alex.polvi.net

I have been thinking a lot about different open source business models. The February Issue of CIO magazine covers with the words “FREE CODE (for sale), Inside the Buying and Selling of Open Source”, so I could not pass it up. In particular, there is a section called, “Your Guide to Open-Source Business Models”. The article outlines five models based around open source; Open Source + Service, Mixed, Open Source + Buy Off, Open Source + Aggregation, Open Source + Hardware.

Open Source + Service
This model is based around the idea that software is a service industry, not a manufacturing one. Open source lends it self to this, so these companies follow the model. The software is free and the customers pay for service contracts. (RedHat)

Mixed
Using closed source addons to generate revenue on top of an open source product. (Tripwire)

Open Source + Buy Off
Licensing tricks so that companies can make modifications to ‘open source’ software with out disclosing their changes. (MySQL)

Open Source + Aggregation
Package up open source software so they are dead easy to use, then sell the package.

Open Source + Hardware
Use an open source platform on hardware. (NetApp)

In my eyes, the model that stays closest to the mantra of free and open source software is “Open Source + Service”. However, this model is also weak. As the article pointed out, “venture capitalists don’t like the service-only model because the margins on service are invariably lower than those for proprietary software.” (p.56) On top of that, it does not seem like it would be that much fun to be in the service industry.

“Mixed” and “Open Source + Buy Off” are clear evil. A mixed model is nothing more then a free trial. Sure, it may be a robust trial, but the developer is holding code back. It seems like a self created conflict of interest. The buy off method seems like a cheap trick in order to make some money. If a company is sold the right to not distribute changes, they effectively became a leach. If companies using this model are successful, the communities will not be, and everything is lost.

What is a good model? We need a model that does not stomp on the contributors, promotes community, and is not a support shop! How do we do it? Not really sure. I am in love with the Ubuntu model (Ubundel), but they have yet to show a sustainable future. This is sort of expected, since they are forging the way. New models will be followed out of their ambitious lead. But what’s next?

I purpose a model that applies open source practices outside of the software industry. This time we do not take Open Source and tack on some money making revenue, we use open source itself.

The Open Source Model
The communities are the core, in fact, they are the company. Start a community that is a revenue generator. Anyone can work for the company, and the individuals are paid via contribution, not via hour. The company would list what projects they are working on and any one interested could come on board.

What sort of projects would this work for? Only the rewarding ones. If this was a development shop creating boring software, nobody would participate. However, if we were working on projects that supported humanity, had people think outside themselves, or were straight up sexy, it would be unstoppable. The pace would accelerate as it grew. The bittorrent of business models!

Free Code (for sale) exemplified that open source models are still limited to one off successes. The models that they and I proposed are not perfect, and will not be, but they are a step in the right direction. Free and open source software has so much inherent value that it has already solidified its future, we just need to do a little backwards thinking to get there.

This entry was posted on Tuesday, February 28th, 2006 at 1:44 am and is filed under Computing, Personal, Work.