Entree Libre, Software Libre

Entree Libre, Software Libre Many years ago, some Paris shops tried a radical experiment. They started displaying signs saying "Entree Libre" ("free entry"). They encouraged potential purchasers to be free (libre) to come and go, without any...

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Entree Libre, Software Libre

Many years ago, some Paris shops tried a radical experiment. They started displaying signs saying "Entree Libre" ("free entry"). They encouraged potential purchasers to be free (libre) to come and go, without any obligation to buy anything.

This clearly daft idea was in direct opposition to the existing business model. Formerly, shopkeepers didn't want people coming in and wasting their time without buying anything. By walking through the door, customers were committing. It avoided the problem of tyre-kickers, and undesirables; of people pawing the goods with no intention to buy.

Under the old system, shopkeepers agreed, it was much more efficient for trade if the only people in the shop were serious, committed purchasers. If all the shops in the town did the same thing, better still. The rule meant that people tended to commit, in effect, to visiting one shop (of a particular type), they would be less tempted to visit the competition.

The vendors locked in the customers, created a cosy oligopoly, and could keep prices nice and high. And since customers rarely visited other shops, it was more difficult to do price comparison, anyway. (Customers could still peer in through the windows, but that was no substitute for actually being in the shop).

Still, for some reason all retailers have by now abandoned the old model. Huge buildings like the Westfield Centre and the Mall of America were constructed, with the premise being that people were free to come and go, without any obligation to purchase. Somehow, retailers had decided that the enormous cost of development of these buildings could be financed by the rather hippyish ideal of letting people enter the shop freely and without restriction, in the possibly naive hope that enough of them would be enticed to buy something. No one would be forced to.

In the late 20th century, some software companies tried a radical experiment. They started displaying signs saying "free software". They encouraged people to download the software, use it, at home and in their businesses, making it clear to them that they were free (libre) to tinker with it, copy it, and share it with their friends. They wouldn't charge for the software, either. The software companies often provided complementary services, but people were free to pick and choose from competing pieces of software, without any obligation to buy.

This clearly daft idea was in direct opposition to the existing business model. Formerly, software companies didn't want people using their software without paying for it. To get fully-functioning software to use, they had to pay for it. It avoided the problem of people using the software without actually paying for it. Once the customers were used to using the software they were, effectively locked in. To move to other suppliers was difficult: their data formats were non-standard. People got used to the user interfaces that the software companies provided.

The analogy, of course fails. In practice, you can only make a shop so large before it becomes uneconomic, and you can only have so many visitors because the catchment area of a shop is limited by travel costs and travel time, and expenses such as parking. There are no such constraints with software.

With software, you are not restricted by square footage. You can make your shop as arbitrarily capacious as you like. People can visit it, instantly, from anywhere on the planet at a tiny marginal costs. So, where the analogy fails, it fails because the retail model is constrained by physicality which does not constrain software. A model that has worked for hardware is even more likely to work for software.

Don't misunderstand. I'm not trying to suggest that retailers should give away their wares for free. The real comparison is this:

Where a business is providing a product which has a very low marginal cost to reproduce, or provide to another person, then even if producing (as opposed to reproducing) that product in the first place is very expensive, (and even if that product is very desirable) the business is at risk from competitors who will provide that product for free, and therefore the business needs to look elsewhere for its revenue stream.

For retailers, even though the provision of their premises is very, very expensive, they cannot (in a functioning free market) afford to prevent potential customers making use of it for free, so they have to make money by selling (relatively) scarce things - like socks, paintings and Bang and Olufsen televisions.

For software companies, even though the development cost of software is very, very high, they cannot (in a functioning free market) afford to prevent potential customers making use of it for free, so they have to make money by selling (relatively) scarce things, like support, maintenance, migration services and the development of customised code.

The upshot of this is that a shift to free and open source software is inevitable (although having said that so is the withering away of the state, which although it's been put on a crash diet recently, can hardly be descibed as emaciated).

In the 21st century, some musicians tried a radical experiment. They started allowing their customers to download music for free....