Why Free Software’s Long Run TCO Must Be Lower

[ Thanks to Anthony Rumble for this link.

“This paper argues that the long run total cost of operations
(TCO) for a suite of proprietary software must necessarily be
greater than that for an equivalent suite of free software, with
the TCO benefits maximised in the case of the GPL and GPL-like free
software. The total cost of operation of a suite of free software
is the price determined by a competitive market for a bundle of
goods and services associated with that suite. Because the source
code is open and not subject to limitations on development or
distribution, the market for services relating to that code will be
perfectly competitive. A rational vendor will use a proprietary
route for a program only where releasing that program in that way
will allow them to increase their profit above that which would be
returned to them by the operation of a competitive market. This
result should be hardly surprising, given that the express
objective of copyright law is to mandate a market failure and
permit software creators to extract above market rents as an
incentive for the creation of that software.

“Customers attempting to evaluate a free software v proprietary
solution can confine their investigation to an evaluation of the
ability of the packages to meet the customer’s needs, and may
presume that the long run TCO will favor the free software package.
Further, because the licensing costs are additional dead weight
costs, a customer ought to also prefer a free software solution
with functionality shortfalls where those shortfalls can be
overcome for less than the licensing cost for the proprietary

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