Marketing, Organization, and Financing

Unlike other companies that have a focused manner of development, the open source is less clear-cut. There are mature open source products that perform product marketing, but most of them have no global planning authority. This is justified by the fact that open source is not a business, but an entire business, which moulds to the market itself. The product marketing for the global open source community operates in the way a capitalist nation operates its economy, rather than the way a company plans its products.

Networks of programmers can be formed via the Internet. They can create large and complex software products, and the team increases progressively according to the phase of the development. Software is extremely modular by nature, and thus many people can work on different segments of the software, almost autonomously, if they agree how to share tasks. A good example would be the Debian GNU/Linux Distribution. This system includes more than 16,000 software packages maintained by over 1,000 volunteer developers worldwide.

Open source is funded directly or indirectly as a cost-centre item by the companies that need it. This software is developed in order to use it for other activities, which are the ones that bring profit to the business, so the cost of development is less important than the future use of the software. Such contributors are willing to invest in this kind of project because it allows them to spend less on their cost centers by distributing the cost and risk among many collaborators.

The Recognition, Protection and Classification of Creative Products - Part 2

The case for intellectual property in economic theory notes certain substantial differences from the case for tangible property. Consumption of tangible property is rivalrous. For example, once one person eats an apple, no one else can eat it; if one person uses a plot of land on which to build a home, that plot is unavailable for use by others. Without the right to exclude others from tangible resources, a tragedy of the commons can result. The subjects of intellectual property do not share this feature of rivalness. For example, an indefinite number of copies can be made of a book without interfering with the use of the book by owners of other copies. When combined with a lack of exclusive intellectual property rights, this nonrivalrousness and nonexcludability combine to make them public goods and susceptible to the free rider problem. A rationale for intellectual property therefore rests on incentive effects to overcome the free rider problem. This case asserts that without a subsidy that is afforded by exclusive rights, there is no direct financial incentive to create new inventions or works of authorship.

As Wikipedia and free software demonstrate, works of authorship can be written without direct financial incentives. Moreover, many important works were created before copyright was invented. One might argue that much more invention occurred after patents came into existence; however, one could also argue that patents were brought into law as the power and influence of industrial interests grew. The status of intellectual property is disputed by various commentators in India, China and other developing nations. The United States and the United Kingdom are the only two nations who consistently receive net balance of payment benefits from intellectual property, and are amongst the chief supporters of intellectual property systems.

The Recognition, Protection and Classification of Creative Products - Part 1

Once new products and services are created, they have to be protected. Many creative products qualify as intellectual property. Besides the attribute of belonging to someone, intellectual property is intangible. Copyright, patents, trademarks and designs are the most common forms of intellectual property.

By an economic analysis, the incentives granted for intellectual property rights have sometimes served the public benefit purpose and promoted innovation by ensuring that someone who devoted, say, ten years of penury while struggling to develop vulcanized rubber or a workable steamship, could recoup her or his investment of time and energy. Using monopoly power, the inventor could exact a fee from those who wanted to make copies of his or her invention. Set it too high, and others would simply try to make a competing invention, but set it low enough and one could make a good living from the fees (1)

Exclusive rights such as copyrights and patents secure their holder an exclusive right to sell, or license rights. As such, the holder is the only seller in the market for that particular item, and the holder is often described as having a monopoly for this reason. However, it may be the case that there are other items of intellectual property that are close substitutes. For example, the holder of publishing rights for a book may be competing with various other authors to get a book published. In such cases, economists may find that another market form, such as oligopoly or monopolistic competition better describes the workings of the markets for expressive works and inventions. This is one reason to prefer the term exclusive rights over monopoly rights.

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(1) http://en.wikipedia.org/wiki/Intellectual_property