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Software The Almighty Buck

Giftfile Project Primes Decentralized Gift Economy 68

Posted by michael from the whuffie-for-everyone dept.
belmo writes "Last week, the Giftfile Project unveiled developer documentation and reference software for the giftfile system. This system enables producers and supporters of computer files containing nonproprietary intellectual works to participate in a gift economy. Tax deductible lump donations, made to nonprofit intermediaries, can be allocated to these files in an automated and efficient manner, supporting transactions as little as .01 USD. Nonproprietary intellectual works include free software, music, and literature. To use the system, you don't have to go to some web site and register--it's decentralized, built on open standards, and does not depend on any for-profit entity. The project is currently targeting free software developers to test the system, help make it accessible to other computer users, and be its first participants."
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Giftfile Project Primes Decentralized Gift Economy More

Giftfile Project Primes Decentralized Gift Economy

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  • How Typical (Score:5, Interesting)

    by Anonymous Coward on Saturday June 05, 2004 @12:52AM (#9342601)
    How typical. When a news story concerning **AA, specifically how it is going to sue people who download songs from the internet (I would not be shocked if the songs were Bach Chorales), everyone gets ticked, and we have veritable screaming matches.

    Then, when a theoretical solution to the problem of how [composers|programmers|authors] will get compensation, NO ONE CARES!

    • Re:How Typical (Score:5, Insightful)

      by DerekLyons ( 302214 ) <fairwater@@@gmail...com> on Saturday June 05, 2004 @03:26AM (#9343038) Homepage
      Then, when a theoretical solution to the problem of how [composers|programmers|authors] will get compensation, NO ONE CARES!
      It's theoretical alright, and fraught with practical problems.

      First off, the 'gift money' is only given to the [composer|programmer|author] on demand... Which means that any interest that acrues will end up as income to the 'giftfile' organization. Lacking any place to spend the money... Where does it go? (Fat salaries for employees and managers is my bet.)

      Second off the proponents appear to making the suggestion that their should be multiple gift pools, which makes for a situation ripe with oppurtunities for fraud.

      Thirdly; One also wonders how long the nonprofit status will survive, since the company isn't performing charitable, research, or educational functions, but is rather providing 'bank like' functions in distributing income to individuals. (They claim they are 'grants', but the fact that they are monies earmarked for an individual and payable to that individual on demand moves that claim onto *very* shakey ground.) The granting of status as a non-profit doesn't mean it can't be revoked, such revocation can also (for tax purposes) be antedated. (This entire 'thirdly' is mostly the thoughts of my wife... A CPA who has done tax and nonprofit work.)

      • Re:How Typical (Score:4, Insightful)

        by /dev/kev ( 9760 ) on Saturday June 05, 2004 @04:21AM (#9343152) Homepage
        Which means that any interest that acrues will end up as income to the 'giftfile' organization.

        It is possible that any interest earned on a giftfile's balance be given to the giftfile's author, even if the realisticness of this is debatable.

        Second off the proponents appear to making the suggestion that their should be multiple gift pools, which makes for a situation ripe with oppurtunities for fraud.

        This is true. But it's part of their idea for a decentralised system, and it encourages competition between giftpools to best serve the public.

        They claim they are 'grants', but the fact that they are monies earmarked for an individual and payable to that individual on demand moves that claim onto *very* shakey ground.

        When I donate to particular charities, I'm often able to say what I want my money to be used for. I'm able to tick boxes which say that I want my money to be used only to help homeless kids, or only to provide aid to foreign countries, or not to be used for administrative costs. Well, in this case, I can "tick a box" which says that my money is to be used to support free software programmers. And there are lots of "boxes", so that I can tick exactly which programmers I think most need the help of my donation. Because the software in question (the software I'm supporting with my donation) is free software, I can argue that it benefits society as a whole since anybody can use it or improve on it. This is in comparison to donating money which ends up going to a homeless kid and helping them sleep somewhere at night. Don't get me wrong, I think that the homeless are a serious social issue, and I have nothing against spending money to help them - but I'm trying to show that the "bank-like" comparison is not necessarily as strong as the "charity-like" one. I can see the benefit in donating to homeless organisations and to free software programmers, but perhaps I can see more direct benefit (personally) in the latter.

