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Commercializing Open Source Software
CowboyRobot writes "Michael Karels, system architect for BSD 4.3 and 4.4, has an article on ACM Queue about the challenges in trying to make money from open source software. From the article: 'As users of the software, open source contributors have certain common interests in making the software stable and usable.' but 'When additions require modifications to the base system, there may be resistance to incorporating the changes.'"
isn't that why OSS projects get forked?
Karma: Bad. (As in Good?)
A number of users have suggested that I charge for custom work, but when I ask them if they would ever pay for cutom work, the answer is always no.
Here's what I do: Bitty Browser & Andromeda
I think offering Subscribtion services is about the best way to make money with open source (Transgaming, Lindows, Slashdot?, even tech support).
many free programs pay off for the developers because they charge for support. without proper support software is often not worth considering for many organisations, so that's a convenient way to raise funds for further development. Even more i don't think that making certain changes for money is a bad idea (as long as it doesn't compromise other parts of the program or makes it incompatible to prior versions), for all of the users will profit from it, the buyer gets what he wants and the developers get money they need to further develop the program.
".Sig Stealer" was here
The problem comes in the nature of the beast. It's like art really. Artists perform their art because it makes them feel good to share. And they want everyone to be in on it. The same can be said of Open Source. People code Open Source cause they want to not only create something for themselves, but to give it to the world. The problem comes in, about the same time as it hits the artist, when they want to put more time and energy behind their creation. They start to realize that the only way to dedicate more of their lives to this brain child of theirs they can't be bothered by things as mundane as work, or bills. The only solution is to make their brain child their job!! But because of things like the GPL, they've effectivly shot themselves in the foot. They can no longer sell their brain child. They can't even offer it for a measly $20 unless there's something else they can give with it. Thusly the support angle. Why do people go out and pay $60 for a copy of Red Hat when they can download .iso's or do an FTP install? Because if they pay, there's some guy who's sitting by a phone, and he's perfectly willing to help them when they fuck it up. If more OSS coders went non-OSS, and offered the source to purchasers through some new liscencing system the OSS movement would die though. I didn't say I had a solution, only that I think I have some insight as to the problem.
Kleedrac
Sure we wang, can.
> Does anybody have the text of the article?
Commercializing Open Source Software
ACM Queue vol. 1, no. 5 - July/August 2003
by Michael J. Karels
Introduction
The use of open source software has become increasingly popular in production environments, as well as in research and software development. One obvious attraction is the low cost of acquisition. Commercial software has a higher initial cost, though it usually has advantages such as support and training. A number of business models designed by users and vendors combine open source and commercial software; they use open source as much as possible, adding commercial software as needed. They may use open source software as a central component of a product or service, but use other components to add value, which can then induce customers to pay for the offering (obviously, it is hard to compete with free software on price).
After a brief overview of the salient differences between open source and commercial software, this article will describe several basic business models in today's marketplace to highlight ways that value is added to open source software and services. For the most part, I will discuss only complete software systems sufficient for some useful purpose, such as network servers, which include an operating system and its associated components, any applications needed for the system's purpose, and necessary local configuration information. Many of the same principles apply to components such as applications and other software packages.
Open Source Development
The development process for open source software is often quite different from that of traditional commercial software. In some cases a single author or a small group may develop and distribute a program or system. Successful software often attracts additional developers, however, and larger projects generally require larger teams. These teams tend to be distributed, with participants in different locations and with different affiliations. Some members may contribute their own time; others may be paid to work on the project. Some projects develop infrastructure such as a consortium to coordinate the project; others work with a looser organization. In either case, projects are likely to be organized with less central control than in traditional software development. Some projects may have a strong central figure such as the initial author of the software, but many other projects have "outgrown" central control.
This less-centralized structure affects the development process for open source projects in several ways:
* Community support is often available via mailing lists associated with a project. Response ranges from rapid to nonexistent.
* Projects may have many volunteer contributors. Their abilities and availability can vary significantly.
* In terms of quality, Darwinism applies. Some software features may be added while the project is still incomplete or experimental. These features may eventually be removed or replaced, or they may be improved over time. The addition of features and other modifications is driven by the interests and wishes of the contributors (including companies that pay staff to extend open source software). As users of the software, these contributors have certain common interests in making the software stable and usable. They may have substantially different uses for the software, however, as well as different ideas about how the software should be engineered and extended. The direction taken by the software developers may be driven by those who have the most time to devote to development or by those with the greatest tolerance for the discussions on mailing lists for the project. When different groups design and implement the various subsystems, their architectures might not have similar or compatible styles.
