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Making Money Using Open Source Software?
GamblerZG asks: "As many of us probably know, convincing people to run Free Software can sometimes be a tedious task. However, there are a lot of factors that help us in that regard, and, perhaps, the biggest of them is a simple truth: Free Software is free. It's hard to argue with such statement. I know it, because I faced it today, trying to convince my fellow co-worker that it is possible to profit by writing GNU-licensed code. 'How company can make money, if its products are available for free?' That was a valid question indeed, and I could not find any simple answers to respond with. That makes me wonder, whether there are articles on the Internet, which explain and analyze how Open Source business models work? Do you know any ways to prove that such models can be profitable?" It can be done, you can check out a recent interview with an Open Source Entrepreneur on NewsForge for some hints. What other ideas and business plans do you think would be a good match for a business with an Open Source core?
Charge for support, customization, and installation. Show the customer that your value doesn't end when the code goes gold.
- Despite popular opinion, I am not perfect.
Make software that is VERY extensible. So much so that the open-sourced "guts" of the software are pretty much a framework for the extenstions.
Then, sell consulting to design, write, install, support, and maintain those extensions.
Just take a quick look at IBM announce today they're making 38.8 million off Open-Source-based services on a single location in the span of four years.
If that is not money, I dare not fathom what is.
HAD
This is easy: Charge for the things you do. Making software isn't easy--it takes time and effort--so you should be paid to make software. Supporting software isn't easy, either, and so you should also be paid to do it. (Making copies of software is easy, so it's not fair for you to be paid to do it.) Neither of these sources of income are incompatible with free software. It's simply a matter of compensating people more directly for the services they provide.
Successful companies do not produce "products" so much as we produce "customer satisfaction". Products are necessary props in producing satisfaction, but they're not the only necessary props. Software is used to produce that satisfaction. The programmer's dream is to work only with our computer, producing that "killer app", and publishing it for the hungry masses to consumer. The reality is that customers must be sold tom if they are to pay, and that software is part of the sales process. So keeping the source closed is really sleight-of-hand, a way to protect inferior code from competition. Binary-only software is no less piratable than source code, especially with so many architectural layers that can be replaced with rebranded wrappers. Profit measures the surplus value in the *relationship* between vendor and purchaser. So open source is no different from closed source software in its role in making money. If anything, open source is advantaged in improving the relationship, and in offering more opportunities for satisfaction, as well as reducing the costs of delivering that satisfaction - hence more profit.
--
make install -not war
-- Thou hast strayed far from the path of the Avatar.
So... Many... Quotes...
No one ever went broke underestimating the intelligence of the American public
Make something idiot proof and the world will make a better idiot
I checked with my company's IT guy - he's in full agreement. I must admit, it's fun listening to him teach the executives how to use e-mail.
Simple answer: it's extremely dificult to do so.
The question you should be asking is 'How can a company make money, if it gives away software for free?', and the answer should be more obvious - it can do so if its product is not the software it's giving away.
For instance, IBM's "product" is the tailor-made services and consultancy it provides. The software is merely a tool they use to provide it.
You might argue that keeping such tools to yourself is a commercial advantage over your competitors. That's true to an extent, but there are also downsides - e.g. if you provide your own proprietary operating system instead, you don't get benefits contributed by the community, and your competitors are more attractive because there is no lock-in.
Recent examples include things like displaytag library, Hibernate and HTML Area.
Of course, this means I must take a wide berth around GPL'd code, but there is enough stuff under BSD/Apache/whatever to get the job done.
Yeah, right.
Offer customization services. Then you will be able to sell maintenance agreements. If someone wants to have your software integrated with their funky app, they won't necessarily have the expertise to do so. Get the specs and make the modifications for them (then release the source code and binaries to them).
Gamingmuseum.com: Give your 3D accelerator a rest.
LOL.
Here, have a clue on the house. The people who run sendmail.com? It's CTO is the original author of sendmail. How's that for making money writing open source software?
As for redhat, are you saying that having someone who knows how to make 50 software packages work together across 2000 seats in an enterprise situation isn't worth the price of admission to Red Hat Enterprise? Do they need to have written all that software themselves in order to make money off of it? Apparently not, or they'd be out of business.
Not to mention you're completely overlooking the fact that they wrote rpm and dozens of other tools that make their job as support as well as the actual administrators' jobs that much easier.
If I have been able to see further than others, it is because I bought a pair of binoculars.
"what is going to prevent other companies competing against you on support?"
You mean like I make a decent penny now and again by supporting Windows, even though I didn't write it and MS doesn't get dime one of my fee?
Jeezum Crow, even Billy hasn't figured a way around that one yet, it keeps him up nights working on it, but he still hasn't found the answer.
Still, there are people who call MS for support instead of me, because it's an MS product, yes? And there are still people who call me because I give them something they can't get from MS, like my being right over and actually fixing the problem, yes?
And am I not, when I support Linux software, taking just as much advantage of Redhat as they might be of me? I didn't pay them for the software I developed my product on. I don't give them dime one when supporting their product for a fee and they don't get dime one when I resell their product as a base to run my own on.
There is a perfectly functional reciprocity system at work in OSS, it just doesn't revolve around the exchange of money, it revolves around the direct exchange of the code itself.
So you don't sell the code. You make yourself fit into the sytem instead of trying to bludgeon some other system into it. You exchange it (got ma OS and development tools for free from Red Hat, given 'em back my zingblat code). Then you sell what can't be exchanged, your expertise with your own code. . . and Red Hat's (gonna support zingblat on Red Hat).
From Red Hat's point of view it's giving away a free OS, getting back a free app they can bundle and support.
They could sell you the OS for $20 and you can sell them zingblat for $20 and the whole thing works out the same, except now you both have to support debt, a larger army of lawyers, accountants, filing clerks, et al into the bargain.
Aha! There's the problem with the OSS business model, it eliminates offensive, makework deadbeats in the workforce, thus eliminating jobs and destroying the economy. Billy was right!
KFG
Trolltech is an excellent example. They would not have nearly as many paying customers if it wasn't for the free version. Everyone in unixland knows KDE, and a good part of them use and like it. Enough of them are programers who have played around with the source enough to pass the qt learning curve and see how great it is. When the boss decides to start a new project they are not in position of either asking for qt, or evaluating all toolkits. The latter is hard to do, because by the time you know a toolkit isn't great you have half your application written already.
Trolltech in fact mentions kde to those who are considering their product. When you evaluate something new it is hard to know if it is any good. It is hard to get customers to act as a reference, and even when they will there is always a question if the reference is honest. KDE is there, they can point to it and say "See, they have several million lines of code built on qt". That is worth a lot.
In short, sell the GPL version as the demo, and the free software built around it as proof that your code is good. Doesn't work so well for non-libraries though.