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How Can Companies Profit While Giving Code Away?
An anonymous reader writes "In an almost philosophical essay replete with references to everyone from Larry Lessig and Tim Bray to to Professor Yochai Benkler, Sun Micrososystems evangelist Simon Phipps explores the metaphor of subscription (well, of course it's not just a metaphor any more from Sun's point of view) as the way that companies will make money off of deploying open source solutions. His distinction between OS developer and OS deployer is useful, but the crux is his contention that, with a "system" such as Sun has put together like the JDS, 'You don't buy the software from Sun - instead you subscribe to the editorial outlook.' It's an alluring analogy - Sun as the editor-in-chief of a 'publication' (JDS) with readers who may or may not choose to subscribe. Worth reading."
Sun preaches subscription as a opensource model.. when are they going to acknowledge and treat the gpl right in their subscription?
its kind of hypocritical to proclaim opensource when misss treating the Licneses of the code tha tyou use..
Don't Tread on OpenSource
what makes the community do what they do? (what my boss always asks, even though he loves OS products).
That's how a "subscription" company makes money, but how is the community sustained through governance? I realize these are rather wide open questions, but encouraging discussion enlightens us all.
Sig it.
Service Providers (hosting, ASP, ISP, VoIP, etc.) can make money by charging for their services while giving code away. An open source service provider will attract more customers because they are not dealing with a black box (a white box?), they will provide better services because bugs will be fixed faster, they will have more loyal customers, especially those that are actively involved with the product; And if other companies use their code and compete, better service as opposed to more obscurity will result.
There is so much good open source software out there (my most recent find was a sweet little bookkeeping package called Lazy8 ledger) that gets very little promotion. I'd guess that there are many, many useful packages and programs that if I knew about I'd use. So I can see significant value in "editing" open source into useful groups. Also, I've long thought that it would be nice to see a "starter's" edition of Linux that reduced the choices of packages available to the "best" pieces of software. Nothing against vi and EMACS ed and the others, but does a first time user really need to choose between 12 or more text editors (or two desktop environments or three office suites, etc). I realize there are tremendous advantages to having diverse software offerings, but it's not as useful for the first time user.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
Advertising has to be seen/heard to be effective. Comments in the code will not be sufficient. The ads will have to be inherent in the GUI or something... like your background has to be like one of those billboards that changes every few minutes. Maybe some add has to pop up first before any application you activate runs...
Sounds fun and wonderful...
IBM has realized this, and is building up their services business around this model, and it would be great if companies like Sun join the fray, to keep the competition there.
I also liked the portion of the essay where he talks about being able to pull together all of the components yourself, and support it yourself, or to pay someone else to support it for you. The first part of that is why I used OSS, and the 2nd part is what is currently lacking to make OSS more generally accepted. While there are people that will need support, there are some of us that just want the choice, freedom and flexibility, and OSS seems to be the best way to provide both right now.
Paying for the CD is usually just enough to actually cover the cost of the media... a few $$ at most. It's hard to get folks to pay for tech support when it can be had for free everywhere else (newsgroups, web searches, etc.) It isn't like hardware tech support where you provide an actual service like if a HDD fails, someone will be waiting for you at the open of business the next day to replace it for you.
It's more about newspapers: yesterday's news is not news. The assumtion is that old news is worthless; therefore, old newspapers are worthless.
Old newspapers are nearly worthless. It is worth having an archive, but only a few of them, so old newspapers are worth very much less than their cover price.
So... by anology, old software must be worthless. Hmm. 'Old' webservers are useless ('cos they will get r00ted in no time). But old, offline typesetting software? Pfft. 'Old' here really means 'unmaintained'. I think that an analogy with rusty machinery is a better one for unmaintained open source software:
at any point you can take it to a mechanic to get an estimate on repairs;
old models continue to be useful, in certain applications, as long as they are adequately maintained.
Posters recognized by their sig,
I've always wondered about this. If you write good enough software, with simple install, concise manuals, etc., people shouldn't have to call you for tech support; essentially ruining any chances of you giving away the software for free and surviving off support calls. Or are you meaning charge for adding new features that specific customers want?
None of the information I provide for my employer is secret. It's all out there buried like a needle in a haystack. My employer is always welcome to fire me but somebody has to find the needle and the haystack is very big. If you're not as big as IBM, paying somebody to provide you with the good stuff on a silver platter is way more profitable than trying to dig out the stuff yourself.
The emphasis here is on incentive.
Just something to ponder. Stephan
http://stephan.sugarmotor.org
>>Sun can make money by operating as 'editor in chief' of a suite of freeware applications.
Of course, when a group of university students in Sweden or Germany or (God Forbid!) China decide that they want to work together and editor-in-chief Sun's freeware applications, for free just 'cuz, and make some great admin tools, then Sun is going to have a cattle drive (instead of just a cow).
> The process doesn't work the way the Sun statement implies.
Exactly. If I were Sun, I would give money to fledging open-source projects. It's amazing how much goodwill a $500 paypal donation will generate on a one-man project.
For example. Python operated "under the radar" for many years. Now, there's street recognition (not much, but some) but it's now too late for outside parties to influence or even buy Python.
Likewise there are many projects out there that could become just revolutionary yet are completely ignored by Sun and the like. The people in these projects toil in darkness, stressing about money and relationships, gritting their teeth as their pre-alpha api takes shape on their sub-par hardware. If a company or three came and said: We believe in what you are doing, and here's a $1,000, keep up the good work and post progress to your blog, we'll check it out regularly; then said developer would remember said company as an early benefactor and would just have a warm feeling for them for years to come.
BTW, Johnathan Schwartz' weblog is interesting, except maybe a little paternalistic.
"Piter, too, is dead."