* The open source process is inherently social and political. Group leaders spend as much time on organizational matters and conflict resolution as on technical issues
CAPS LOCK IS LIKE CRUISE CONTROL FOR COOL!
I believe in open source (or at least want to). But I think money rules in this world. If you look at other forms of Media and Art, giving stuff away won't get movies like Matrix made.
This is not to say that there are not many, many very good independent films. I'm just saying that maybe Linux and other Open Source projects are trying to hard to get the wrong market.
With "limited" resources a focus should be made to take the server market from M$, drop the GUI crap, Linux WON'T win on the desktop (at least not yet). But can easily win on the server.
Michigan Photography
Money can help affect political change, and when coders pass on the chance to make money, they also pass on the chance to affect political change.
Obviously you can still make a change without money, but it's quite a lot easier if you have some.
As I see it, when coders are giving their work away for free for professional use by international companies, they are being had.
Here's what I do: Bitty Browser & Andromeda
Perhaps we shouldn't be trying to commercialise OSS. Perhaps we should be trying to commercialise the businesses and products/services which rely on OSS.
For example if I set up a cybercafe and write some software to deal with scheduling and billing, I'm not looking to make money from it. Instead I'm looking to make money from the business that relies on it. Providing a service is what is going to make me the money, and by opening the source of my billing software I may find a wealth of people willing to help me improve it and to use it themselves in other commercial products which pay their bills (and not mine). I get free upgrades and enhancements and they get the basis of a product that runs their business.
It's just an idea, and I'm no economist, but I have a feeling that this sort of set-up could work in many situations.
The key is educating companies in to believing that it's their (civic?) duty to contribute back to the OSS products they use. For example, if every business that uses Linux and has more than 1000 employees were to donate the time of one employee to improving Linux (working full time in the OSS community), we'd see pretty rapid improvement. People are begining to catch on (IBM, Red Hat...), but more of the same would be nice, IMVHO.
1 - develop a application ( you know how to do it, no ?
:)
:)
2 - try to "sell it" to as manny organizations as you can (for free).
3 - Make a contract with those organizations (for maintenance, bugfix, feature add)
4 - make it available to the world as open source.
What the organizations get:
1 - A "free" software. Maybe not the best there is, but sometimes they need months to decide on what to use (because it costs a lot of monney), but they need something now. There comes your program. And believe it or not, most times, your program will be the "final one".
2 - Direct contact with the developper
3 - A rapid deployment.
4 - Low risk (if you don't charge much for your software
What you get:
1 - costumers !!!
2 - flat fee revenue (aka you know what you're going to get in the end of the month)
3 - going open source enlarges your app "possible customers" universe.
4 - You can still get lot more customers with onsite or remote support for instalation, bugfixing, feacture adds.
What the world gets:
1 - Open Source Software
2 - open source software development backup up with real money.
I adopted this in the last 3 years, and its working great
The fact is, most support is of the getting-started variety. Do you expect those people to pay for support *before* they have their software working? Or do you help them get set up for free, after which they have little need for support?
And if somebody writes to ask: "hey, quick question" Do you reply, sorry, but that'll be $5 first.
Here's what I do: Bitty Browser & Andromeda
I've got all the fancy dress I need already, thanks.
I've always thought that ghostscript had a neat idea in that the latest version is released under a different license and older versions are GPL'd. Why not charge for the most recent version with the newest features and release old versions with lesser functionality than the current as free and maybe even in the public domain. If there's not money to be made on old outdated software, why not release it free and open source? Sure, you might make a few less dollars, but you'll make yourself a lot of new customers in the process, too. I know there's always shareware, but it tends to be severely crippled and has a 30 day time limit on it. The point is, charge for the newest major features, and release older and fully funtional versions to the public free and open sourced.
Red Hat makes it's money from support from Corporations, it may have trouble turning a profit right now, but when the marketshare expands even more, then I don't think they have much trouble. Red Hat has a good buissness model, their pricing scheme maybe a little shaky but I think it will change. Perhaps what they should do, is have releases every two years instead of one, support both releases, then in another two years drop support for the old one. That way you'll get a good four years out of a product. I'm not a market expert, but I could work. Its better than a one-year product life.
> But because of things like the GPL, they've effectivly shot themselves in the foot.
If you dare to read the article, you'll find an amazing way of making money off GPL (look for 'Dual Licensing').
GPL requires the derived work sources to be published under the same license, which is unacceptable to many businesses. However, one can always bargain with author for separate license for their specific project.
