At the beginning of last year, Manuel Hoffmann, Frank Nagle, and Yanuo Zhou published a working paper on the Value of Open Source Software [PDF] for comment and discussion only.
The value of a non-pecuniary (free) product is inherently difficult to assess. A pervasive example is open source software (OSS), a global public good that plays a vital role in the economy and is foundational for most technology we use today. However, it is difficult to measure the value of OSS due to its non-pecuniary nature and lack of centralized usage tracking. Therefore, OSS remains largely unaccounted for in economic measures. Although prior studies have estimated the supply-side costs to recreate this software, a lack of data has hampered estimating the much larger demand-side (usage) value created by OSS. Therefore, to understand the complete economic and social value of widely-used OSS, we leverage unique global data from two complementary sources capturing OSS usage by millions of global firms. We first estimate the supply-side value by calculating the cost to recreate the most widely used OSS once. We then calculate the demand-side value based on a replacement value for each firm that uses the software and would need to build it internally if OSS did not exist. We estimate the supply-side value of widely-used OSS is $4.15 billion, but that the demand-side value is much larger at $8.8 trillion. We find that firms would need to spend 3.5 times more on software than they currently do if OSS did not exist. The top six programming languages in our sample comprise 84% of the demand-side value of OSS. Further, 96% of the demand-side value is created by only 5% of OSS developers.
The working paper is especially interesting when considered in the context of similar, earlier works such as Ghosh et al in Study on the effect on the development of the information society of European public bodies making their own software available as open source [PDF] published by the European Commission back in 2007. One would think that both sides of the pond would be very interested in this valuable commons and work to not just protect it but cultivate it further, rather than work to saw the legs from under it by advancing software patents instead.
Previously:
(2025) Open Internet Stack: The EU Commission's Vague Plans for Open Source
(2023) The Four Freedoms and The One Obligation of Free Software
(2023) Opinion: FOSS Could be an Unintended Victim of EU Security Crusade
(2021) European Commission's Study on Open Source Software
Related Stories
While fastidiously avoiding use of the F-word [i.e. freedom], the European Commission has published a very long report on the impact of open source software and hardware on technological independence, competitiveness and innovation in the EU economy. Open hardware is also covered.
This study analyses the economic impact of Open Source Software (OSS) and Hardware (OSH) on the European economy. It was commissioned by the European Commission's DG CONNECT.
It is estimated that companies located in the EU invested around €1 billion in OSS in 2018, which resulted in an impact on the European economy of between €65 and €95 billion. The analysis estimates a cost-benefit ratio of above 1:4 and predicts that an increase of 10% of OSS contributions would annually generate an additional 0.4% to 0.6% GDP as well as more than 600 additional ICT start-ups in the EU. Case studies reveal that by procuring OSS instead of proprietary software, the public sector could reduce the total cost of ownership, avoid vendor lock-in and thus increase its digital autonomy. The study also contains an analysis of existing public policy actions in Europe and around the world.
Back in 2006, Rishab Aiyer Ghosh prepared a similar report for UNU-MERIT, Study on the effect on the development of the information society of European public bodies making their own software available as open source, in The Netherlands.
FOSS could be an unintended victim of EU security crusade:
Opinion: The European Union has a commendable love for the safety of its citizens. Armed with the keys to a market of 300 million of the world's richest consumers, the EU has merely to scent danger to bravely regulate. Food, consumer goods, financial markets and data processing: if it can bite the punter, the EU has a legal muzzle to hand.
[...] The EU has now turned its attention to cybersecurity and more especially the lack thereof. It's certainly dangerous enough to merit attention. A proposed Cyber Resilience Act (CRA) making its way through Brussels says that for "products with digital elements" to be allowed on the EU market, manufacturers have to demonstrate they follow best practice in four areas. These are improving the security of a product through the whole life cycle, following a coherent cybersecurity framework to measure compliance, demonstrate transparency about cybersecurity efforts, and lastly to make sure customers can use products securely.
Which sounds fair enough, considering some of the horrors visited upon us in the past – and today. Cheap "smart" electronics running out-of-date Android that nobody's patched since Noah? Phones studded with "I bring you the best wishes of the People's Liberation Army" mystery-meat bloatware? Big name, big ticket office software that keeps making headlines for all the wrong reasons? Who could argue with bringing these into line?
