None of Your Business Model

“What’s the business model?” It’s a question I hear again and again at meetings and events. The existing model for newspapers is quickly unraveling, so we need a ‘new new thing’ to serve some of the vital functions that newspapers used to.

Whatever that new new thing may be, it is supposed to have a business model: a business model is what separates the well-meaning amateur from the sustainable enterprise. It is vital for securing loans or venture capital. You can’t be serious about sustaining a venture unless you have a plan for a business that will sustain that venture.

Except that maybe you can. I believe that in many cases, the urge to find a business model is orthogonal to one of the most important social changes today, one that is reformulating labor, technology, and product in unexpected ways.

Let’s take a step back and explore how we usually imagine a business. Conventional wisdom dictates that, in order to create a product, there needs to be a profitable business (a firm), or similarly a well-funded non-profit with paid staff. The firm is a mixture of capital, labor, knowledge, and technology. The firm does the work of creating a product, in the way the Washington Post Company puts out the Washington Post newspaper. (Or, at least, still put it out when this post went online.) The firm’s profits provide the capital needed to sustain the enterprise, and the actual work on the product is done within the firm. All this is so obvious that it hardly seems worth repeating, but therein lies the problem: the business model that assumes a firm is so ubiquitous that many people unknowingly conflate the firm with what it produces. They think that a product needs a firm, and even that each tends to scale with the other.

While the model in which a firm produces a product is common and viable, some of the biggest product success stories in recent history don’t actually come from businesses. That’s not to say that no one is making money from these products; there is plenty of green in these fields. But there isn’t a one-to-one mapping between business (in the sense of a firm) and product. These new products are generated under the alternate organization of knowledge, labor, and capital called the free software model.

Free software has already had a profound impact on the world of IT, and its impact is being felt in other domains as well. Many people have heard of free software, Linux, or “open source,” or may have downloaded the Firefox web browser. But few understand how free software is made. I believe that the way free software projects are created and maintained could be a great model for the future of news.

Let’s look at one tried and tested free software project: the Apache HTTP server. HTTP servers are the bit of software that lives on hardware servers, taking requests for web pages and then dishing them out. Since 1996 Apache has dominated the intertubes, and currently has 50% of the global market. It is a complicated, comprehensive piece of software, the necessarily fast and secure engine that serves most major web sites. Apache HTTP is not made by a business, nor is it even made by a non-profit; rather, it’s made according to a free software model. True, it’s technically hosted by the Apache Foundation, a 501c(3). But the Foundation was formed in 1999 — three years after the product was launched, and after the server had about 60% of global share. The non-profit Apache Foundation was created to help manage the project, but little of the code is generated by employees of the Foundation. Moreover, Apache Foundation now hosts dozens of different projects other than the HTTP server, some that are nearly as successful.

So while the Apache Foundation clearly has a plan — perhaps even a business model — the product itself is co-produced by literally hundreds of other businesses and individuals. Apache HTTP and other massive free software projects are the fruit of the labor of a group of committed, er, “committers” — people who are trusted to create and modify the project’s source code and upload it to the community code repository. Their changes may well be integrated into to the next release of the software. A list of current Apache Foundation committers — roughly 2000 — can be found here, and the “trunk” (main version) of the server they’re building together is here.

Why do these people work on a software project that isn’t cutting them a paycheck? They might be working in a big company that uses Apache HTTP, and are paid by their company to tailor it or add functionality. Some have their own business or consultancy that is competitive precisely because they know Apache inside and out — and they continue to work on Apache in their down time. Some are individuals who work all day programming for a company that takes their work and gives them a paycheck, but keeps the rights to their work and “manages” their contributions. These programmers then go home and program for a free software project, an egalitarian enterprise that they see as a contribution to society. There is no one personality type that describes a free software project committer; indeed, there’s no one model of a free software project.

Different free software (and free culture) projects have quite different labor, funding, and management structures. Wikipedia is largely maintained by non-programmers. Ubuntu (an alternative to Windows or OS X, currently used by millions of people) has a multimillionaire founder and front man, is backed by a private company, and borrows from an older product called Debian for much of its technical foundation. The Python Foundation coordinates Python (my favorite programming language), and its sponsor page has a list of corporate logos that would overwhelm a racing car. None of the products of these collaborative initiatives runs off of a single traditional business, though many people are making money from and through these products.

The projects I’ve mentioned so far are large, with hundreds or thousands of contributors. But the free software model isn’t just for big projects. By far, the majority of free software projects are not massive; they solve a smaller problem, and have one, two, or three contributors. They may see little use, and need little improvement. But some of these projects are huge, and have scaled incredibly: Wikipedia’s english edition, love it or hate it, has 2.5 million articles, and has incorporated edits from 220 individuals in the minute that I wrote this sentence. (The Wikinews project has, in contrast, been something of a dud. Indeed, it fails in the way that much contemporary American journalism fails, by trying to create a neutral point of view. But while the Wiki* projects share some similarities to free software projects, they are also different, and I don’t think we can generalize much from Wikinews’ shortcomings.)

These free software projects are based not in business units but in communities. Granted, in virtual, distributed communities rather than geographic ones, but communities nonetheless. None of these projects could have existed before the Internet, but projects like Debian also have quasi-Masonic systems of induction, including personal meetings and cryptographic signatures for all the trusted committers. Anyone who can contribute working code can join, and if they aren’t too sociopathic they can rise within the enterprise. The more people involved in a project, the more “eyeballs on the code,” meaning the less chance of a security hole, stale code, or inefficiency. This leads to great product: after all, Microsoft and Sun didn’t cede the leading market position in web servers for over a decade because they decided they didn’t want it. Apache was just plain better.

It’s understandable that so many entrepreneurs default to a standard business model rather than the free software model — even when they are creating web sites that will be served off of Apache HTTP. In many ways, the impact of free software is misunderstood or underestimated, in no small part because corporations like Microsoft have actively tried to block or obscure free software’s success. But part of our unfamiliarity with free software models is because they are relatively new and quickly evolving, and their impact has mostly been felt in the guts of computers and networks. Every web user has “experienced” Apache HTTP much more than they have YouTube or Facebook — easily thousands of times more — but most of them didn’t know it because Apache is doing its work transparently. Wikipedia and Ubuntu are, nonetheless, recent proof that it’s possible to create goods and services that aren’t just for hypergeeks, and even business schools are starting to take notice of how these remarkable products were made and are sustained.

At the Center for Future Civic Media we’re not only looking at a journalism model, or even a firm-oriented business model. Indeed, many of our projects borrow the labor/knowledge/capital models of free software, activism, or other community-based enterprises. In the nearly two hundred years since LLCs and corporations started, they have produced most of the products we touch or use every day. But there’s a new alternative to that model, and it’s one that might lead to stronger, healthier, more informed communities.