Proprietary profitability as a key metric

I proposed last year that proprietary profitability as a key metric for open access and open source, claiming four benefits:

  1. Indicates relative progress. Any non-moribund project/movement can make seeming progress, blind to different and potentially much greater progress by competition.
  2. Implicates role of knowledge economy and policy in increasing or decreasing equality (of income and wealth, not just access).
  3. Hard numbers, data readily available.
  4. It’s reasonable to multiply destruction of proprietary profits when characterizing gains (so as to include decrease in deadweight loss).

I haven’t tried gathering the data though. Expected future profits (in the form of market capitalization) could be useful as well. Thoughts?

Datapoint – Oracle Sales Erode as Startups Embrace Souped-Up Free Software:

The impact shows up in Oracle’s sales of new software licenses, which have declined for seven straight quarters compared with the period a year earlier.

A Bloomberg survey of 20 startups valued at more than $1 billion supports the trend. The survey, which included companies such as Cloudflare Inc. and Pinterest Inc., found they placed open-source technologies at the heart of their businesses, with the exception of DocuSign, which had built around Microsoft’s SQL Server.

Still, Oracle has its fans. Zach Nelson, the CEO of NetSuite Inc., a cloud enterprise resource planning company, described Oracle’s software as “the best transaction database,” and said it made sense to use it.

“It only costs us 6 percent of revenue, and that’s nothing,” Nelson said.

As open-source databases continue to improve, there may be less reason to pay for Oracle’s products.

Further links re Oracle and competition from open source and other sectors (cloud) in replies to https://twitter.com/mappingbabel/status/609029172732768256 (author of linked article), most useful http://redmonk.com/sogrady/2013/11/21/selling-software/

“It only costs us 6 percent of revenue, and that’s nothing,” Nelson said.

Wow. You’ve got one heck of a profit margin if you’re talking like that.

Yeah, I admit to quoting that statement because it seems ridiculous.