There are just two questions that need to be answered: will the proposed regulations do the job they set out to do, and what effect will they have on the market? Here, it's not so much the devil in the details as the entire population of all seven layers of Dante's Inferno.
Educator Lionel Dricot explores the historical prescience of Richard Stallman's (RMS) warnings and prophecies which have been spot on since the beginning, including his proposed solutions. Dricot points out that the problem with acceptance of the solutions is not with RMS or the Free Software Foundation (FSF), instead the problem is us and that we didn't listen. In addition to the Four Freedoms, he points out one obligation which has been taken for granted and left unspoken until now: the obligation to prevent privatization of the Commons.
There was one weakness in RMS theory: copyleft was not part of the four freedoms he theorised. Business-compatible licenses like BSD/MIT or even public domain are "Free Software" because they respect the four freedoms.
But they can be privatised.
And that's the whole point. For the last 30 years, businesses and proponents of Open Source, including Linus Torvalds, have been decrying the GPL because of the essential right of "doing business" aka "privatising the common".
They succeeded so much that the essential mission of the FSF to guarantee the common was seen as "useless" or, worse, "reactionary". What was the work of the FSF? The most important thing is that they proof-bombed the GPL against weaknesses found later. They literally patched vulnerabilities. First the GPLv3, to fight "Tivoisation" and then AGPL, to counteract proprietary online services running on free software but taking away freedom of users.
Netzpolitik has an English language article about the EU Commission's vague plans for open source via its Open Stack programme. An internal paper calls on the Commission to support Free and Open Source Software in public administrations – and think about a new legal form. However, many questions remain open. The crux of the matter, which would be the role open protocols and open standards play in enabling vendor independence, remains unnamed in the article and is almost but not quite named in the acutal report [warning for PDF].
The EU Commission has been funding open source projects for years. A programme called Next Generation Internet (NGI) is central to this by distributing money quickly and without red tape to promising projects – such as the decentralised microblogging service Mastodon, the video software PeerTube or Jitsi for videoconferencing.
But the Commission has been set on ending funding NGI for some time – despite prolonged criticism. Involved organisations have said that NGI works well and efficiently. Open source also plays a key role in protecting Europe from foreign actors – particularly important in the current geopolitical environment.
The Commission responded that the end of NGI is not meant to be the end of its open source funding. That is set to continue under a new name – initially the “Open Europe Stack”, now the “Open Internet Stack”. Important distinction: In spite of the new name, the programme is only indirectly related to the “EuroStack”.
Some of these plans include the EU Commission leading by example through improving procurement and use of Free and Open Source Software in practice. They also include phasing out proprietary and/or overseas services in favor of more local services specifically those which are more amenable to using Free and Open Source Software.
Previously:
(2025) Euro Techies Call for Sovereign Fund to Escape US Dependency
(2022) The EU's AI Act Could Have a Chilling Effect on Open Source Efforts, Experts Warn
(2021) European Commission's Study on Open Source Software
(2018) German Documentary on Relations Between Microsoft and Public Administration Now Available in English
(2014) EU Spending €1M for Security Audit of Open Source
(Score: 4, Funny) by c0lo on Friday August 15 2025, @03:45AM
That's $8.8 trillion that are no longer captured by any GDP numbers of any countries! Those thieves rob the world of about 8% of the total world's GDP [google.com], money that could have been going to some honest corpo... ermmm... into some pockets.
:large-grin:
(only wanted to see how much of the total GDP is the supply side of open source, otherwise the position is economic BS)
https://www.youtube.com/@ProfSteveKeen https://soylentnews.org/~MichaelDavidCrawford
(Score: 5, Insightful) by bzipitidoo on Friday August 15 2025, @04:09AM (3 children)
The business world persists in trying to treat everything as a scarce resource. Been very bullheaded and narrow with their vision. That's at heart what patents and copyrights are: turning the abundant into the scarce, and trying to hand off control to a small group, blessing and encouraging them to gouge and levy just as absolutely as much as they can. They think the best way to create value is to tempt people with such prizes. If they weren't so damned stubborn and stupid about it, they would never have tried copy protection, DRM, and NFTs. What they should have done was work out new business models. They didn't want to.
