Open source licensing and technology strategy

The most recent issue of Harvard Law Review has an interesting piece on open source and technology strategy – “The host’s dilemma: strategic forfeiture in platform markets for informational goods.”


Voluntary forfeiture of intellectual assets — often, exceptionally valuable assets — is surprisingly widespread in information technology markets. A simple economic rationale can account for these practices. By giving away access to core technologies, a platform holder commits against expropriating (and thereby induces) user investments that support platform value. To generate revenues that cover development and maintenance costs, the platform holder must regulate access to other goods and services within the total consumption bundle. The trade-off between forfeiting access (to induce adoption) and regulating access (to recover costs) anticipates the substantial convergence of open and closed innovation models. Organizational patterns in certain software and operating system markets are consistent with this hypothesis: open and closed structures substantially converge across a broad range of historical and contemporary settings and commercial and noncommercial environments. In particular, this Article shows that (i) contrary to standard characterizations in the legal literature, leading “open source” software projects are now primarily funded and substantially governed and staffed by corporate sponsors, and (ii) proprietary firms have formed nonprofit consortia and other cooperative arrangements and adopted “open source” licensing strategies in order to develop operating systems for the smartphone market.

Here’s the pdf.

2 Comments on “Open source licensing and technology strategy”

  1. BillyMeinke says:

    Thanks for the link. The lead operations manager in my college will be interested to see this article. It seems as if there’s less of a clear line between the development of FOSS projects and proprietary software.

  2. Very interesting. They describe the credible commitment as giving away a portion, but I would also think that part of having a credible offering also requires keeping part. I work for a software company, and when we acquire pure open source companies there are often signaling issues where the industry wants to know that there is a commitment to continue development. Developing proprietary add-ons, and keeping the IP, seems to reassure potential customers that we also have a vested interest in keeping the technology alive for the long term.

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