Open Source and the Challenge of Making Money
bits.blogs.nytimes.com
bits.blogs.nytimes.com
Wait, what? How, exactly, does OSS "by definition" have more mistakes?
Perhaps if you include every half-hearted attempt to throw code in the open as a "failed effort", and ignore such half-hearted attempts for proprietary software (because they are hidden), then perhaps you could reach such a conclusion.
But I doubt the author even bothered to look for any data; instead he just printed it because it made sense to him at the time.
I guess that's also how he reached the conclusion that "it’s time to admit that this idea didn’t work out" despite the wild growth, unimaginable reach, ubiquitous use, and general acceptance of open source.
We shared all of this work with the upstream projects, as we had no interest whatsoever in maintaining private forks and because better quality infrastructure attracts more users, which again leads to further improvements or at least ensures the project stays maintained.
Yes. This point seems to be lost on the author of the article. Even the founders of the Open Source movement thought that.
I can't find it now, but I remember once reading an essay by Bruce Perens where he pointed out that the vast majority of software that's written lives on the cost side, not the revenue side, of a company's balance sheet, because the vast majority of software that's written is custom in-house software. If you can share those costs with others who have similar needs, everyone benefits.
As a kid who had only ever thought of software as "something you have to pay for when you want a copy for your computer", this was eye-opening for me. The idea that the software I was familiar with was the exception, rather than the rule, made it plausible that there were other ways to get high-quality software through besides paying a license fee to Microsoft. As a result, I found that idea very attractive.
These challenges cut close to some things we are aiming to solve at Assembly [http://assembly.com]. One such question we hope to answer is this: "how can people build a real, profitable company in a collaborative, open manner like they build in an open source environment?"
An example is Coderwall, which makes more than $25,000/month [1] and is built and maintained by the community. Each month, revenue goes to the people who are building the product. All the code is publicly available [2], and licensed to be used non-commercially. A core team of contributors guide vision and quality control, but anyone can participate.
It's not exactly open source, but products on Assembly are built in the open and anyone can dive in and help out. Some products have lofty ambitions to make big revenue, and others are are more aimed at being a public offering like a traditional open source project.
[1] https://assembly.com/coderwall/posts/coderwall-coinholder-up... [2] https://github.com/assemblymade/coderwall
If this article was published in 1998, and we revisited it in 2008, we would have concluded that the author was proven wrong by a landslide.
The idea that someone still thinks this in 2014, and is confident enough in his opinion to publish it, is ridiculous.
I think the author wants to express that open source has changed a lot from the early days. As far as I remember it, open source originally was driven mainly by students, academics and hobbyists, and by service companies like Red Hat or maybe IBM. Nowadays, many of the larger, successful and enduring open source projects are mainly developed by professional developers working for companies that use the open source software for their commercial products or infrastructure.
I don't think the examples and quotes used by the author are great, but I do think that there is some truth to this argument.
We sell two WordPress plugins, both of which have free counterparts (think Lite/Pro). The source code is GPL for both versions.
Why do people buy the Pro version of our software? That's we've asked many times over the past few years. I feel they buy the Pro version for both the features and, more importantly, for the fact that it will be _updated_ and _maintained_, and they will have _access to support_. Site owners that want to use one of our plugins recognize that by paying for the plugin they get access to support and features not available in the Lite version, whereas the free version has limited features and only community support.
Could someone copy the source code for the Pro version and sell it? Sure. (And people have.) But can they copy our Pro support and sell that? Not so much. Can they copy our reputation? Nope.
I've learned over the past few years just how valuable "access to support" is for many people. Even if they never contact us, just knowing that we're there _in case something goes wrong_ is comforting enough for them to pay for that comfort.
If more open source projects started offering support, I bet you'd have a lot more open source developers making money.
For example, if I decided to set up `mutt` for the first time to switch over from web-based email, would I buy a "mutt support service" from someone that allowed me to submit `mutt` questions through a ticketing system while I was setting up and getting familiar with `mutt`? Yes! I would, especially if that person had a reputation in the community as someone who knows `mutt` inside out.
It's also worth noting how offering support helps drive documentation. If the documentation is great then a developer can easily point people to the relevant information and save him/herself time (so that support doesn't take up all available time). I basically used this type of "ask me a question, I'll create documentation for it and then reply with a link" method with my Independent Publisher WordPress theme project [1].
Most of the bigger companies raised money when VC's believed in the open source business model and are still operating on those funds. That's an avenue that is no longer open to today's open source entrepreneurs.
