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Re: [!NEWS] The GNUtards Must Be Crazy

From: Alexander Terekhov
Subject: Re: [!NEWS] The GNUtards Must Be Crazy
Date: Fri, 13 Mar 2009 20:17:26 +0100

Hyman Rosen wrote:
> Alexander Terekhov wrote:
> > A copyright "to be licensed at no charge to all third parties"
>  > is NOT a full copyright. It is not a copyright at all.
> Of course it is. If it were not a full copyright, it would
> allow someone to begin charging for its use.

"I first saw r0ml speak at the O’Reilly Open Source Convention in 2003.
The talk was Protecting the Innovation Premium: Open Source Business
Models. Not too far into the talk, he starts discussing Sharia, or
Islamic law, how it forbids the charging of interest, and how banks with
Islamic clientele have found clever ways of charging interest without it
actually, technically speaking, being “interest”–hence, not in conflict
with Islamic law. That’s neat and all, but a quick glance around the
room shows I’m not the only one unsure what this has to do with open
source business models. 

Just as I’m wondering this, he puts up a slide comparing Borland’s and
Red Hat’s (at the time) latest quarterly numbers, with Borland’s revenue
labeled “license revenue” and Red Hat’s revenue labeled “subscription
revenue”; and alongside these numbers a series of percentages (personnel
expense as compared to revenue, etc.) that shows that, percentage-wise,
the two are roughly equivalent compared to traditional service revenue.
In other words, the “open source religion” forbids Red Hat from calling
it license revenue, even though that’s what it really is, so Red Hat
just calls it subscription revenue instead, all so Red Hat doesn’t
violate “open source law” and damage their careful positioning as the
open source good guys. Brilliant!"

>From RHAT's 10Q: 


Our subscription-based contract model may encounter customer resistance. 

The subscription agreement used for many of our products, including
Enterprise Linux, requires customers to agree to a subscription for our
services for each installed system on which they deploy our subscription
based products. At the same time, the subscription agreement places no
restriction on the customer’s right to redistribute the products [other
restrictions prohibit Red Hat’s customers from redistributing Red Hat’s
binaries]. While we believe this practice complies with the requirements
of the GNU General Public License, and while we have reviewed this
practice with the Free Software Foundation, the organization that
maintains and provides interpretations of the GNU General Public
License, we may still encounter customer resistance to this distribution
model. To the extent we are unsuccessful in promoting or defending this
distribution model, our business and operating results could be
materially and adversely affected. 


Quoting Red Hat's Subscription Agreement: 


The term "Installed Systems" means the number of Systems on which 
Customer installs or executes the Software. The term "System" means any 
hardware on which the Software is installed, which may be, without 
limitation, a server, a work station, a virtual machine, a blade, a 
partition or an engine, as applicable. The initial number of Installed 
Systems is the number of copies of the Software that Customer purchases. 


Note that Red Hat's "Software" is contractually defined term. 

<quote> The term "Software" means the subscription </quote> 

Now, since it's just impossible to install and execute on a computer a 
*subscription* (a legal arrangement for providing software), they must 
mean software (not Software) in the definition of "Installed Systems". 

And here's the hammer: 


If Customer wishes to increase the number of Installed System, then 
Customer will purchase from Red Hat additional Services for each 
additional Installed System. During the term of this Agreement and for 
one (1) year thereafter, Customer expressly grants to Red Hat the right 
to audit Customer's facilities and records from time to time in order to 
verify Customer's compliance with the terms and conditions of this 
Agreement. Any such audit shall only take place during Customer's normal 
business hours and upon no less than ten (10) days prior written notice 
from Red Hat. Red Hat shall conduct no more than one such audit in any 
twelve-month period except for the express purpose of assuring
by Customer where non-compliance has been established in a prior audit. 
Red Hat shall give Customer written notice of any non-compliance, and if 
a payment deficiency exists, then Customer shall have fifteen (15) days 
from the date of such notice to make payment to Red Hat for any payment 
deficiency. The amount of the payment deficiency will be determined by 
multiplying the number of underreported Installed Systems or Services by 
the annual fee for such item. If Customer is found to have underreported 
the number of Installed Systems or amount of Services by more than five 
percent (5%), Customer shall, in addition to the annual fee for such
pay liquidated damages equal to twenty percent (20%) of the
fees for loss of income and administration costs suffered by Red Hat as


"My issue with Moglen and RMS re Red Hat is that they never really
convinced me that RHAT's subscription contract and EULA for their
proprietary software product didn't mean that RHAT was violating GPL
when distributing GPL code to enterprise subscribers. I gave what I
still think is a good reading to that effect (way more certain than my
reading of the RHAT press release -- I mean a reading I'd take to court)
and got back basically "we see it differently". It seemed like their
reading might have been more politically expedient than legally sound
and it bugs me to this day."

What say you now Hyman?


(GNG is a derecursive recursive derecursion which pwns GNU since it can
be infinitely looped as GNGNGNGNG...NGNGNG... and can be said backwards
too, whereas GNU cannot.)

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