See: Mozilla Foundation
Last I heard, the IRS was investigating them for claiming deductions as a charitable foundation but funneling money to the Mozilla Corporation.
They've only recently started concentrating on paying developers to reduce the memory leaks, bloat etc after Chrome started eating their lunch in a big way.
How is this a poster child for a good way to develop good and useful software for the masses? In fact, it seems to exemplify the pitfalls and weakness in the model, if nothing else.
As for the IRS, they were auditing Mozilla's finances. And since when is there an implicit assumption of guilt in an audit?
Well enough that they can hire a few hundred full-time people, apparently, yes? Including some people who should clearly have no shortage of other job offers (e.g. http://en.wikipedia.org/wiki/Julian_Seward ).
> Last I heard, the IRS was investigating them
The IRS is doing an audit (which is not the same thing as an investigation, by the way).
The IRS is also auditing, right this second, Apple, Google, and Microsoft. In fact, last I checked, for companies like Apple or Microsoft they had full-time auditors assigned to them on an ongoing basis.
As far as the memory leaks thing... That's a developer-driven project, like many other things at Mozilla. Most developers there are not paid to do a specific task; they're paid to do the right thing. Just like Google doesn't hire you for a particular project, by the way.
While true, your claim that nobody makes money with open source is false. The classic business model of selling IP doesn't work anymore, but there are other models out there. Mozilla being one of them.
http://journal.dedasys.com/2007/02/03/in-thrall-to-scarcity
Open Source Software is not a scarce resource: you cannot sell it.
Therefore, you have to sell something associated with it - developers' time, the right to integrate it with proprietary software, or things like that.
And iOS will be killed by Android anytime now. Right?
If "forced scarcity" as you call it is eliminated, the first copy of software, songs, movies, will cost a few billion dollars and the rest will be free. After all, it costs real money to feed the designers and coders.