The support model has its applications, but it should be plainly evident that it's not enough for everything. You know you're hitting the corners of a flawed philosophical system when doing something like writing intentionally mediocre documentation can be a (admittedly short-term) profit incentive.
People use BSD-style lincensing to allow people to see and use their code. People use the GPL to allow other people to see and use their code and not let commercial packages make use of them.
"If someone uses my code in a commercial product, then they're making money off my work!"
Well, if you really think about it, since they have access to your unmodified free code, they're only really paying for the extra features offered by the commercial code. What's so bad about that?
the whole idea is that you give something away... but not EVERYTHING... or.. at least you eventually charge for something. for example, people spend countless hours creating animations and videos for the internet, only to give it away for free...just to generate hype. is this any different? speaking of that, what you really should be doing-- rather than thinking about or discussing this topic-- is riding bmx bicycles. Videos and Pictures of people riding BMX bicycles[bmx.zensky.com] have fun and don't eat poop.
Our company, profits selling hardware, while most of our engineering effort goes towards our open source software, SlimServer. The open source part of our business has helped us build an great community of users. Some of our users don't buy the hardware but contribute nonetheless, making our hardware, Squeezebox, more useful and valuable to the folks who do buy. It's a business model that's working for us right now.
I wrote something similar yesterday...
Sometime in the 1940's Nestle approached Mrs. Ruth Wakefield, the inventor of the chocolate chip cookie, and purchased her recipe. After purchasing it, they gave it away by printing it on every bag of chocolate chips.
Why would they do this? They PAID for that recipe! Why would they turn it around and GIVE it away?
Nestle was not in the business of selling cookbooks, and they were not a restraunt. They are (among other things) in the business of selling chocolate.
By giving away that recipe, they gave everyone a reason to buy chocolate chips. They couldn't patent the recipe (recipes aren't patentable), but they DID trademark the name "Nestle Tollhouse Cookies". Today, that is a brand that makes a considerable amount of money selling chocolate chips, selling prefab cookie dough, and selling cookies in shopping malls.
Why would someone pay a dollar for a cookie at a store in the mall whenthey could make that same cookie for 20 cents? Convenience.
So, people make money off of open source by providing the goods necessary to USE the open source, by providing services around the open source product, AND by turning it into a recognizable BRAND (ala Red Hat).
This is not a new business model - it is actually very old. People just think of it as new because of the huge impact it has had in recent history in a new market.
i always seem to compare the open source movement, to the independent music scene..
a lot of the times, artists promote their band, or work, by giving it away for free. what better way to get your name out there, than to just give everyone a taste of what you got goin on..
one way or another, the artist, still fulfills their goal, gets recognized for it, and manages to make a buck or two in the process, even though they don't hit major MTV rockstardom.
independent musicians in particular, aren't what you would call mainstream artists.. neither is anything open source.. its nothing compared to an operating system in which 90% of computer users, use...
same goes for music.. that 10% of elitests, usually have some pretty damn good taste.. wether its in music, or choice of OS..
eventually, after years of hardwork, striving to accomplish your passion, it always happens.. you fulfill it.. you end up, or even die, being happy.. so money, shmoney.. the open source movement was created for a morally good reason.. and it will succeed wether the programmers and companies that donate their time make money or not.
- Hi I'm Linus Torvalds and I pronounce Linux, Lih-nix..
The bottom line is, they often won't. Businesses just don't want to muck around getting a free piece of software and then finding someone to configure it. They want black box solutions as a rule, particularly if the price is quite cheap.
Insecure.org retains ALL copyright to all nmap code, regardless of the original author. This allows them to release it under the GPL for general use, and also to sell it for big bucks under a closed source license to security companies who want to make it a component of their products without the GPL's "viral" licensing requirements. Nmap gets a sweetheart deal: their community of users helps build their tool, so they get free development and testing in return for shared use of their product, but they retain all profit rights.
So while this guy is writing an essay, insecure.org is actually doing it.
The model works always, as long as you provide a useful service to the customer at a price he's willing to afford.
Sorry but Raffaello's point, "This model only works if there is no competition in your tiny market niche", is correct. I can take you GPL'd code and offer to maintain and support it for less. And I should always be able to undercut you. I only need to cover my support costs while you need to cover both support and the initial development. Thank you for researching the market, establishing the market, and building the market to an interesting size.
To make a profit you have to make an income greater than your expenses. Your total gross earnings must exceed your costs.
There are many ways to make money as a GPL using company. You can:
a) Sell the software in a box on a store shelf.
b) Sell the software on CD from an online order form.
c) Sell the software or ask for donations online via PayPal, Visa/MC, etc.
d) Offer commercial customization options online so anyone who uses your software can purchase enhancements.
e) Offer support services so anyone who uses your software can get support.
f) Sell documentation.
g) Sell certification.
h) Sell training.
i) Sell merchandise using the software and your accomplishments as advertisement. A simple contribute/donation option and a url link are much more pleasant than a full screen flashing advertisement from the perspective of the customer.
j) Sell systems designed to run your software.
k) Sell yourselves, offer money in exchange for your time on interviews, presentations, implementation/contracting, analysis/design, review/benchmarking with news and mass media, etc.
l) Ask for donation (politely) from other F/OSS organizations if they are using your software.
m) Be evil and try to make your customers pay by only offering the software for sale on your website, for very high prices, with marketting fluff and very little internal information so your customers can't tell what you do (if anything) to your software behind the scenes, then only give your source code modifications to the people who ask for it and only if it is required because you borrowed your source code from someone else because you were too [slow|stupid|lazy|greedy|cheap] to do it yourself, but unfortunately (for you) they were smart enough to release it with a GPL style license. So now you claim they don't exist and threaten to sue everyone who uses any copies of this software that you didn't authorize, build up your army of lawyers and plan to take over the world.