Open-source economics

While initially it might seem that contributing to open-source software goes against basic economic principles, there are several ways in which people are incentivized to contribute to open-source projects. Some reasons are not strictly economically beneficial to the contributor, but are related to leisure activities.[7] People program as a hobby and are incentivized to contribute to open-source projects simply because they enjoy it. There are also altruistic reasons, such as creating a better world and donating one's time to a project one believes in.

There are also several economic arguments for producing open-source software. A potential economic benefit is the enhancement of a person's reputation or resume.[7] A top contributor to open-source software may get easier access to venture capital money or better access to jobs. Further, developing open-source software can be cheaper than purchasing commercial software, thereby saving a contributor money.[7]

Corporations have several incentives to contribute to open-source projects, including talent acquisition. Some software developers are huge proponents of open-source software, and if they have used a company’s open-source software, or are aware of it, they may be more interested in working for that company. For example, Twitter created Bootstrap, an easy-to-use framework for designing websites. Bootstrap is very popular and is used by many people. Therefore, by open-sourcing Bootstrap, Twitter is able to increase brand awareness due to the large number of people developing products with their software, which should help them attract talent.

It is common for companies to not open-source core parts of their products that are critical for business, but helpful auxiliary processes and infrastructure. This way, through open sourcing they get all the positive aspects of talent acquisition and branding, and do not give up market share.

By making a product open-source, more people can contribute. These contributions can help develop the software faster, so it may also be beneficial for companies to open-source to get free help.[8]

Open-source software can help protect against monopolies. For example, the rise of GNU/Linux, an open-source computer operating system, helped prevent Microsoft from being considered a monopolist.[9] Microsoft considered Linux to be their main competitor during the 1990s.[9] Many computer makers offer Linux or Windows for their users, and a large percentage of mobile phone and tablet operating systems are Android, which is a Linux variant. Not only are monopolies affected, but several other businesses with strongholds are affected. Microsoft Office has open-source competitors such as LibreOffice.

Numerous companies have created businesses around open-source software.[10] They do this by publishing all of their code open-source, then charging for training, certifications, add-ons, and other services. One example is Red Hat, which produces operating systems. Red Hat sells services such as 24/7 support, integration into company's products, and training.[11] Red Hat was the pioneer for the open source business model, and was valued at approximately $16 billion as of April 2017.[11] Other examples include Google, which created Android, an open-source mobile operating system based on Linux.