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Making Money In Open Source
Khalid writes "An interview with Sleepycat President and CEO, Michael Olson, it brings a lot of interesting information about their business model and licensing scheme. A lot of good ideas, when a lot of open source based companies are struggling for life. "
I don't think there is any magic in it.
If it's a COMPANY it need to be run like a COMPANY. A BUSINESS.
In my opinion the fall of many opensource based "companies" has been the fact that they never were COMPANIES - but instead a collection of enthusiastic nerds.
Opensource is not the complete answer for a company strategy unless you are planning to eat rice for the lest of your life.
Now that the megalomania, greed and excess of the Linux boom days has disappeared, it's clear that raising a mountain of money from VC's and an IPO and overthrowing Microsoft and Oracle isn't the way to succeed for a free software developer. On the other hand, growing at a reasonable rate, living off revenues and (duh) making a really good product like Qt or BerkeleyDB can make you a nice living.
Maybe we should refocus our attention on making "reasonable" or "sufficient" amounts of money. Statistically speaking, in most fields, nobody makes the bigs bucks.
In sports there are many many minor league players just scraping by for each major league bazzillionaire. In business, most places are small mom-and-pop (more than 50% of the US ecconomy?) compared to the relatively few McDonalds out there. Maybe Open Source is a bit different in that it is virtually impossible for there to be even this many (or any?) BIG winners - but that doesn't mean that everyone is thus forced to be a "looser".
It seems as though there are lots of opportunity for making a living with creation, support, etc. of Open Source solutions to various people's problems. And in fact there are a lot of people making decent livings providing those services.
Most OSS companies don't know how to run a business because the paradigm and rules of the game are too different. Look at Caldera, for example. There is a company which seems bent on selling Linux as if it were proprietary software, which looks like the safe choice to the novice, but really provides the worst of both worlds...
The real problem facing OSS companies is that the rules of the game are so different than they are for proprietary software companies. You cannot make your money on licensing because if you try to do that, your competition makes a cheaper clone. OSS commoditizes the software market.
I think that companies like Sleepycat are honestly trying to find out how to make money in a commoditized world, but I think they will have to transiton into another mode. Repeat after me: "You cannot make money selling open source software that you develop yourself." The market is simply too competitive.
What more companies need to do is offer tailored services, utilizing open source software to produce less expensive, more competitive packages of services. Of course, then you are competing with IBM, etc. but I suspect that this is EXACTLY why IBM is starting to move more open source.
LedgerSMB: Open source Accounting/ERP
A large number of americans have a lottery mentality that they are always looking for some way to make lots of money with little effort. All of the economic bubbles have been built on this tendancy. The dot com boom and the related boom in VC funding for open source was all about getting the big payment without doing the hard work. When the dust settled turned out a lot of those companies didn't have a clue and died.
I think there's a lot of money to be made on open source, but that's spread out over a lot of people. Support, custom development, integration, lots of useful stuff that isn't sexy and isn't going to make anybody fabulously rich but is valuable and will provide a more than adequate living for a lot of people.
I think if anything open source is a big bomb shell for the whole notion of making the big money. A lot of companies who got cozy making proprietary software, charging huge license fees and then selling exhorbitant support contracts on top of that are in for a big wake up call. When everybody can have access to the code you don't need to be addicted to one vendor. That breeds competition, and competition drives down prices. Those companies that can provide the best services for the best prices and can create the best brand will be the ones collecting the money in the future but because they necessarily must be efficient it won't be the really big money.
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What always seems to surprise me is the total lack of 'talking'.
"Gee, I'd really like to use SpamFooOODBMSRTC in my project. But Alas! It is GPL and I'm stuck to BSD!"
Why not drop the developer/company an email?
"Hey! I've got this great FourthGenerationDiscoBobulatingDooHickey! It would work great with your SpamFooOODBMSRTC!! How can we arrange to do it? Can you grant me a different license that would work? Y'know, dual licensing? Is there some way I can add or use an exposed API and not need to redistribute your source? Can I get some old source under a different license? Mabye you can just promise, as copyright holder, not to sue my ass off?? I promise I will give you the changes I make under whatever your license is."
.sig: Now legally binding!
In fact, Sleepycat's business model stops working if the Free Software revolution has taken place because no one would need a proprietary-compatible license for Sleepycat's software. ACT's business model continues to work because their customers still need support, and still pay for enhancements to the GNAT toolchain.
I guess Sleepycat is just an Open Source company, but not a Free Software Company. ;-)