I love the open-source/libre philosophy but it's not viable for a business. I think the more pressing question is whether software even should be a business. Many think that there's a certain rift between users and developers that still exists today, and I have to agree.
1. Users push for increased ease-of-use 2. Developers implement more simple systems 3. Power users complain about the loss of features 4. Developers add back in missing features 5. All users complain about software being a convoluted mess
The programmer is now left at a disadvantage: he can either continue working with a codebase that's disorganized and inelegant, or he can start over from scratch. In a business environment, starting over from scratch would not be an economically viable situation, while continuing with the older codebase would be the wiser choice (even thought it may piss off users). Users are left disadvantaged; they can continue to use the older software versions but run the risk of poor security and an inferior interface.
With free/libre software this problem disappears, as a talented programmer with the user's interest can simply fork the older version and continue to implement a better interface and security updates while retaining a cleaner codebase. However, the endless stream of forks fragment software and hinder unified progress. Also, the original developer is more likely to abandon the software application due to lack of funds and interest.
It's a lose-lose situation. There is no one perfect development methodology. The open-source philosophy is more effective in the long run, but proprietary software is the only viable method to sustain a business. Open-source advocates will often point to Red Hat as a counter-example, but it's important to note Red Hat is the exception to the rule. It's also even more important to note that Red Hat isn't doing so hot these days, either.
Where the FSF falls down is in its inability to compromise. A number of companies have achieved success with a mixed closed/premium source model, such as JetBrains. While this again allows much more freedom than a standard proprietary setup, the FSF will always refuse to acknowledge any software with ANY proprietary bits in it.
They're now incredibly out of touch with Silicon Valley, and it isn't difficult to see why. They continue their militant and expressive attitude instead of expressing gratitude to those that push OSS forward.
Apart from GNU, the GPL and its many variants, the FSF is largely irrelevant.
It never had to be that way.