        Charities distribute money to help people who are less fortunate people, or to help society as a whole. That's what they do. I would say that providing an income to programmers whose work is freely available to anyone in the community is a charitable function, no less than paying the wage of a social worker.

        Also, it's worth noting, as another poster has, that the "demand" of the giftfile owner is more of a "request" or "application". Ultimately the giftpool has discretion over where the funds go. However, if a giftpool starts withholding monies from giftfile authors, or otherwise "misbehaving", then donors are free to stop using them and move to another giftpool. I guess the hope is that this would be enough of a deterrant to stop giftpools from doing this sort of thing.
    • How typical. When a news story concerning **AA, specifically how it is going to sue people who download songs from the internet (I would not be shocked if the songs were Bach Chorales), everyone gets ticked, and we have veritable screaming matches.
      I was going to submit a story about the AAA, but now I've thought the better of it. Thanks, msterious stranger!
    • >When a news story concerning **AA, specifically how it is going to sue people who download songs from the internet How many times does this have to be said... they are not suing those who download but those who share :P
    • Actually, even if there aren't a lot of comments yet, people do care about this. Maybe this is one of those few topics intriguing enough that people are actually RTFA? (Hey, I can dream.)

      Plus, look at iTunes. It's wonderful. Still has some problems (DRM, charging for "empty songs" in Dark Side of the Moon, etc), but we love it. The more the **AA embraces that, the happier I for one, and I suspect much of the /. crowd, will be. So your analogy is bogus. This giftfile project applies to the little g

  • How long before.... (Score:4, Interesting)

    by Anonymous Coward on Saturday June 05, 2004 @12:53AM (#9342604)
    ....two people set up projects with an absolutely useless piece of free IP (like a 52x52 jpg of pure white), and start "donating" equal amounts to each other just for the tax deduction?

    • Re:How long before.... (Score:4, Interesting)

      by gid13 ( 620803 ) on Saturday June 05, 2004 @12:57AM (#9342618)
      I don't know about the U.S., but in Canada, technically money received from gifts is taxable. And while that's never really enforced, it probably would be if someone pulled THAT.
      • There's a minimum though, which is about $500 CAD if I remember correctly. Of course, nobody is gonna declare christmas gifts but if you win say, 2 plane tickets to Hawaii at your job - since your company will declare that gift, you will have to, too. And pay taxes on the value of the "free" plane tickets you got.

        That sucks to see employees win a home theatre or something during the Xmas office party and then bitch about the taxes they will have to pay for it.

    • Re:How long before.... (Score:1, Funny)

      by Anonymous Coward
      Right now, thanks for the idea.!

    • Re:How long before.... (Score:2, Informative)

      by Anonymous Coward
      ....two people set up projects with an absolutely useless piece of free IP (like a 52x52 jpg of pure white), and start "donating" equal amounts to each other just for the tax deduction?

      They would need to be recognized by the government as a non-profit organization for that to happen. I don't think "The White JPEG of Purity Society" will manage that.

    • Re:How long before.... (Score:5, Interesting)

      by gbulmash ( 688770 ) * <semi_famous@ya h o o .com> on Saturday June 05, 2004 @01:27AM (#9342747) Homepage Journal
      You need to be a 503c non-profit corporation to qualify for donations to you to be tax deductible. It's not easy to qualify for 503c.

