Against Intellectual Monopoly

licenses have allowed most open-source software to be
written by large and loosely organized teams of programmers, each of which
contributes small pieces of code and all of which benefit from the sharing
of information and ideas. Because of the commitment to make public all
the ideas and code, each individual collaborator expects to benefit from the
advances made by his or her colleagues, and so has strong incentive to share
ideas and code. Moreover, individuals who may not actually be part of the
"formal" team often contribute ideas and expertise - also assured that they
will ultimately benefit from the innovation triggered by their information.
    It is striking to us that a Washington conservative think tank figure
such as Ken Brown, president of the Alexis de Tocqueville Institution, an
extremely vocal proponent of the great benefits of the free enterprise system,
would argue against public licenses such as the GPL.7 Brown apparently feels
that this private institution is some form of government socialism. Although
there is a strong case for eliminating or deregulating intellectual monopoly
such as copyright and patents - which are inimical to free enterprise and
capitalism - there is also a strong case for preserving copyleft contracts such
as the GPL, which strengthen free enterprise and the system of competitive
markets.
    The success of open-source software is not some strange miracle, unrepeatable under normal circumstances. On the contrary, it is the everrepeating pattern in innovating and growing industries. Later we will learn
about an identical episode, which took place in England about 150 years earlier: the development of the Cornish steam power engine, without which
the Industrial Revolution would have been a shadow of what it turned out
to be. Too bad we do not have time to write an entire encyclopedia of competitive innovations. We could tell of similar wonders in the American automobile industry, the Swiss and German chemical industries, the worldwide
oxygen steelmaking industries, the Italian textile and fashion industries, the
Swiss watch industry, the wine farms of Europe and California, the Czech
and Venetian glass industries, and so on and so forth.8

"Pirating" Software
    The idea that a software producer - say, Microsoft - could earn a profit
without copyright protection always puzzles people. Without copyright
protection, wouldn't "pirates" step in and sell cheaper imitations, putting
Microsoft out of business? Although this is an interesting theory of how
markets work, it is not one supported by the facts.
    Again, we turn to open-source software and the Linux computer operating system. Because it is open source, Linux may be resold commercially,
but only if the source code is made freely available, including any modifications made to the original program. For example, Red Hat is a company
that sold a modified and customized Linux system with easy installation
and many other useful features. Although Ret Hat obtains the underlying
Linux system for free, the customization and testing that Red Hat conducts
is costly. Using prices quoted on the Internet on July 10, 2002, Red Hat
charged $59.95 for a package containing its system. Because it is based on
the underlying Linux system, Red Hat must also make available its code to
competitors. As a result, anyone who wishes to can sell his or her own "Red
Hat" system. And, in fact, there were at least two companies, HCI Design
and Linux Emporium, that did exactly this. For example, on July 10, 2002,
HCI Design offered for sale Red Hat Linux 7.2 for a price of $16, about onethird of the price charged by Red Hat. The Web site Linuxemporium.co.uk
offered a similar deal.
    So how does Red Hat stay in business? For starters, it turns out that
Red Hat sold many more $59.95 packages than HCI Design and Linux
Emporium sold $16 packages. Moreover, Red Hat is a large, well-known
company, while no one has ever heard of the other two, nor does it appear
that they ever represented a dangerous market threat to Red Hat.9 How
could this be? Or more accurately, how could this not be? Have you ever
used software that worked properly? If you had a problem with software
you bought, and had to call the seller for advice, who would you prefer to
call: the people who wrote the program or the people who copied it?

    The story is not over yet; please bear with us. Taking years in writing a
book chapter is not proof of high