Phil Mattison said:
> I've been trying to understand the economic rationale behind the open
> source philosophy, and I think I see an apparent contradiction. From
> what I've seen so far it seems there are two economic motives for
> contributing to open source projects. (Ignoring those who do it just for
> fun.)

It is probably best to study the social rationale and the economic
rationale soon follows.  You really should spend some time studying Game
Theory[0].  I think in the essence of even the most basic game theories
you see collaboration played out as the logical answer.  Something as
simple as the prisoner's dilemma[1] can demonstrate this.

It is not an often known fact but much of our governments antitrust policy
is deeply rooted in Game Theory.  That is economists are highly interested
in this kind of thinking.

> 1. For young programmers making their mark, it is an opportunity to gain
> experience and prove their worth, enhancing potential for future paid
> positions.

I think this might motivate some, but for most this is very non fruit
bearing exercise.  Only the smallest of applications reach such a large
momentum as to actually produce fame or credibility to the extent of the
authors major gain.  Linus is an exception not the norm. :)  While it
might help on resumes, largely Free Software hacking is seen as hobby by
many employers.

> 2. For companies with proprietary software that doesn't sell well as
> shrink-wrap, it is an opportunity A) to reap the benefit of the unpaid
> labor of those in [1], and B) to generate revenue through support
> services, because they are the only real experts with a particular
> package.

I don't think this is a factor at all.  Most companies that try to "dump"
products onto the community do so with little or no success. 
Netscape(Mozilla) and StarOffice(Open Office) are the only two I can
really think of and both of those basically exerted complete rewrites once
the community got ahold of them.

I think the biggest thing is that the market is shifting.  Propeitary
software vendors like the RIAA have to understand that the market is
changing.  A good deal of this in both industries is that distribution and
cost to create has greatly reduced.  When a "real" computer cost 20,000
and there was no way to distribute the software, proprietary vendors had
no problems.  When I can get a development workstation that smokes for
under $600 and can collaborate with people across the world at virtually
no cost.  The world has changed. :)

Smart companies are embracing.  They are saying, what does it take to be
part of the community.  Lets make software a commodity.

[0] http://www.gametheory.net/
[1] http://pespmc1.vub.ac.be/PRISDIL.html

-Derek