Faraaz Damji is a first year law student at Osgoode Hall and is taking the Legal Values: Challenges in Intellectual Property course.

In Yochai Benkler's article, “Coase's Penguin, or Linux and The Nature of the Firm” (Yale Law Journal, volume 112, online), Benkler attempts to address a major economic concern about open source software: What motivates contributors? In today's capitalist society, the concept of a vast array of people devoting time and skilled labour without any monetary incentive would be incomprehensible had it not already been implemented and proven.

The first answer Benkler gives is that "diverse motivations animate human beings." To answer the question of economic motivations, Benkler adopts economic parlance.  He defines three types of reward: M, H, and SP (Monetary, Hedonistic, and Social-Psychological).  While the first two rewards are self-explanatory, it would be instructive to explain the third.  The social-psychological reward of an action relates to its cultural meaning, and the positive effect an action has upon one's social associations or perception by others.  It also encompasses internal satisfaction due to the culturally-determined "goodness" of an action.

This terminology serves little more purpose than providing a guideline to ensure that all considerations of an action's reward is considered.  The hedonistic and social-psychological categories also appear to overlap, as desiring positive perception by one's peers may also be framed as a hedonistic, self-motivated desire.  Nonetheless, the underlying message is clear: the monetary reward of an action is not the only consideration.

Three inferences can be made: The total reward, considering hedonistic & social-psychological rewards, is higher than the alternatives that pay money, the job must be able to be split into small actions, and if money does not affect SP, or affects it in a positive way, approaches that provide a monetary reward will be preferred.

Here, Benkler introduces two more variables: p and jalt.  p is the degree to which monetary rewards affect social-psychological rewards, and jalt is the phenomenon where the presence of monetary rewards for some actors changes the social-psychological reward of more poorly paid, or unpaid, actors.  This is in line with common knowledge about human nature.  However, there are many cases where jalt does not introduce a strong negative impact.  Contributors accept that profit can be made from open source software, and this is reflected in licenses that permit exploitation of freely-obtained open source software for commercial gain.  One important point is that, under most licensing schemes, anybody who profits off of an open-source or peer-produced effort is not at an inherent legal advantage.  Others could replicate their business model: there is no exclusive ownership on copyleft content conferring a monopoly over making a profit.  I agree with Benkler's statement that "whether the jalt effect exists, how strong it is, and what are the characteristics of instances when it is or is not important is a valuable area for empirical research."

These unique motivations also give rise to a problem in open source software: What would be the motivation for a corporation to support open source software in developing compatible software? Although money can be made from open source software through schemes such as support contracts, the fact that open source software will always be available free of charge means that such software initiatives will always make less money than equally-popular proprietary software.  Where it is uneconomical for hardware manufacturers to support users of open source software, it will often be unfeasable for groups behind such initiatives to pay these hardware manufacturers for support.  Although peer produced software is possible through the advent of modern technology, the same may not be true for hardware, a physical good which is still subject to traditional limitations.  The necessity of interaction between software and hardware has long been a major problem for open source software.

The existence of open source software seems to contradict the basic tenets behind our system of intellectual property.  Intellectual property rights are created to reward content creators, but contributors to open source software have not only voluntarily given up many of these rights, and often license their works under terms that ensure derivative works are licensed under similar terms.  The success of open source software would seem to undercut this claim; Benkler seems to explain this discrepency by explaining the unique economic motivations driving contributors to open source software.  It is only by understanding what motivates people in open source software can we cultivate an IP regime that can allow it to flourish while ensuring the continued success of traditional market and firm-based production.