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The Magic Cauldron
by Eric S. Raymond
June 1999
This paper analyzes the evolving economic substrate of the
open-source phenomenon. We first explode some prevalent myths
about the funding of program development and the price structure
of software. We present a game-theory analysis of the stability of
open-source cooperation. We present nine models for sustainable
funding of open-source development; two non-profit, seven for-profit.
We continue to develop a qualitative theory of when it is economically rational to be closed. We then examine some novel
additional mechanisms the market is now inventing to fund for-profit
open-source development, including the reinvention of the patronage
system and task markets. We conclude with some tentative predictions
of the future.
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