Is Open Source Recession Proof?

DaMan writes "ZDNet asks Is open source recession proof? 'So, how might a recession affect open source software? Well, first off, I think that any business model that relies on volunteers could certainly see interest decline if times get tough. There are a lot of businesses that rely on people working for them for free because they get a pay check somewhere else, and I think that a recession would make people question working without getting any dollars in return.'"

Slow news day much?

somebody-submit-a-better-story-please

This made me laugh

Re:Slow news day much?

Recession isn't when there isn't enough money, recession is when the money is hoarded and no longer used for exchange, leading those who are the owners of the real capital to foreclose on everyone and scoop up ownership of anything that isn't already theirs, and causing hardship because everyone just stops working.

The problem with a recession is that everyone just sits around doing nothing with no direction, not that the money supply dried up. It's a testament to the power of sheeple.

So, if people have nothing to do that will make them a quick buck one way or the other, and they haven't yet lost their tools of the trade, there's every reason to think they might contribute more just because they are idle.

Of course, when they've taken your house, it's kind of hard to write software while you're living in a tent city...

They just don't get it.

Do they think OSS has a problem with recessions? Quite the reverse.

I got nailed in the Bomb, like a lot of us. Went through 4 companies in 3 years, and only one of them still existed after I left it (for another 3 whole months). Leaves you with nothing but crap on your resume; can't even prove the companies existed, more less get a reference.

I got left with skills that no one wanted, and no money to buy professional tools to start my own business. So I turned to Open Source. I'd hardly used it to that point; hadn't had any real need. But the ability to churn out products using nothing but freely available tools put money in my pocket, let me undercut my competition, and basically saw me through a rough patch. I've never been as active in OSS development as I was in those days...It wasn't because I had so much free time, it was because I needed that stuff, and if it didn't exist, I damn well had to create it!

So they think OSS is something that comes out of people being well off? All of us volunteer because we're all so bored, and have so much money and free time that we just sit around coding things? Are they nuts? Did Linus start programming Linux because he was bored with working with all the fancy Unix code people were throwing at him? No! He started it because he couldn't afford the expensive stuff, so he damn well made his own. Did anyone pay him to do it? No! Did he end up making money off it none-the-less? Yes!

Far from being bad for OSS, recessions are GOOD for OSS. You lose your job, and freelance while looking for another one...What are you going to use? Companies have a need, and no budget to fill it with commercial software...What are they going to use? Sure, if you specialize in zillion dollar OSS deployments, you've got problems (problem #1: You're mythical), but the true strength of OSS isn't in giant deployments, but in filling in the gaps...When the gaps get bigger, there we are.

If you've got a track record of doing more with less, recessions are always a good time for you.

Re:They just don't get it.

Totally agree. Plus hard core coders who NEED to have an interesting app to work on might end up working on OSS in their free time because they were forced to take a boring job in a shitty market.

Re:They just don't get it.

There are three kinds of people who fund open source development:

• Those selling complementary products / services.
• Those who actually need the software.
• Those developing in their spare time to pad their CVs.

There are likely to be more unemployed people in a recession so those looking for some form of differentiator to make their own CV more attractive will be more common. Those who need the software will continue developing (or paying third parties to develop it) it, because they have no other choice. They may even become more common since open source development is more efficient than off-the-shelf development and can be introduced as a cost-cutting measure by companies looking to reduce expenditure in a recession.

Those selling complementary products, like IBM, might well cut back. They likely invest a fixed portion of their profits in open source development and if their profits drop then so will this investment. They may increase it to try to spend their way out of the recession, but it's unlikely. The fact that they aren't the only people paying for the development might well mean that they consider that they can cut back a lot and still retain good open source products to build solutions on top of.

Re:They just don't get it.

That's gotta suck, bringing down 3 companies like that must really depress you. You should try and get a job with a company to take a job at their competitor. But seriously, I agree, I think that a lot of people will move to support OSS when times are tough. That kind of thing can really beef up a resume, especially if you can prove yourself on these projects.