Anecdotal evidence: I was involved in a proprietary project where we needed a very specific functionality. The opensource library doing just what we needed was there, but licensed under the terms of GPL. The contact with author revealed that he is perfectly willing to relicense it for us for a nice amount of $35000. And it really was an OK price because reimplementing the necessary functionality from scratch would cost the company considerably more, and we wouldn't fit into the timeframe anyway.
Lisp is the Tengwar of programming languages.
people have been trained to do two things with software, purchase and steal. i cannot begin to tell you how many requests i get for office or windows cd's from people who don't wish to pay for it. fact is, mainstream computarded L-users feel better when they've shelled something out for the software, even if it is free. like carnies, we have to take advantage of the marks, because they ask for it, and wouldn't be entertained otherwise.
beyond that, i wish that lycoris would put OO.O on their distro, just so i could hand out disks of their stuff and not tell anyone what they're getting, let them use the stuff and be happy, like the most illiterate of my clients who get free software every time they ask for a crack.
"You never want a serious crisis to go to waste." - Rahm Emanuel
I have been successfully running my own Free Software Business for the past 2 1/2 years. Every quater I hit or exceed my targets, and comfortably in profit - might not be rich but certainly have perfectly viable long term business.
My company provides consultancy, support and training ontop of the open source project I lead. The key to success is that the project competes well in terms of functionality and robustness with equivilant commericial products, and that you provide the services that the market requires ontop of that product.
FSB's really are little different than conventional companies, if you provide and product or service that the market want at a price that is reasonable for the customer, yet profitable to provide, then you're in business. It really is very simple. Robert Osfield.
Making money out of open source software is so simple:
http://erichsieht.wordpress.com/category/english/
IMHO, it is possible to make money with open source software. The secret is coming to the realization that you aren't going to make any money by packaging the software and selling it in boxes. OSS software is available for FREE, so why would a customer pay for it in box when he/she can get it for free elsewhere? Obvious point, I know.
... consulting. offer consulting services (for $$) to guide customers through custom module development, implementation, design, etc. Perhaps you could even offer high level technical support for $$ -- opportunity #4. Web design services for the Cow CMS -- opportunity #5.
So, how does one make money with OSS? Services. Granted, incorporating and building paid services around your open source software may not be simple in all cases, it can be applied very well to certain types of open source software.
For example, lets look at the CMS arena... lets say that I have a OSS CMS called "Cow". I make Cow available for FREE to anyone that wants it. BUT... Cow, being the sophisticated piece of software that it is, requires a web server with certain dependencies. Some people will be able to setup Cow and run it on their own web servers and some won't. There's the opportunity for service #1... specialized hosting for the Cow CMS. You can charge $$ for specialized hosting of Cow CMS based websites.
Since our fictional CMS (Cow) would be modular, you as the developer could make highly advanced and highly functional modules available to end users for $$. Perhaps they need a eCommerce module with some advanced capabilities. Perhaps they need a specialized payment gateway. There's opportunity #2.
Lets say that Cow CMS has grabbed the attention of a few big web sites. Now, you have some real commercial entities showing interest in the CMS. Opportunity #3
See, I think it is possible to make $$ with open source software by adding services of real value around the software.
A few random thoughts for the "services approach":
1. The software has to be good and have at least the majority of functionality of commercial competitors.
2. The software should be able to run on the windows platform.
3. The UI should be of commercial quality.
4. Not every type of OSS software will lend itself well to the "paid services" approach. CMSs are a good example, as would be any type of specialized vertical market software, such as Medical Practice Management systems.
5. You need to understand your market! Understanding your market means you'll understand which services would be of real value.
Skiers and Riders -- http://www.snowjournal.com
The change you affect by passing on money is the marginalization of your voice. If instead you took that money and gave all of it to support some cause that you may believe in, you'd be affecting a lot more change.
And by devaluing things others charge for, you may indeed make it harder for the establishment to compete, but you also make it harder for independents too.
Here's what I do: Bitty Browser & Andromeda
The money is in integrating the things and making it work for people.
The other money is in CUSTOMIZING. People have a demand for stuff that works only for their situation, and demands an in-person presence that indians (in india, that is) cannot satisfy.
There's not a huge profit margin in selling commercial packages anyway, but about the same amount of time is spent making them work. SELL YOUR TIME!
(Don't buy the commercial vendors "TCO" arguments..)
Most of my clients are all too happy to get away from "license" payments. They want to spend money for actual value, and a "license" isn't an actual value, other than for the "privilege" of running a software package.
-- I am. Therefore, I think!
They don't pay for anything they can get for free.
I make money, not on support, but on development of extensions to some very specialized software which is the "best of breed" in its limited area. My customers aren't traditionel end-users, but either research institutions or consulting businesses who use my software for projects for their clients.
