Open source: The stealth stimulus package

O'Reilly report suggests small and medium-size businesses benefit hugely in the unseen economy from open source

If I asked you to account for your energy consumption, you might list your laundry equipment on the spreadsheet. We'd see how much you spend using your dryer each month -- quite a large amount. Worried by the cost, you might then opt for a clothesline in your yard. Naturally, your costs have gone down. But has your energy usage? You're actually consuming as much energy as before, but you may decide to omit it from your spreadsheet because you're no longer paying for it.

This tendency to account only for the resources we pay for and to ignore the value of the resources we don't is called "the clothesline paradox" (first coined by Peter van Dressler). It was also the subject of O'Reilly Media CEO Tim O'Reilly's well-received keynote at the recent Open Source Convention (OSCON) in Portland, Ore.

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O'Reilly highlighted the value of another public resource not included in balance sheet: America's economy in the 21st century has a profound dependence on open source software. However, in most corporate balance sheets, it's either passingly mentioned or, more often, forgotten entirely. Given it's not a cost, that's not surprising. But it also means we have no idea how valuable open source actually is.

Small business and open source
One step toward filling that knowledge gap is a report that O'Reilly Media released at OSCON, "Economic Impact of Open Source on Small Business: A Case Study." Based on data from ISP BlueHost, it considers the anonymized data from over 2 million of the company's customers, backed up by a survey of 4,000 of the same base. Most of BlueHost's customers are small or medium-size businesses.

BlueHost uses open source software to deliver the majority of services to these customers; while none of them would regard their ISP as open source (though the majority is familiar with the term), the benefit they derive is massively dependent on open source software. Without it, the economical domain hosting of the kind BlueHost and its ilk offer would likely be impossible.

In addition, the overwhelming majority of the applications its customers are running on their sites are open source, with content management the leading category, represented by WordPress, Joomla, and Drupal. Those applications in turn are powered by other open source packages and are served up on the Web by open source.

It's no stretch to assert that all the benefit BlueHost and its customers gain from their hosting activities is derived from open source software. How much value has that introduced into the economy? Think of it this way: BlueHost's customer base has an estimated aggregate revenue of about $124 billon. Given BlueHost has about 10 percent of the hosting market, that implies there's around $1 trillion revenue in the economy dependent on open source software in the Web segment alone.

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