      • Re:How long before.... (Score:5, Informative)

        by /dev/kev ( 9760 ) on Saturday June 05, 2004 @02:46AM (#9342947) Homepage
        RTFA. Donations are to "giftpools", which are non-profit organisations. Producers of giftfiles can apply to the giftpool for a "grant" of the amount of donations which have been allocated towards their giftfile. The grant may be subject to taxation, however the donation would be eligible as a deduction. It is, however, futile if you donate $500 to your friend and then claim back $500 in a grant which came from him (via the giftpool). In fact, it's pretty stupid, since the giftpool takes a small amount of the money for their operating costs.

        From the last link [giftfile.org] in the story:

        ... other participants in the giftfile system make allocations to giftfiles as described above, yet do not produce giftfiles themselves. The way they gain privilege to make allocations is by donating cash to a giftpool. Such donations are tax deductible, because giftpools are nonprofit entities chartered to fund nonproprietary works.

        and

        Be aware that giftpool grants may need to be declared on your taxes.
        • It is, however, futile if you donate $500 to your friend and then claim back $500 in a grant which came from him (via the giftpool). In fact, it's pretty stupid, since the giftpool takes a small amount of the money for their operating costs.

          Its not stupid at all.

          I could donate $10k today. That saves me $4k taxes this year. In 5 years when I have no income, I demand my giftmoney and get $10k + interest - operation costs. In 5 years I likely earn much less than now and I only pay a small amount of tax. Let
          • That generally won't work, because when you get your $10k back, it counts as income and so you'll have to pay tax on it. This means you'll be paying the $4k which you would have had to pay 5 years ago anyway, and you gain nothing except perhaps a small amount of interest (probably less than you could have got by investing the original amount wisely yourself). These rules vary from country to country, but since giftfile is only a registered charity in the US, I expect we can assume US rules for the tax dis
            • That generally won't work, because when you get your $10k back, it counts as income and so you'll have to pay tax on it. This means you'll be paying the $4k which you would have had to pay 5 years ago anyway...

              No, this idea is a good one - tax in most countries is progressive, so the more you earn, the higher your level of taxation - though an accountant can usually make income move from one year to another without having to do this kind of thing.
      • Don't you mean 501(c)(3) ?
  • "A giftpool is a nonprofit entity that will collect the money allocated towards your giftfile, and distribute the funds to you on request, or allow you to reallocate the funds to other giftfiles" So it's a way of putting money in escrow until I decide what to do with it? Am i reading this right?

    • Re:I don't get it.... (Score:1, Informative)

      by Anonymous Coward
      No. "Escrow" has some specific legal connotations.

      In this scheme, you're giving money to an organization, when you intend for it to reach a certain author. You trust that that organization will later give most of your money to that author. They are under no particular legal obligation to do so. Authors hopefully remember to apply to all the nonprofits for a grant, and the amount of that grant is supposedly something like the amount donated to the nonprofit "for that author". The non-profits will take
      • It's worth pointing out that the United Way actually does stuff with thier donated money. An "organization" that did nothing more than than move money from one spot to another in a 99.9% automated manner would have very low (almost 0) administrative costs. Transaction fees they'd have to pay to banks would be about it.
  • so if I buy software I have to pay more taxes, but if I donate to a free software org I pay less taxes... hmmmm, do I understand this correctly?

  • finally, a workable alternative to paypal (Score:3, Interesting)

    by wyldeone ( 785673 ) on Saturday June 05, 2004 @12:59AM (#9342634) Homepage Journal
    It is nice to have a free alternative to paypal, which forces registration on the user, as well as takes a percentage of what the developer makes.

  • But I'm REALLY CHEAP ! (Score:4, Interesting)

    by MajorDick ( 735308 ) on Saturday June 05, 2004 @12:59AM (#9342636)
    Hey I use a ton of GPL software, I wouldnt PAY for it
    Im serious no flamebait, , BUT I also write and contribute software under many free licenses, so THAT my gift back to the "Open Source Movement" if you want to call it that.

    I have seen "Free" software that it is almost EXPECTED by the author that he get a "Donation" for it, kinda irks me and usually It gets dumped, If you want to charge for it FINE but dont try and hide it behind the guise of free software then BEG for green.