One possible exception might be the WordPress model of offering hosting.
In other words, the way you make money with open source is by not making money with open source. The downside of this is that you don't make money with open source.
Unless you count using open source (as it contributes to the development and monetization of the non-open-source software you make money with). But then you could say everyone is using open source to make money, which I think misses the point the article is trying to make.
Which is that you can't make money by selling open source software? That's pretty obvious. I think the point of the article is to discuss possible ways (or whether it is ultimately impossible) to make money for a company that produces open source software, which is not something everyone can claim to be doing.
By definition you're not going to make money through open source selling licenses, but you're also not going to make any real money selling something else, unless you keep some aspect of it closed, like Google do with their search indexes.
The open source software which most companies publish has nothing to do with how they make money, it's usually some implementation detail of their infrastructure that represents an incremental improvement on some similar open software which came before it.
If you take away licensing restrictions, then those business models that depend on licensing revenue are naturally going to suffer. But that's almost a mathematical truth and fairly obvious.
But there are lots of other businesses out there that make heavy use of open source software to make a lot of money selling something other than licenses. And those businesses often recognize an interest in contributing to the software upon which they depend.
Google makes a lot of money from advertising.
FTFY
If US property rights were not so strong there would not be such enormous advantages given to those who produce proprietary software. This isn't as much an issue with open source business models as much as it is with US economic policy.
Why? Can you elaborate on that?
Theoretically, yes, if I have the source every change and customization I want to make is just a recompile away.
Practically speaking that almost never happens because now I'm likely forking a huge code base and almost always abandoning the support contract I paid money for to do so.
Unfortunately, because theoretically speaking anyone can change anything, authors seem to neglect the whole documentation and API portion of open-source software, and that's what I typically want in practice.
Obviously there are exceptions, but most people pay money for support, warranties, integration with existing systems, documentation and available training. All of those things have very little to do with whether the source code is open or not.
Management is just skittish. Nobody wants to open source because nobody else wants to open source.
And the vendors that later move to other platforms carry the idea, for example remobjects.com & devexpress.com.
This make sense. Having the source not mean I want to change it.
P.D: But the source is not licensed as open source. So this is the other model
I am currently trying to build a product on this model, because I think it is pragmatic. Not sure how it will work out.
Digia still does dual licensing of Qt and doing OK.
In any case, I wonder whether the original success of Qt would still be possible in today's business and open source community environment.
And what about the main users of the software that are saving money by using free software?
But of course your whole competitive edge is that you are giving away those rights to keep the software proprietary and to dictate who can use it, for what and for how much. You cannot simply expect to put a price tag on it and sell it, "as is".
Which definition of open source (method?) do they go by?
No?
I'll go back and finish the article, but it's starting to look like the something you'd see in a tweet from @nytonit "Building a business around a product you give away is hard and The Times is ON IT."
Yes, but often 10 companies try to make an online photo album and the market picks one (or a few). The comparison between open source projects and the dynamics inside a company doesn't seem like the right one.
Google, Facebook and others are open sourcing a good amount admitting, that this attracts skilled people (probably to be hired) and benefits their code (in the open)... "companies that use your code are never competitors". Though they remain the major force behind these projects, e.g. being accused to be show offs (hiphop vm) "look how great we are, but you'll never get it to work".
The default license on git hub is MIT. Sorry GPL, but forcing everyone to open source on modifications they make. NO way for me: Take it (http://www.use-the-tree.com) and make it proprietary (and better and make a business), you are so welcome. When you succeed with that, then congrats to you.
Enterprises want to pay and they go for FUD "no accountant was ever fired for buying IBM/Microsoft/HP". It's hard to break into that and they are even right with it, because when buying from a large vendor they are also buying into the huge support/manpower.
How does Ubuntu want to generate income? Selling shirts and Coffee-cups with "Ubuntu" printed on (okay advertising for Amazon in Unity) and diverging from "Linux for people/the desktop" to Ubuntu-Server/Cloud? But the fact that they sell T-Shirts and coffee cups (and others sell likewise silly things, like boxes with CDs and printed manuals), wow... that's a confession of failure (for this type of doing open source).
So "open source (almost) everything" (2011) [1], what a late(!) and great contribution to this discussion (free from ideological believes and focused on business).
Does RMS still live for free on the Harvard/MIT campus? And sorry I was in the group that was turned away back in the times.
[1] http://tom.preston-werner.com/2011/11/22/open-source-everyth...