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The Economics of Free Software

Christopher Browne

Table of Contents
1. The Crucial Economic Freedom of Free Software: No Licensing Fees
2. Problem - Recovery of Sunk Costs
3. Some Economic Fallacies
4. Associate Charges With Costs
5. Organizational Changes
6. Points of View: Trying to Gain Perspective
7. Other Free Software Economics References

The GNU General Public License indicates, near the beginning, that " When we speak of free software, we are referring to freedom, not price. " People often rephrase this with the evocative statement: " Like 'free speech,' not 'free beer.'"

This is dismissive of the economic implications. The goals of the Free Software Foundation may be social and political; this certainly includes economic aspects. Free software most surely provides some freedoms that are of an economic nature. Some people might want to have "freedom from economics," but since we can't prevent there being some scarcities of resources, and economics is about the handling of scarce resources, this seems unrealistic.

This essay seeks to draw out some of the economic implications of free software. It does not provide a comprehensive analysis, but rather seeks to encourage people to think about the issues.

1. The Crucial Economic Freedom of Free Software: No Licensing Fees

I would argue that the crucial economic freedom that free software, and the GNU General Public License in particular, provides is that of the rejection of licensing costs. It is interesting that the Open Source Definition presents the rejection of licensing costs as the very first point.

The rejection of licensing costs has the following practical effects:

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