    I wonder how much problme REGULAR donations to EVERYONE involved in now free software would , I dono taint ? them to where they change to only a paid programming model ?
    • my understanding is that if you donate, you can reduce your taxes by that amount, so essentially you pay the intrest only (ie opportunity cost of not donating)
      • Not quite. You do not reduce your taxes by that amount -- you simply do not pay taxes on your donation. That is, were you to spend $100 some way other than donating to a non-profit (503.1(c)-exempt) company, an income tax would be levied on that $100.

        By donating, all you gain is the government's obligatory share of that money.

    • Re:But I'm REALLY CHEAP ! (Score:4, Insightful)

      by Anonymous Coward on Saturday June 05, 2004 @01:31AM (#9342760)
      > I have seen "Free" software that it is almost EXPECTED by the author that he get a "Donation" for it, kinda irks me and usually It gets dumped, If you want to charge for it FINE but dont try and hide it behind the guise of free software then BEG for green.

      Yeah, how dare they encourage people to voluntarily donate to them.. the gall!

      There are a lot of projects out there that are very deserving of financial rewards for all their efforts. I think this is one of the downsides to the "Free Software" movement. Too many people think of it in terms of "Free as in my cheap ass doesn't have to pay a dime for it", not in terms of the freedoms Mr. Stallman cares about.

      I think if there was a viable mechanism for expecting/getting payments (the vast majority of shareware fails financially) many developers would use it. If it meant better software got produced, and more developers could make a living from it, that would be a very good thing.
      • The system is similar to patronage. I think this will work for the most visible projects, but the small developer has to take unpaid spare time to bring sth. up.

        This works only as long as there is a sizeable middle-class (educated, non-greedy and interested in more than 'making money') somewhere in the world.
        If poverty spreads in the western world, the FLOSS movement would grind to a halt.

        [rant]IMHO, the (mostly) hobbiest nature of of the free software movement is a very valuable thing in itself. Yet, big
    • One thing to consider when making a donation to a project requesting donations is whether the author gives a full accounting of all moneys received.

      I make donations to many organizations and projects, but there is a limited amount of money I have to donate, and I have to decide how to best allocate this money. If a project is very popular, there are more people who are likely to donate. If the developer of a wildly popular little utility is getting rich as a result of the donations, then great for him/h

  • The Gift of Vapor (Score:5, Interesting)

    by l0ungeb0y ( 442022 ) on Saturday June 05, 2004 @01:10AM (#9342673) Homepage Journal
    After reading their vacuous website it seems that they themselves are collecting donations by means of snail-mail only [ege-inc.org]. Which seems completely laughable on the face of it.

    And even if they emerge from vapor-mode and do indeed set up this system, it seems geared torwards institutions rather than individuals as you'd have to use a "gift-pool" ie: a centralized body and set aside fundage into that BEFORE you can assign a portion of those funds to a recipient. And that's not to mention the restrictions placed on those who may contribute their work by requiring contributers to license with a handfull of licenses.

    Personally, I think PayPal already covers the online donation territory in a far less political and more trustworthy fashion. Anyone can set up a donation link for any reason whatsoever and collect fundage from the willing. No restrictions on what license is used, what type of media it is or anything else for that matter. And furthermore, you don't have to lock up funds in your paypal account to be able to donate, paypal will transfer from your bank account/credit card automagically.

    I think the developers would be wise to reconsider their very niche-centric and restrictive objectives if they are to expect any real usage by both contributors and benefactors.

    • Re:The Gift of Vapor (Score:3, Insightful)

      by /dev/kev ( 9760 )
      that's not to mention the restrictions placed on those who may contribute their work by requiring contributers to license with a handfull of licenses.

      The reason for supporting only nonproprietary works is to get tax exemption. If you're producing proprietary works then you're not entitled to that, and so you can try yourself to get people to donate to you, without tax exemption.

