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Imagine I create a fantastic new beer: a new taste that most people love. My recipe is open source. I have put a lot of time/money perfecting the recipe/brand

Imagine I create a fantastic new beer: a new taste that most people love. My recipe is open source. I have put a lot of time/money perfecting the recipe/brand . I started selling it to local businesses and have been expanding slowly but steadily. I don't have big production scales yet so I can sell a bottle for $3. Now come Big Beer Co., #1 on the beer market world wide. They take my recipe and can sell it for $1 thanks to their economies of scale. I keep making my beer better and better whiel Big Beer Co. keeps the original recipe they "forked". I start losing customers: yes I keep improving on the recipe but it does not justify paying $3 instead of $1. Eventually, I die and Big Beer Co. are the only one remaining selling my recipe. Is it because they made a better product? Nope.

dkhenry 7y ago
Thats a great example, because there is no beer out there that is "closed source". Meaning you can duplicate almost any beer you taste given enough time and effort. However what has happened in the market is the exact opposite of what you just described. The micro breweries are selling beer for $3 that the big companies could make for $1. So why hasn't the big brewery put all the small players out business? It turns out that even if you can make beer really cheap there are so many variables in the brewing process that there is no way you would be able to do all of them at a very high quality at the same time, and even if you could under the covers the big beer companies operate at a scale that isn't cost effective in small batches. So the big beer company pretty much makes all their money off that one style beer that is fairly popular, and even though they could make other styles there is so much nuance in the brewing process that it wouldn't be a broad success. The real problem you have is lets say you are that craft brewer and you are doing really well with your $3 a bottle beer, so well in fact you want to expand so you can prep for your big IPO. Well it turns out brewing beer at a large scale is fairly hard, but lets say you figure that out because your an awesome brewer. Its even harder to run a national distribution network, and you have no clue how to do that. You will quickly learn that the reason Big Beer Company is doing so well has very little to do with the taste of their beer. Yes they do a lot to make sure their product is great, but mostly its to make sure the product is uniform, and reliable. The real magic is the business side, they have suppliers, an distributors who can get their product into every store in America. Their product isn't beer their product is beer distribution, you can't compete with that, because your a craft brewer not a logistics expert. This is the same thing going on with the big cloud providers, if your product is just a logging system you will loose to the company who can deliver that service to users at scale. The product is the service not the software.
yarrel 7y ago
You can't copyright recipes.* If you could, that would still be the smallest part of the dynamics of why people drink craft beer and how the economics of scaling up production of a recipe work. * - And trade secrets don't lend themselves to openness.
- ElKrist 7y ago
  "You can't copyright recipes." => I did not say that and my analogy was not assuming that either. Can you elaborate why you made that point? Perhaps I could have been more clear: I explicitly share with everyone the exact process/recipe so it is reproducible without any other research.

dkhenry 7y ago

Thats a great example, because there is no beer out there that is "closed source". Meaning you can duplicate almost any beer you taste given enough time and effort. However what has happened in the market is the exact opposite of what you just described. The micro breweries are selling beer for $3 that the big companies could make for $1. So why hasn't the big brewery put all the small players out business? It turns out that even if you can make beer really cheap there are so many variables in the brewing process that there is no way you would be able to do all of them at a very high quality at the same time, and even if you could under the covers the big beer companies operate at a scale that isn't cost effective in small batches. So the big beer company pretty much makes all their money off that one style beer that is fairly popular, and even though they could make other styles there is so much nuance in the brewing process that it wouldn't be a broad success. The real problem you have is lets say you are that craft brewer and you are doing really well with your $3 a bottle beer, so well in fact you want to expand so you can prep for your big IPO. Well it turns out brewing beer at a large scale is fairly hard, but lets say you figure that out because your an awesome brewer. Its even harder to run a national distribution network, and you have no clue how to do that. You will quickly learn that the reason Big Beer Company is doing so well has very little to do with the taste of their beer. Yes they do a lot to make sure their product is great, but mostly its to make sure the product is uniform, and reliable. The real magic is the business side, they have suppliers, an distributors who can get their product into every store in America. Their product isn't beer their product is beer distribution, you can't compete with that, because your a craft brewer not a logistics expert. This is the same thing going on with the big cloud providers, if your product is just a logging system you will loose to the company who can deliver that service to users at scale. The product is the service not the software.

yarrel 7y ago

You can't copyright recipes.* If you could, that would still be the smallest part of the dynamics of why people drink craft beer and how the economics of scaling up production of a recipe work. * - And trade secrets don't lend themselves to openness.

ElKrist 7y ago
"You can't copyright recipes." => I did not say that and my analogy was not assuming that either. Can you elaborate why you made that point? Perhaps I could have been more clear: I explicitly share with everyone the exact process/recipe so it is reproducible without any other research.