Now, our ability to copy has grown tremendously. In the 1980s, we had the Xerox copier, cassette tapes, video tapes, floppy disks, and phone lines and modems. Today, we have far, far better storage, communication, and more ways to represent data. Now we have audio, image, and video codecs. We have UTF-8, midi, LaTeX, HTML, XML, YAML, source code, markup, PDF, Open Document Format. And, we have the Internet.
(Score: 4, Insightful) by c0lo on Friday August 15 2025, @04:25AM
Scarce? No.
To pay for? Of course, otherwise they wouldn't have a business.
Except you can't copyright or patent something that you have not rights to it (either you created or acquired those right from the creators).
Sure, you can try to abuse them, but those "rights" are as good as all the players in the field agree to abide by the rules - eg China usually doesn't and nothing bad happens because of it.
Special mention (omitted from your list) to TPB - among the top 10 torrent sites in 2025 [torrentfreak.com].
https://www.youtube.com/@ProfSteveKeen https://soylentnews.org/~MichaelDavidCrawford
(Score: 4, Insightful) by krishnoid on Friday August 15 2025, @04:48AM
I've had this argument with a friend who kept rambling on about economics concepts. My primary argument to him was that if economics was accurate, and everything was treated as a commodity, marketing wouldn't exist. See: Coca-Cola vs Pepsi vs RC Cola. Secondarily, economics concepts as taught in college are predicated on scarcity, physical or otherwise. So when that's presented in enonomics courses as prerequisites to business courses, everything builds on top of it, frequently inaccurately [youtu.be].
I've always thought of open source more as an ecology. Sure, there are bugs and animals that eat the plants that grow out of it renewably, and then poop all over the place with their entitled expectations of free support, but in the process they ask questions, someone who likely isn't the software developer harangues them to phrase the question more clearly and indicate where they've already searched, and eventually questions get answered (see: FAQ), features get flushed out, platforms get built, and participants converge on common/best practices for its use. The more enterprising ones build services and products, mine money from the more pampered animals that don't want to forage for the plants themselves, and things grow organically.
But economic principles of scarcity, money, and markets; and the marketing principle of branding, don't quite apply. If you then want to make money, you describe the ecology in terms of scarity, money, markets and branding, and since those are familiar concepts in the areas where those do exist, people pay for things and you make money.
(Score: 2) by VLM on Friday August 15 2025, @02:40PM
I don't disagree with most of your post. However its worth considering that R+D bucks are indeed a scare resource and the Xerox folks invented a really great copier, so good that the legal team gets very annoyed at people calling the "Xerox machines" when they're not made by Xerox. Anyway the point was instead of returning value to the shareholders (dividends) they invested in photocopiers and owned essentially 100% of the market, them having more or less invented them as a commercial/industrial success. A lot of budgeting and hiring was done on the idea they'll have 100% of the market, after all, they invented the damn things. Then the business folks and competition F-d up and they only have about 1/5th the market now IIRC, employment and financial carnage, etc.
In the long run industrialization and computers seem to create their own capitalist downfall by making products/services too cheap to meter so no one needs to raise capital to invest in buying them. However, R+D expenditures have NOT followed that trend and R+D remains super expensive. The entire economic system becoming scammer left coast startup bros is not necessarily the ideal solution either.
(Score: 2, Insightful) by Anonymous Coward on Friday August 15 2025, @05:03AM (2 children)
Color me surprised.
The Hahvahd Bidness Skool, one of the bastions of Capitialist Thought declaring people working collectively
for the betterment of everyone (and dealing successfully with herding cats) is evil.
(Score: 5, Funny) by MostCynical on Friday August 15 2025, @05:44AM (1 child)
Either you have something that someone wants, and a value is derived, agreed and described.
Working for nothing does not make any sense in this world.
SO, the thing with no price, must have a value attributed to it.
This attributed value must be able to be collected, so someone has made an error if money wasn't 'made'
Giving up this 'value' is incomprehensible - so, If not evil, then what?
Someone should be able to collect this missing value, and if the creators are evil, then you aren't stealing the money if you take it.
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 1, Touché) by Anonymous Coward on Friday August 15 2025, @07:19AM
"Someone should be able to collect this missing value"
and people doing work for charities are fools...
yea, I get it...