      I agree that snail-mail only donations isn't great, but it's not like this will always be the only way to donate. This system
      • The reason for supporting only nonproprietary works is to get tax exemption. If you're producing proprietary works then you're not entitled to that

        What makes you say that? What about free but non-open-source works?
        • Quoting directly from http://giftfile.org/about [giftfile.org] (emphasis added):

          A nonproprietary intellectual work is a work of authorship such as music, literature, or computer software that may be used, copied, modified, and redistributed by anyone without charge. In other words, we are speaking of works from which the public has the freedom to benefit. ... Software works can be nonproprietary only if they include source code.
          To answer your question directly, free but non-open-source (ie. gratis, but not libre) soft

    • Re:The Gift of Vapor (Score:1, Insightful)

      by Anonymous Coward
      Why is it that whenever someone comes up with a clever and useful solution to a problem, with a tinge of idealism thrown in, people like you immediately dive in and start whining about how it's nothing new? This solution is better for some people, for some transactions, than PayPal, and worse for other people, for other transactions. Let's think about Giftfile a little more carefully rather than assuming the worst about it because it's not established yet (and because it's so difficult to read an article

  • I don't get it (Score:5, Insightful)

    by Brandybuck ( 704397 ) on Saturday June 05, 2004 @01:18AM (#9342708) Homepage Journal
    This system enables producers and supporters of computer files containing nonproprietary intellectual works to participate in a gift economy.

    I'm sorry, but I don't get it. Why do I need to "participate" in this "system"? When I post my software on my website under an unenbcumbered license, every and all can come by and grab it. And if I want the unencumbered software of another that has been publicly posted, I can go and grab it. Neither side needs a special system to participate in.

    ESR was using a metaphor when we was talking about gift economies in his books. The analogy is not accurate, because computer files are not integral "things". Potlatches were gift economies, because when you give your neighbor a salmon, you had one less for yourself. But when you give your neighbor a copy of your software, you still have it yourself.

    Gift economies were based on plentiful resources, but not unlimited resources. (and they also had a strong element of "oneupmanship")

    • Re:I don't get it (Score:3, Informative)

      by /dev/kev ( 9760 )
      When I post my software on my website under an unenbcumbered license, every and all can come by and grab it. And if I want the unencumbered software of another that has been publicly posted, I can go and grab it. Neither side needs a special system to participate in.

      That is still the case. The system is of course completely voluntary and optional. As a producer of software you can choose to participate in the system by creating special "giftfiles" for your works (your software). You distribute the gift
  • whoever wrote the Linux kernel, which according to a recent slashdot poll [slashdot.org], was "a sensitive clod"

    Would the sensitive clod who wrote the Linux kernel please identify yourself?

    • Re:I think I'll donate 1,000 bucks to (Score:4, Insightful)

      by /dev/kev ( 9760 ) on Saturday June 05, 2004 @03:25AM (#9343037) Homepage
      Actually, this raises two excellent points which I can't see addressed in the stuff on their website, and are my biggest concerns with the system as I see it at the moment.

      First, how to verify that the creator of a giftfile is the "owner" of a work? In other words, what's to stop me from taking the Linux source, making a giftfile for it using my private key, and then distributing the giftfile in an effort to get donations? I can't see anything which prevents behaviour like this.

      Presumably the digital signature in the giftfile allows one to verify that a particular work matches a giftfile. That would stop me from putting my giftfile with someone else's work (to try and get people to donate to me instead of the real author), or putting my giftfile with some random crap which I claim is something useful.

      Second, how to deal with works which are the result of several authors. In the case of the Linux kernel, there are hundreds of authors, but there can only be one private key to sign the giftfile (I think). Once there are funds donated towards this giftfile, who gets the money? Does it all go to Linus? Or must an organisation (eg. Apache) be setup for every project which has multiple contributors? Or do we have a similar situation to my first point above, where each author makes their own giftfile and then donors have to allocate money to every author? (Or perhaps some sort of grouping system so I can say "split my $10 donation equally among all the authors of linux-2.6.6.tar.bz2"? But I'm not sure how this would fit into their decentralised model...)
      • I spent a bit of time worrying about those problems in the course of my own research [mu.oz.au] on public funding systems as alternatives to copyright.

