"because the industry instinctively understands that this is how good people make good things"
No, it's just because "the industry" has shifted to make a lot of money not from software but from using software to gather data and sell ads, or selling expensive consulting. The whole open source model is based on the assumption you can give software away from free because revenues will come from other sources. In turn you can exploit a lot of free labour beyond the few ones you are forced to pay - otherwise you'd have to pay a lot more developers to write the same software ("Google: Linux needs far more developers! [but we are not going to pay for them....]).
That in turn made a lot of software just a by-products of other interests, and in turn, made software a lot worse than it used to be, because as users don't pay for it they have no voice, nor developers are interested in adding more features than those they need for their main product (which is not software).
Just more and more open source projects found that other revenues sources didn't materialized - so RedHat sold itself to a decaying company like IBM, while others are struggling to find other revenue sources, while the raise of cloud services that can exploit open source without even giving code back is just accelerating the collapse.
Let's see which model is sustainable, in the end.