Open source software is awesome, and I am much richer for it existing. But the concepts that work in widely downloaded free software may not apply as well elsewhere. One of the best books on this topic is Jason Lanier’s You are Not a Gadget, which in large part inspired this post.

Openness is one of the most widely espoused important ideals upon which to build an online business. The reasons it is preached so heavily are

  • anything that is free doesn’t have to get over the penny gap, so it is easy to gain traction when compared against paid alternatives

  • openness encourages economies of scale built on the labors of others (and re-mashing bits of others works together wrapped in a thick layer of ads)
  • the growth and margins created by the above 2 allow the embedded value in network effects to be flipped to a greater fool for a huge multiple of its intrinsic value

But most such plays are exploitative and short term based. They are leveraged bets with hidden costs.

The free tool you use is using you as a free tool.

Given people free access to post content to your server means you spend hours every week fighting spam, and when they post kiddie porn (or similar) your site goes down without warning. Did you build your website on that same “free” service that went down without warning? Oooops.

Not too long ago the publicity whore who preached the importance of loyalty & openness canned all his freelance writers with a 1 week notice, but revoked their ability to delete their own content before breaking the news to them.

YouTube intentionally violated copyright because they figured someone else would get stuck eating the $100 million legal bill.

The network of free content is a PageRank black hole which creatively flows PageRank to the shadow sites heavily wrapped in ads.

Have 43,807 friends? How many of them know your name? I define a friend as someone who you know something embarrassing about, who also knows something embarrassing about you. If there are no inside jokes there is no friendship. The only way you have thousands of friends is if the word friend is meaningless.

The network that was on top of the world seemingly only yesterday is today’s digital ghetto.

Once you build exposure, the openness that was initially vital to overcoming obscurity can become a hindrance. Which is precisely why the highest value web companies are quite closed off. Sure they might have a public relations angle where they promote openness (and perhaps you should too), but beyond that it is often better to go the other way.

More: continued here