Open-Source Software Is Worth a Lot More Than You Pay for It

Open-source software may well be the greatest “public good” the market economy has ever produced. What it shows is the power of voluntary social cooperation.

Standard neoclassical economic theory holds that goods and services with widespread benefits get produced only if their maker can charge customers for them. Open-source software — defined as “something people can modify and share because its design is publicly accessible” — unquestionably has widespread benefits, yet it is free. Think of the Mozilla Firefox browser, VLC Media Player, the Python programming language or Linux-based operating systems. Many companies, including Meta and Mistral, are pioneering open-source AI.

A new estimate from researchers at Harvard and the University of Toronto finds that the worldwide value of all open-source software is about $8.8 trillion. To place that in perspective, about $3.4 trillion was spent on commercial software globally in 2020. The $8.8 trillion figure is more than double the current gross domestic product of India at current market exchange rates. It’s almost triple the latest market capitalizations of Apple and Microsoft. All the gold in the world is currently worth more than $13 trillion, give or take.

Worth a Lot More Than You Paid for It

The new estimate comes from a recalculation of the benefits from the demand side. Previous studies tended to look at the replacement cost for open-source software — that is, what it would cost to hire people to rewrite what is currently free. (Using this method, the paper estimates the value of open-source software at about $4.15 trillion.) The new research, conducted with support from the Linux Foundation, looks at the benefit to those who use software: If a given piece of open-source software is of use to millions, its actual value will register as many times higher than its cost. Thus the revised estimate of $8.8 trillion.

Why do people contribute to open-source projects? Their motives vary. Some may wish to show off their programming skills to increase their value on the job market. Others may simply believe in open-source as a philosophy, as a means of doing good for the world. Belonging to a community of open-source contributors can also bring concrete benefits, such as a valuable professional network or just camaraderie. In other cases, open-source contributors need the software for their own use, and thus they find it worthwhile to contribute to its production.