Re:They just don't get it.

Did Linus start programming Linux because he was bored with working with all the fancy Unix code people were throwing at him? No! He started it because he couldn't afford the expensive stuff, so he damn well made his own.

Linus did not decide to write an operating system because he couldn't afford Minix or Xenix. That would have been crazy.

Re:They just don't get it.

Agreed. In fact from my own professional history, if you have a job and convince your employers that open source is a good idea, when they fire you you can take your work with you. Open source is great job security from the perspective of keeping your toolset alive from position to position.

Open Source Work for Hire?

If an employer pays you to work on an open source project, but they never distribute that project since it is for in-house use, can you legally take your work with you when you go? Experience, sure they can't keep that, but the actual code, changes and fixes, would belong to the employer?

Re:They just don't get it.

I think the main difference between the Bubble and today's impending recession is that back then the tech industry fell down and the "holdouts", namely brick and mortar stores, physical goods and services, etc were propped up because they could point to the .coms and say "We were never that audacious, we have business plans and 20+ years of experience blah blah blah."

Freelancing at that time was pretty clear because there still was a genuine need for getting wired and with the times and with the bust those still standing didn't want to invest heavily on an in-house version of what failed in the wild.

This US recession, at least, is being lead by the plummetting dollar and conversely skyrocketing oil prices along with just about every other commodity. Sub-prime fallout isn't helping and even with an impending intrest rate cut from the fed it's still not going to right itself anytime soon. This particular pain hurts every industry equally and IMHO there will be less money to go around altogether. With a shrinking pie, OSS might get a bigger slice of it but overall I don't see it getting better in the immediate future as far as funding.

Re:They just don't get it.

This US recession, at least, is being lead by the plummetting dollar and conversely skyrocketing oil prices along with just about every other commodity. Sub-prime fallout isn't helping and even with an impending intrest rate cut from the fed it's still not going to right itself anytime soon. This particular pain hurts every industry equally and IMHO there will be less money to go around altogether. With a shrinking pie, OSS might get a bigger slice of it but overall I don't see it getting better in the immediate future as far as funding.

Actually, the US dollar is plummeting because of a very costly military expense. To pay for it, the US Treasury Department has been pumping out tons and tons of US dollars. In most cases, this causes devalulation immediately, but as the US dollar is a reserve currency, it held value purely because everyone wants to hold US dollars.

Oil prices skyrocket because of huge demand (China), and uncertainty in the supply market (rattling sabres in the middle east and in South America makes people nervous, which makes the oil production unsteady). THe devaluing US dollar also encourages it to rise, and oil-producing countries (which pay in their own currency) require more US dollars to pay for the oil extraction.

But this has been going on for years. What really brings it on is the change in the credit laws and the subprime mortgage crisis, as that leads to shortages of cash for borrowers. Companies can't borrow to expand operations and they lose potential profits, and the subprime mortgages causing foreclosures and a sudden glut of homes on the market (impacting construction and related industries, and the trickle-down effect).

Huge chain of events, but it looks like the subprime mortgages may be what broke the camel's back.

Re:They just don't get it.

I agree with everything you said, but would also like to add a few others.

Consumer credit ab/use is out of hand. People are spending themselves to insolvency, and then the first speed bump they hit (lost job, new roof, unplanned medical expenses) drives them under.

I'm not ascribing blame to corporations completely, but in the end every business sells a product. In order to increase the amount of money they make, they need to sell more product and/or cut operating expenses. That means, in part, cutting jobs and benefits while going out of their way to sell more product to people who can not, across the board, afford to buy more product.

Less-than-intelligent banks and people took advantage of too-good-to-be-true loans to do/afford stuff that they otherwise couldn't.

My personal bank account is at an old and large bank, still held in majority by its founding family. My business account is at a local credit union because they don't screw me on fees nearly as badly.

When I went to the credit union on Friday, I noticed banner ads suggesting people take out a second mortgage to go on vacation and take a 100-month car loan so they can drive a luxury car on an ecobox car budget.

