I am a strong advocate for evaluating the present based on the insights of the past. Over the past quarter-century or so, one of the most significant movements in commerce and technology has been what could broadly be described as the open-source revolution. The idea that sharing one’s source code could be considered beneficial for business may not yet be firmly established in the minds of many traditionalists, yet the concept of utilizing existing open-source software certainly is. We are rapidly approaching a juncture where almost all critical, non-specialized software is, in some form, open. In every Android device, all Mac machines, and virtually all mainstream web technologies—servers, databases, browsers, compilers—the foundational components are accessible.
This contrasts sharply with the time when I composed my degree dissertation titled “open source software in the business landscape,” shortly after ESR published “the Cathedral and the Bazaar,” a period when Microsoft and its immense closed-source offerings stood unchallenged, with only a handful of serious instances of open-source software being commercially utilized.
So, what prompted this shift? What has transformed? Did individuals suddenly comprehend that, as Raymond articulated, the “bazaar” model was the optimal approach? No. Merely introducing ideas seldom influences change; furthermore, the concept of a distributed workforce, fueled by individual passions collaborating on a unified project, is not particularly revolutionary.
In fact, software development has always been well-suited for decentralization—the only element that was absent was a universal communication infrastructure for developers—a method for them to seamlessly share code and collaborate effortlessly. It is no coincidence that the emergence of the internet, alongside CVS, IRC, Usenet, and mailing lists, paralleled the rise of open-source software.
So, what else did the previous “cathedral” model offer?
Indeed, it provided several business advantages that we might loosely refer to as “value plumbing”; initially, it motivated practitioners—developers were compensated for dedicating their time and efforts to a project. Secondly, it supplied all essential support resources necessary for development (hardware, software, tools, educational resources, etc.). Thirdly, it served as a repository for funds—it collected payments from those who benefited from the work undertaken. In essence, it managed cash flow, reaping a handsome profit in return for facilitating and incentivizing solution development.
Initially assumed to be crucial, it proved less significant; it appears people frequently dedicate time to software purely for enjoyment. Nevertheless, we cannot overlook that this “value plumbing” continues to play an essential role in human endeavors and service delivery.
So, what does this imply for the future?
Commerce, specifically in the service sector, has thus far adhered closely to a “cathedral” model concerning service commissions, provisioning, and management, all of which fall under this “value plumbing.” We might recognize it through strict coordination, enforced uniformity, explicit top-down management, centralization, and inflexibility. The presence of singular legal entities overseeing extensive production outputs is a clear indication of this.
eBay, as a facilitating platform, was a pioneer in genuine global decentralization; it acted as a vital enabler for small businesses and home industries across the developed world (not to mention a lucrative source of revenue for some of the less scrupulous actors in internet-enabled regions of the developing world). With the advent of Web 2.0 and mobile technologies (to which it is closely intertwined), we are witnessing a new generation of decentralizing applications. The so-called “sharing economy” is beginning to take shape, with Uber, AirBnB, and TaskRabbit as prominent examples. Similar to eBay, these entities diminish the significance of an entire category of “structural intermediaries” and replace their “value plumbing” with a single, technologically adept matchmaker.
The high-level deconstruction they entail typically brings about a certain level of unintentional transparency (Uber’s “safe-driver fee,” AirBnB’s “cleaning fee”; it is common to learn more about your matched service provider). So, what do taxi services, lodgings, and un-/semi-skilled labor organizations share that makes them prime examples of “decentralized services”? From where do their profits originate that allow them to be transformed into scalable automatons so effortlessly?
They manage their reputations (through basic word-of-mouth, marketing, and advertising), oversee their workforce (through finance, recruitment, and contracts), monitor their market (by adapting to fluctuating supply and demand), and address their risks (through vetting, indemnity, insurance, and bonds).
Although they cannot genuinely assert the creation of entirely new or open markets, they are approaching that reality. In the realm of open-source software, they resemble a form of shareware. Not entirely commercial, yet not wholly free either. Singular entities, matchmakers, still exist behind the facade of decentralization, as is evident when one visits bureaucratic and technologically challenged Germany and finds that the only version of Uber available is a standard government-licensed taxi.
So, while they are not fully realized, these developments mark the onset of a social evolution in expectations; as consumers, we seek enhanced transparency in our providers’ operations (from knowing our driver’s name to the precise origin of the rubber in our shoes) and increased autonomy in selecting our services; as individuals, we desire greater opportunities to market our skills, time, belongings, and potential; as businesses, we hope for diminished barriers to entry in any market we choose to enter. Much like with open-source software, it will not be long before a multitude of sufficiently competent amateurs (or professionals aiming to work independently) will begin competing, in a bazaar manner, on an equal or superior level compared to the cathedrals of industry.
The notion of “bazaar services” serves as the ultimate culmination of this societal transformation. Just as open-source software presents minimal barriers to entry and fluidity in leadership and authority, we will observe the world of service provision following suit. The concerns mirror those from 20 years prior. The responses remain similar.
Software development was merely the initial domain to undergo fundamental decentralization, primarily due to the inherent tech-savviness of its practitioners and its nature as an entirely information-based field. With Ethereum, crypto-law, Web 3.0, and similar concepts, all facets of services will likely follow the same trajectory. The idea of a rigid organization or corporation will diminish, leaving behind the true essence of human interaction patterns, regulated solely by openness and information-theoretic mathematics. Whereas the once-dominant “interaction-pattern-manager,” “value-plumber”—or “corporation” for brevity—was subject to laws regarding the emergent behavior it facilitated, the strict legality of emergent behavior will gradually lose relevance as it becomes significantly pluralistic and unmanageable, devoid of any coordinating or profiting entity, legal or otherwise.from it.
We are beginning to envision a reality devoid of intermediaries, middlemen, and trusted authorities, where services are not only provided but are also marketed, discovered, matched, and guaranteed, directly from supplier to consumer. Interaction patterns evolve and persist not through the cumbersome, inefficient legal framework and sluggish corporate regulations, but instead through the intrinsically flexible emergent outcomes of dynamic, adaptable, and straightforward economic motivations. This is the direction we are moving towards, and if it performs as well as open-source software has, it surely cannot come soon enough.
Can we generate profits from this novel social paradigm? I firmly believe the answer is yes; profits will emerge, as always, from fulfilling (perceived) human desires or providing efficiency improvements to those encouraged to recognize and implement them. However, the types of models that will be profitable are not yet apparent. Do not anticipate the profit-generating entity to resemble any current ones, or you will find yourself akin to those seeking the next Microsoft back in 2000 and investing in VMLinux and RedHat. What we consider significant differentiators today may well become commonplace in 20 years, much like operating systems and browsers were in ’95.
To comprehend where these differentiators might exist, one must first understand what will become mainstream. Here’s some food for thought: what if “commodity” turns out to be a digital marketplace that is entirely vendor-neutral, open, and trustless? Ubiquitous “value-infrastructure,” with business logic constantly evolving yet always ready for anyone to participate… Bazaar Services.
5/4/2015 ADDENDUM: After revisiting CatB, I must express my regret for misusing Raymond’s analogies; the initial work was more about the contrast between traditional working paradigms (predominantly commercial software, but it also encompassed some OSS like GNU) and decentralized working paradigms (what we now commonly refer to as open source software development), rather than strictly proprietary/commercial versus FLOSS. Nonetheless, in circumspect terms, the concept of decentralization within software development is prevalent and linked to open source development. Interestingly, even apart from OSS, some aspects of the Agile methodology (notably SCRUM) could be argued to contribute to this general movement toward self-organization, decentralization, and non-authoritative operation of the Bazaar.
