pressures identified by Bjarnason and Tarakiyee pose significant challenges to the sustainability of the open source model. However, the enormous value generated by open source projects and their critical role in modern technology infrastructure suggest that finding solutions to these challenges will be crucial for the continued health of the broader technology ecosystem.

Key facts

Baldur Bjarnason published The slow evaporation of the free:open source surplus on August 27, 2024.

Tara Tarakiyee published "Is the Open Source Bubble about to Burst?" on August 23, 2024.

The estimated value of open source software to the global economy is $8.8 trillion.

Factors threatening open source development include rising interest rates, shift in investment focus, tech industry reassessment, layoffs, maintainer burnout, and industry cost-cutting.

Challenges identified include debates over "Open Source AI" definition, rise of "source-available" licenses, and funding cuts like the European Commission's NGI initiative.

High-profile projects like MongoDB, Elasticsearch, Terraform, Neo4J, and Sentry have adopted more restrictive licenses.

The cost to replace all widely-used open source software is estimated at $8.8 trillion.

Both authors acknowledge the resilience of the open source community while emphasizing the need to address emerging challenges.