There are plenty of free-software business models, and the article does a good job of summrizing them, but there is no business model (based on free software or not) that guarentee you money.
For an honest busniness to be succesful you need to provide your customers with a value that is worth the price, the price need to be lower than what your competition can offer, and your customers need to be aware of both those facts. If that is true, your business will thrive, if not, forget it. Whether it is based on free software ot not is irrelevant.
As I see it, when coders are giving their work away for free for professional use by international companies, they are being had.
And if the little coder use code Open-Sourced by large corporation, is he "having" them ?
I think you don't get the gift culture. IBM use the little coder's code, the little coder use IBM code, everybody is happy about it ! That's the point of open-Source : sharing. It goes both way.
:wq
I think you don't get the corporate culture. You may give away your work with good spirit, but when a publicly-traded multi-national corporation like IBM gives away work, it's as a result of a complex set of business decisions.
In the case of IBM, it's most likely part of a larger anti-Microsoft startegy.
If you believe that IBM is sharing code from some sort of sense of civic good will, you're mistaken...
Here's what I do: Bitty Browser & Andromeda
It's funny reading some of the /. readers ... you'd think that nothing but the GPL exists.
Case in point. Apple is making money off of FreeBSD's technology. And likewise, some of the FreeBSD folks are making money by working for Apple.
Granted, it took a long while and a lot of hard work for that sort of arrangement to happen -- but it shows what CAN happen... and if you can live through the lean years, there is light at the end of the tunnel.
Try sticking by what you believe in, what makes your conscience rest easy, instead of being a money grubbing whore.
I think you don't get the corporate culture. You may give away your work with good spirit, but when a publicly-traded multi-national corporation like IBM gives away work, it's as a result of a complex set of business decisions.
In the case of IBM, it's most likely part of a larger anti-Microsoft startegy.
If you believe that IBM is sharing code from some sort of sense of civic good will, you're mistaken...
This is irrevelant. The result is the same : I have access, for free, to code contributed by a big corporation. Wether they opened it by goodwill or a complex set of business decisions, I don't care.
:wq
I think you don't get the gift culture. IBM use the little coder's code, the little coder use IBM code, everybody is happy about it ! That's the point of open-Source : sharing. It goes both way.
That hasn't worked in 90% of the cases. In most cases, the company contributes some software, the OSS community uses it for free, all the time bragging about how the company should be grateful to them, the company starts to lose money and they come out with a non-free special edition, the OSS community gets bitter and puts out a 100% free version, and the company goes out of business.
As for IBM, they are not the first to try to ride the OSS bucking bronco. We shall see what there attitude is in a few years. This article (well page 7 at least) reminded me of the infamous Netscape list of business cases that was posted to
-a
Why?
Corporations do lots of things all of the time to make themselves look less like the greedy, blood-sucking, economic parasites they are :-) - Just kidding.
Actually, corporations are run by people, some of whom like to think that they do more than provide a value neutral link in the economic chain. It makes them more productive and likely to join the company in the first place if they think that an organization is doing things out of a "sense of civic good will". In addition, all companies products are purchased by people, some of whom like to think that they do more than provide a value neutral link in the economic chain. It makes them more likely to buy from the company in the first place if they think that an organization is doing things out of a "sense of civic good will". Corporations are among our country's largest charitable givers. They wouldn't be donating this money if they did not see a benefit. This "sense of civic good will" may not come from the company itself (corporations are, of course, artificial entities), but I do believe that there are people within these companies that support and provide resources in the name of "civic good will".
To suggest that this type of support does not flow to technical communities, as well, would be quite improper - elsewise how do you explain corporate support of organizations like the ACM and IEEE? In the end, the company and its employees do get rewards from their "sense of civic good will". And this is why the company does it.
Of course, that it also plants a boot in the face of Microsoft doesn't hurt either :-)...
That is all.
The open source process is inherently social and political. Group leaders spend as much time on organizational matters and conflict resolution as on technical issues. When members cannot agree, the groups sometimes split into different factions. This may result in potentially competitive projects with different approaches, and possibly redundant efforts in both groups.
I actually see this as a potentially good thing. In then end, the OS project that lives is the one that more people have agreed upon and supported. I think disagreements are a fact of life, and in a way Open Source provides its own judicial system through Freshmeat's reverse popularity search.
The only place I see it as not so good is in the incompatibilities between distros. While we all like to find the one that fits our personalities best, I think in some ways it has been both a stigma to outsiders. Still, most software included in distros can be found in source and made to work on your favorite flavor. Not something for the newbie or grandma, but at least its possible.
I'm curous how the rest of you view the potential of OS projects to fork... Positive, or negative?