The bank isn't forcing people to do it, but those are both such bad ideas that I can't even begin to clear the bile from my throat.

People just finance everything these days. First off, they don't realize how much extra they're paying in interest and second, it just allows them to eat up every dollar in their paychecks before they even get them.

My wife and I splurged a bit around the holidays and bought a relatively large flat panel TV. Across most of the stores we went to while shopping around, we had a hard time figuring out what the "buy it now" price was for the hardware. In most cases, the pricetag would say something like $129/mo in huge print and then $1699 in small print somewhere. Needless to say, we weren't interested in financing a TV.

I'm not saying credit or financing is inherently evil. Immediate needs (shelter, transportation, medical etc.) are ripe for financing. If you can pay cash, all the better. People confuse needs and wants. We didn't buy the big TV until just now because we didn't have the hard currency to do it. No way were we going to buy an unnecessary TV on a credit card.

We, especially the children of the platinum card spend-all 1980's need to take a minute (or a class) in personal finance and household economics. Where our parents might not have even had credit cards in their 20's and 30's, we grew up in their midst, moreso without the feel and smell of Bejamin Franklin in our back pocket on Friday. Plastic spends easier than cash.

Credit is a tool, but a dangerous one. We need to use it wisely.

Ways a recession could affect Opensource

1) Employees of major corporations assigned to opensource could be laid off or reassigned to directly profitable projects.

2) People who work on opensource in their spare time could be laid off and
    a) Be unable to buy computers, maintain an internet connection, etc.
    b) OR... have lots of spare time and do a lot of cool stuff to build their resume.

3) Folks who are depressed are not every productive. In a deep recession there will be a lot of fear, anxiety, and depression.

4) Donations to opensource bandwidth, download sites, and so on could falter and lead to blackouts of key opensource resources.

Re:Ways a recession could affect Opensource

3) Folks who are depressed are not every productive. In a deep recession there will be a lot of fear, anxiety, and depression.

I bet most of the people program in their free time exactly because they are depressed, otherwise they would just waste their free time screwing the prom queen.

Re:Ways a recession could affect Opensource

You know, I tend not to do that anymore at my age. The word jailbait comes to mind.

Re:Ways a recession could affect Opensource

Of course, there is the outside chance that if a lot of programmers find themselves unemployed, they might decide to spend some portion of their now-excessive free time participating in the OSS community.

But here's the way in which FOSS is particularly recession-proof: If your average proprietary software vendor gets hit hard by the recession, they could go out of business and take their source code with them. If you're that company's customer, then the possibility of updates and support would disappear. When it comes to FOSS, that's not really possible. The project might dry up and support might disappear, but if there's money to be made updating and supporting that software, some other programmers can take up working on the project again.

Re:Ways a recession could affect Opensource

5) A bad job market means employers can ask employees to work more overtime without the fear of turnover, leading to less free time available to work on open-source projects.

Re:Ways a recession could affect Opensource

Employees of major corporations assigned to opensource could be laid off or reassigned to directly profitable projects.

Bingo. This is precisely what happened to the FreeBSD probject when the dotcom bubble burst. Half of their developers got laid off in the middle of major architectural work (fine-grained locking). It took years for them to recover. Conversely, Linux in 2000 was much more of a hobbyist world (unlike now) and kept going without a hitch.

Just the opposite, IMO

There are a lot of businesses that rely on people working for them for free because they get a pay check somewhere else, and I think that a recession would make people question working without getting any dollars in return.'

On the flip side of that, if you have a lot of unemployed coders who want to keep their skill-set up-to-date (as well as avoid a large gap in their work history), open source provides a way to do both.

Definitely

If you can do anything besides just counting beans, and you stay out of debt, you are recession proof.

Depends on your definition

If you are talking about the development and evangelization of Open Source, then I would say yes. People are going to volunteer regardless. However, when you are talking about companies that sell or service Open Source software, then I would say no...it is not recession-proof. Economics are economics, and money is the same everywhere. Where there is a crunch, money doesn't flow as freely, and both Open Source and proprietary models will suffer.