        The conclusion I came to was that there just isn't a fair way to split the credit for large collaborative projects. If you think the linux kernel is hard, what about a nifty embedded gadget or something which relies on the kernel for 90% of its functionality, but was made by completely independent developers?

        The situation is a bit better if you offer payments in ad

    • You planning to split it evenly? $500 for Santa Claus and $500 for the tooth fairy?

  • I've thought about this a bit... (Score:3, Interesting)

    by Exantrius ( 43176 ) on Saturday June 05, 2004 @02:55AM (#9342963)
    I'm not sure that this is totally on topic, but it kinda has to do with gift cultures and micropayments

    Micropayments-- the Exantrius way:

    1) pay a certain amount to a "host" (this doesn't work quite right unless you have central hosting-- think sourceforge, or fanfics.net.) You can either do it so that it's what the user wants, or a flat rate, or whatever.

    2) take a couple percent (5ish?) for server and bandwidth costs.

    3) Every time you visit a "story"/informational page, you rate it (good, bad, indifferent), defaulting to indifferent if you don't choose any. every page you visit gets one "vote" for a bad, 10 votes for an indifferent, and 100 votes for a good.

    4) At the end of the month, tally the number of votes from each user-- and find out each share price-- 1 vote == $.0032 or whatever. now place it in the voted's account. this would be per user-- if someone had 10000 votes and $10, their votes would be worth $.001. likewise, someone with 10 votes and $10 would have $1 shares.

    5) Hold money in an account for each user. This works best in a closed system-- think a bbs or blog community or something-- probably more like fanfics.net or something with creative or real other value. when the voted makes a certain amount, they can cash out (so you don't have to send $.18 checks to people). say $20. Plus they can use their acct balance to pay their "subscription" fee.

    2 ways for service to make money:
    1) "skimming off the top"-- as long as it's kept low-- 5% is high, ideally it'd be in the sub 2% range.
    2) collect interest on money-- invest it in short term investments or just put it in an interest bearing account.

    Ideally though, the system would be set up as non-profit, with the hope that the people that set up the system are decent contributors, so they can make their own money... so make just enough money to pay expenses.

    This would work best in a situation where everyone can be a contributor, and noone has "special" priveleges, except maybe a "top N stories" by votes. that means that the guy that runs the site would have to place his work in the system with everyone else.

    This is just the most basic idea-- I've actually played around with this, but I'd need a large hunk of data in order to get numbers right... I think people would join a community for a small fee if they had the opportunity to get money back-- this also guarrantees that *ALL* the money goes back to users, and it gives an incentive to not only be an active member of the society, but a good contributing member.

    Of course, I would make it all available without registering/paying, but with ads, and no contributing-- no reason to charge people who are just passing through...

    Or possibly I'd let them contribute, and have a counter on their front page "If you registered, you would have made this much: $TEXAS"

    Unfortunately I'm lazy, and frankly don't particularly care about doing data systems as much as I used to love them... If anyone can put this into effect, I'd love to hear about it...

    bob[at]drunkmonkey]dot[org /ex
  • Something tells me a truly popular and useful piece of free software stands to make more from Google Adsense [google.com] than from direct donations. Of course, nothing says you can't pursue both avenues.

  • I'm a developer with the giftfile project. We'll try to answer some of the questions/comments in another post or at the site, but let's take a step back. The giftfile project is a only humble start, we want to accomplish two things:

    • a common format for publishers to express the public's rights, and
    • a standard donation system to introduce economic feedback from consumers to producers.

    Our community needs these things to get to the next level. Everyone can see these problems. Somehow the community woul

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