Open Source Hackers Cooperative

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Robert Hodges:

"The fact that it is hard to make money off open source is a symptom of a larger problem: we are losing the wider social benefits that for many people are the real point of open source software. This is an economic problem: how do we allow hackers to make a reasonable living on open source projects while maximizing the long-term value of the software to the widest possible number of users? It turns out there’s a reasonable economic model that can do this: cooperatives, which are defined as follows in Wikipedia.

- a legal entity owned and democratically controlled [equally] by its members

Cooperatives have existed for centuries in many different forms and have successfully solved problems ranging from providing student housing to delivering consumer goods like sporting equipment on a grand scale. We need a new form of cooperative that I propose to call the Open Source Hackers Cooperative, or Hackers Co-op for short.

The Hackers Co-op has three different but co-equal types of members:

  • Hackers, who are the core committers to the project and stewards of the code
  • Sponsors, who supply funding and labor
  • Community members, who use the software, test it, and contribute patches

As we will see, some members are more equal than others, which is why I added brackets in the cooperative definition." (


Robert Hodges:

"Here are the organizational principles for an Open Source Hackers Cooperative:

  • The Co-op is a non-profit. It’s not for sale and there is no exit strategy. Like all co-ops, it exists to maximize benefits for its members.
  • Hackers work directly for the Co-op. Their time is divided between implementing features that interest them, integrating patches as well as fixing bugs reported from the community, and implementing features for sponsors.

Sponsors provide long-term funds and/or labor to the Co-op. Sponsors build businesses on the open source software and kick back a percentage of the business value in return for support and new features. They can also contribute labor for specific co-op tasks. Sponsors need not be for-profit businesses. They could in some cases even be governments or NGOs. The point is that they fund the software based on its value, for example through grants.

  • Community members provide leverage to the development model. They use the software, provide basic support through forums, and contribute patches for bugs and small features. These activities leverage the hackers who can use community patches and feedback to evolve the software. This is a very efficient development model.

The Co-op is a democracy. Co-op members vote on allocation of hacker resources. The vote is structured to keep a single group of members from hijacking the entire Co-op by dividing hacker time into a pie with allocations for the interests of each member type. Sponsors vote for their section of the pie using a vote weighted by their relative funding contributions--sponsors are not equal to encourage competition to commit more funds. Hackers effectively vote their portion by doing whatever they want with the time they get for personal projects. Community members vote through surveys or some other reasonable mechanism. The Co-op has elected officers. There is a chief economist who is in charge of the business model and plans finances, contracts with sponsors, arranges employment contracts, etc. There is also a chief technologist who ensures project infrastructure and moderates technical discussions. Co-op officers are elected or at least approved by the members at large.

  • The Co-op pays dividends. Some open source projects are quite valuable, so a well-run co-op could easily become very profitable. The excess profits are distributed to hackers in the form of retirement and other benefits, to sponsors in the form of cash rebates, and to community members in the form of conferences, hiring of new hackers to work on features, improved infrastructure, etc."



Robert Hodges:

"You can try to run through a number of scenarios for the hacker co-operative to see how well the model holds together. All you really need is software with enough intrinsic value that it can sustain an active, technically aware community and where sponsors are motivated to build businesses on it but do not need to own the engineering. It is helpful to have community members be programmers, but you can also design the software to allow even non-technical users to contribute effectively.

Such conditions hold for a variety of system software like database management systems, app servers, and communications packages. With a little thought they could apply broadly to user applications like accounting systems or voting software, which so far are relatively rare in open source. The Co-op is model is quite stable, because it aligns interests in such a way that everyone does better if they stick together.

Hackers earn a stable, comfortable living and public recognition for working on software that they enjoy. “Comfortable” in this context means salary and benefits equivalent to a typical EU country like Germany or Finland, which are the gold standard for employee compensation. This works economically because hackers are (a) very productive to begin with and (b) become more so by leveraging an active user community. Hackers are motivated to produce because the more viable the software is, the better the co-op does, and the more benefits they receive. Sponsors get features that they need using a productive open source hacking development model. This is a replacement for models like trying to take the software private and farming it out to low-cost offshore locations, which experience has shown to be badly broken on a number of levels. More important, sponsors get stability in the sense that the software cannot be taken over by hostile corporate interests and is supported over the long term, which lowers the risk of building businesses on it. They are motivated to contribute more in order to vote more resources for tasks that help their businesses.

Community members get software that is continuously supported and evolving rapidly to add features they need. They get assurance that valuable patches will be integrated. They are motivated to use, test, and develop patches for the software as that further increases its value to them and leads to recognition as authorities on the project.

The Open Source Hackers Cooperative can be structured to create a number of virtuous feedback loops that will support and extend the software over a long period of time. The Hackers Co-op model could be standardized and even backed up with software as well as cookie-cutter legal documents so that it becomes very simple to set up and manage." (

More Information

  1. See: Free Software Cooperatives, for a budding directory of such projects
  2. OpenCoopt, as an example of applying those principles