Your second paragraph is explaining perfectly why open source doesn't work and how its economics don't add up.
I would also add that it indirectly kills the vast majority of programming jobs - nobody is ever going to get paid to create a JPEG decoder as everyone can just use libjpeg. Nobody is ever get paid to write a new kernel as everyone can just use Linux. Very few people are going to get paid to work on a new database as you can just use Postgres...
Once there's a good enough open source solution in a field, in the long run it will out-compete commercial offerings, even it's overall a worse package, as it's some guy's free time project and is created on a $0 budget.
Programmers work for free, end users get a worse product, companies make trillions.
I would also add that it indirectly kills the vast majority of programming jobs - nobody is ever going to get paid to create a JPEG decoder as everyone can just use libjpeg. Nobody is ever get paid to write a new kernel as everyone can just use Linux. Very few people are going to get paid to work on a new database as you can just use Postgres...
Once there's a good enough open source solution in a field, in the long run it will out-compete commercial offerings, even it's overall a worse package, as it's some guy's free time project and is created on a $0 budget.
Programmers work for free, end users get a worse product, companies make trillions.