The term free software is used in essentially two different ways:
software that can be copied, used, studied, modified, distributed, etc., with few or no restrictions (think free speech and free market).
any software which may be copied and used without payment (think free beer).
Not sure what to call this section...
Issues that are often debated in and around the free software movement....
Free software can be sold and used commercially, licences that allows only for Non-commercial use have be written but these have not taken off.
BSD/Apache style terms
Free software as an economic model
The existence of "free goods" is incomprehensible within the framework of the concepts of Exchange, work and Money. So far, all traditional economy is based on the assumption that "free goods" are not the result of systematic human activity. The classical economy, from Smith to Ricardo, makes it the central distinction: What is result of human activity, has value. What is not result of human activity is "free good".
For many it is already hard to understand why there are software developers who don't ask for payment for their work. To resolve that question, 'free products' (useful material results of human acitvity not in the form of commodities) can be considered as a totally new economic model which has never previously existed.
Free labour, payment and subsistence
According to Lakhani & Wolf (2005), only approximately 40% of the producers of free products are paid. Though few would object to payment for their work, many are suspicious of the lack of control over their labour that payment can entail. Most free content producers are motivated by intrinsic rather than instrumental factors such as self-improvement, the joy of hacking, scratching an itch and meeting a challenge.
This attitude may be linked to the fact that many free content producers already meet their subsistence needs through other paid work, and so have the luxury of working in this way during their free time. There are no clear statistics on how many free content producers make a subsistence living from their work without sacrificing their operational autonomy in the process. A promising alternative to this less radical interpretation is that, given an unconditional Basic_income, many people would happily produce free content rather than commodities with their time and energy.
The role of social contracts and of social obligations must also be accounted for. Producers may feel obliged by moral reasons or personal inclinations to produce free goods that are mainly for the use of others.
Exchange and use value
Free products are generally produced for their Use_value rather than for their Exchange_value. Though they may be commodity, often with proprietary extensions, and sold with an exchange value, this process doesn't necessarily affect the producer nor the products in other spheres of life where they remain objects valued for their use. This can be clearly seen in the fact that, as per the conditions of their licenses, free products can be endlessly shared, used and modified without cost.
Some have therefore characterised free products as gifts, constitution a Gift_economy. However this can be contested by pointing out that the product isn't created and donated to a particular person. Rather, it is created for specific needs and distributed to the whole of humanity in a way that promotes further productivity.
Many companies in the traditional sense can make money with free software by providing services. Instead of making money by propertising and controlling the product, they tend to provide additional services that benefit the users of free software. These services can include anything from competent packaging and distribution of free software into distributions, to prodiving documentation, support, on-site maintainence and bespoke customisations.
In some Francophone countries there is a group of companies that operate using this strategy, that extended the use of the principles of free software to other domains - like "one employee, one vote" and equal salary. See www.libre-entreprise.org
The role of digital copies and the internet
This totally new economic model within this sector was historically only made possible through the invention of the digital copy and its wide circulation. It is computers which have brought about the massive reduction in unit costs of digital copying, making possible, in turn, the infinite copying of data without any loss of quality. This data can include software, web pages, recipes, travel reports, letters, pictures, circuit plans, music, etc.
The internet, which can be understood as a huge distance-copying facility, does away with the limitations of a local computer and makes world-wide networking possible. The internet can bring together, in a historic new way, people from all over the world who share the same interests. Free software is an example of how useful and productive this global network of can be.
Individual development as the driving force
Although the producers of free software don't get any money, they do get something out of writing software. One of the most important motivations is the fun they have writing computer programmes. This, for some, is enough. Its practical uses for oneself or others also plays an important role in the production of free software. Producers are focussed on the software's user-value and quality. Others again enjoy working in a like-minded team. Those who work as maintainers of free software projects need to enjoy communication, organisation, and decision-making that reflects the consensus of the project. And then there are those who write software because they want to give something to the world.
The motivations behind the development of free software can be summarised in the wish for self-fulfilment. This personal experience is different for everybody. Authors of free software mostly have other means of income and don't need any other external motivation for their work: the work is worthwhile in itself.
However there are many people who are paid to write free software.
Wikipedia/Linus's_law - "given enough eyeballs, all bugs are shallow".
This leads, then, to a new economic model whereby available products exist in surplus, they are abundant, there is no scarcity and everyone can just take what they need. An exchange of valuables, as such, is no longer necessary, but still the best possible provision of goods is guaranteed.
If this attitude, which is already well-developed in the realm of free software, could be extended to other IT sectors and later, to Material_goods, this new economic model could potentially replace traditional economics with its concepts of exchange, work and money. Some moves to transfer the principles of free software to other products are already happening and the recent acceleration of such developments might lead to a much faster change than is currently anticipated.
From each according to their ability and to each according to their need and dream of the free association of producers and consumers are aspects of Karl_Marx's ideas that appear to be realised in free software production and use.