Now...had they have said "Is FREE software recession-proof" then I would say, "yes...it is."

Certainly not worse than CSS

What's the point of the original message? "You get less job opportunities from developing for OSS when there's little need for developers".

Ok. And if you're working on CSS? What's more likely, that some OSS goes "out of business" or your proprietary company? Like someone else has already posted, what is more likely to be used in times of little money, software to buy or software to take?

Not to mention that, well, when you have more spare time (because you're lacking a job), wouldn't it be a quite GOOD idea to develop some nifty piece of software, push it into OSS and find companies interested in using it AND hiring the guy who knows it best?

Just the opposite

What was the best thing that happened for Open Source on Wall Street? 9/11.

Of course nobody wanted it that way. But when some Wall Street firms lost data centers and desktops, Sun, IBM, and HP couldn't make hardware fast enough. So, beige boxes all over the east ended up in ad-hoc data centers, running Linux or BSD. And surprise, they ran as well, often better than their predecessors.

Open Source is going to do well whenever IT can't pay a lot for software and has to stretch its budget. Good times might be worse for Open Source, but I don't see them being terrible for it.

Bruce

Re:Then you are doomed to fail.

Don't discount people who just deploy OSS for a living. I know a guy who probably hasn't contributed 10 lines of code over his career, but who is so effective at taking poorly documented OSS projects and making them function beautifully in commercial deployments...He makes a good living, evangelizes the hell out of OSS (he's a true believer), and drives money back into the projects.

Most critically of all, he has the ability to see the flaws, and to visualize the next step that would make the project into something awesome. People like that, who know the features that really need to exist in the project, are almost more important than the people who end up actually coding the feature in. I can do the code, but the spark of genius behind a really good feature...That's special.

Re:Recession-proof is a fallacy

Modded insightful? That post is completely absurd.

Recessions don't exist based on some Keynesian model (I'd love to know which one by the way, since most of Keynes' work was done in response to the great depression), and therefore it somehow transforms into reality? (Those are what? Imaginary? http://en.wikipedia.org/wiki/List_of_recessions [wikipedia.org] )

Yes wealth can be created and destroyed, economy is _not_ a Zero-Sum Game.

Of course, the reality is that the central banks have been creating credit for one specific reason: to transfer wealth from the poor and middle class to the bank-connected elites.

Access to credit greatly improves living conditions for who? The middle class. (And the subprimes greatly improves the living conditions of the poor) Imagine the world for the middle class was there no credit, just for the housing. You'd keep putting money aside your whole life to be able to buy a house when you're close to retirement, imagine all the value lost for yourself if you had to wait that long instead of taking a loan...

The wealthy have been hoarding money for decades?

Are you serious? Why would someone keep their money in a vault (Return = 1 - inflation) when they can make much more money by investing in risk free securities (Short Term Gov. Bonds)? Being rich is all about investing in the market (whether it's through starting a business or investing in others), please show me one "rich" man who stacks his money in a vault... If you had kept your money (lets say $100) in a "vault" the last 50 years, you'd still have $100 dollars today (please note that 100 dollars back then is worth about 2500 dollars now), if you had put these same 100 dollars in equity, you'd have 45.000 dollars now... but yeah, stack your money in a vault, that's a real good investment.

Credit is NOT tight because those who have it don't want to risk letting the middle class earn it to invest it in their own wealth-growth schemes (please notice that he somehow abandoned the idea of rich people stacking their money), but because the risk premium on the market is growing (AKA Credit Spreads), therefore the creditors lend money only to people with better profiles, and ask a greater risk premium, this is a normal consequence of a slowing economy, since the risk taken by creditors is higher.

So if you're an OSS or a closed-source developer, and you're hurting, remember for the next time another bubble grows: stay out of it.

Oh yeah because bubbles are so easy to predict... All those analysts working in banks and other investment firms are just idiots, dada21 knows better.

God you should stick to IT, you obviously know nothing about economy...