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.
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:
It means that license charges are not a disincentive against using software.
With free software, you never have to ask the question: "Is the cost of the license going to be too expensive for us to handle?"
Free software requires no costs to track the distribution and use of software licenses.
In contrast, proprietary systems use all sorts of expensive tools including "license managers," hardware "dongles," complex legal contracts, threats of legal prosecution, and even 1-800 hotlines and advertising to encourage "whistle-blowing" against so-called software "piracy."
These secondary costs to track the use of software licenses can be quite substantial, particularly in the presence of redistribution. And the costs associated with licensing Internet-oriented server software can be quite outrageous.
The key economic insight in the denial of licensing charges is in its recognition that once costs have been incurred to produce software, the costs are properly treated as sunk costs that can thereafter be ignored for decision-making purposes.
If the producer of the software doesn't need to consider the sunk costs for decisionmaking purposes, it sure is nice when its release as free software results in the users not needing to consider those costs either.
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