On some more of Eric S. Raymond's Essays.
On its own, I'm not sure the open source models makes much business sense. As ESR puts it, the tradeoff between open source and proprietary software typically boils down to proprietary software sacrificing truly independent review for monetary gain, whereas open source software sacrifices (consistent) monetary gain for truly independent peer review. A perfect example of when the open source software business model fails is Mozilla. Of course, I'm not at all saying that Mozilla is a failure - I think they are a great company that does a lot of good for the open source and general software communities. However, just this past August Mozilla fired 250 employees because they couldn't afford to keep the organization as big as it was. Layoffs happen in the proprietary software world as well of course, but I can't help but imagine that if Mozilla were a for-profit institution this round of layoffs might not have been necessary.
What I Think Works
I'll succumb to our capitalist overlords and admit that I think the open source movement can only stay alive with the support of large and even mega corporations such as Google and Amazon. Companies such as these can help keep the open source community alive in a few ways. First, they can donate to open source organizations such as the Mozilla foundation. Second, their employees can contribute to open source projects that are relevant to the company's business needs or even used in their proprietary stack. Third, these large corporations often make projects and tools they developed open source software, which further helps keep the open source movement alive. I don't think these companies should make their entire codebases open source because that would kind of defeat the purpose of being a for-profit company. Beyond large companies sustaining and funding the open source movement, individuals will still be highly integral in keeping open source popular. Without the countless individual projects and contributions across open source software, there would really be no open source community. As an individual, you can even contribute money to open source projects via the donate/support button on GitHub repositories or by using something like PayPal or bitcoin. Overall, I think the magic cauldron still has power - it's just going to take acceptance from the open source community that money is in fact important in powering the open source movement.
This post is in response to Reading 9 of the Hackers in the Bazaar course offered at the University of Notre Dame.