Economic Impact of Open Source on Small Business: A Case Study”; Mike Hendrickson, Roger Magoulas, and Tim O’Reilly; July 2012; O’Reilly Media.

The radical theory and practices of the digital commons are very relevant for archivists and digital curators today.  Commons thinking challenges the conventional roles of institutions in preserving and providing access to archives, and may also help justify costly digitisation or digital preservation projects. These and other themes (such as creative commons licensing) are explored in the video presentations now available from the website of the recent Economies of the Commons 3 conference in Amsterdam. See also the blog posts of David Bollier.

An essential element of the digital commons is open source software, such as Linux, Apache, MySQL, PHP, JavaScript, and WordPress. The authors of Economic Impact of Open Source on Small Business describe how “like the ecosystem services provided by the sun, the open source software that makes the web possible disappears from our accounting.”

This 50 page Radar Report from O’Reilly Media is appropriately open source at £0.00 – so there are no excuses not to have a quick browse. The book attempts to speak up for the developers of open source software projects and the communities that support them – the “unsung heroes of the economy” – by placing an economic value on their work product.

The report is based upon data obtained from a web hosting company that provides services to over 2 million customers, most of them small and medium sized businesses (SMBs). The majority of the report is a comprehensive survey of the ISP’s customers, detailing how SMBs use ISP services in their business model and the technologies they employ, with simple graphical representations of the data.

Interesting facts discovered along the way include:

  • PayPal is the dominant internet payment mechanism, outstripping direct credit card payments by nearly 2:1
  • WordPress is a far more important open source product than most people give it credit for and it is as widely used as MySQL and PHP
  • Open source hosting alternatives have at least a 2:1 cost advantage relative to proprietary solutions

The authors lay out their assumptions and work up a model to estimate that businesses that rely on hosting/domain name providers for their web presence represent a trillion dollar market. Two case studies look at return on investment scenarios, including some surprising assumptions regarding the profitability of Search Engine Optimisation and Google Adwords. The report concludes with an analysis of programming language trends.

Overall, a rather dry and business-like report but important for its recognition of the economic role of open source. The book is available for free download via http://oreillynet.com/oreilly/opensource/radarreports/economic-impact-of-open-source.csp or via Amazon for Kindle.