an example: open source software produces lots of value. this value is partly captured by consumers who get better software for free, and partly by businesses that make more money than they would otherwise.
the most clear cut case is that some businesses exist purely by wrapping other people’s open source software, doing advertising and selling it for a handsome profit; this makes the analysis simpler, though to be clear the vast majority of cases are not this egregious.
in this situation, the middleman company is in fact creating value (if a software is created in a forest with no one around to use it, does it create any value?) by using advertising to cause people to get value from software. in markets where there are consumers clueless enough to not know about the software otherwise (e.g legacy companies), this probably does actually create a lot of counterfactual value. however, most people would agree that the middleman getting 90% of the created value doesn’t satisfy our intuitive notion of fairness. (open source developers are more often trying to have the end consumers benefit from better software, not for random middlemen to get rich off their efforts)
and if advertising is commoditized, then this problem stops existing (you can’t extract that much value as an advertising middleman if there is an efficient market with 10 other competing middlemen), and so most of the value does actually accrue to the end user.
an example: open source software produces lots of value. this value is partly captured by consumers who get better software for free, and partly by businesses that make more money than they would otherwise.
the most clear cut case is that some businesses exist purely by wrapping other people’s open source software, doing advertising and selling it for a handsome profit; this makes the analysis simpler, though to be clear the vast majority of cases are not this egregious.
in this situation, the middleman company is in fact creating value (if a software is created in a forest with no one around to use it, does it create any value?) by using advertising to cause people to get value from software. in markets where there are consumers clueless enough to not know about the software otherwise (e.g legacy companies), this probably does actually create a lot of counterfactual value. however, most people would agree that the middleman getting 90% of the created value doesn’t satisfy our intuitive notion of fairness. (open source developers are more often trying to have the end consumers benefit from better software, not for random middlemen to get rich off their efforts)
and if advertising is commoditized, then this problem stops existing (you can’t extract that much value as an advertising middleman if there is an efficient market with 10 other competing middlemen), and so most of the value does actually accrue to the end user.