Making Money from Open Source and the Business Model Debate
Matt Aslett makes great observations about open source business models in a recent blog follow-up discussion:
I am very glad that they took that decision, because in hindsight the statement “there is no open source business model” would have been inaccurate in the context of our report. We identified that there are multiple models used to build a business around open source: theoretically hundreds.
The 451 Group did a lot of research as they developed their model of discussion, and their definitions around development model, license choice, and revenue trigger are great. But it still feels like they start falling victim to the shades of grey slicing problem.
I'm still more of a fan of the tool analogy. As a company, you have a certain budget to spend developing the product, it's marketing, sales and distribution. Imagine a proper old hardware shop where you have a certain budget and need to figure out how you're going to spend to buy what tools from which aisles (development, marketing, sales, legal) to launch and build (and maintain) your product. "Open source licensing" is a set of new tools in the legal aisle and "collaborative community development" is a new aisle. It's not that there are hundreds of business models, but rather one can combine the tools in hundreds of ways. (Some ways are more proved than others depending upon the business.)
Indeed, "dual licensing" doesn't even belong in the open source licensing tools. It's an attribute of copyright law. I can license my intellectual asset to as many people as I want in as many ways as I choose. The Microsoft EULA attached to software at the local office supply store is different to the Enterprise Agreement signed when a corporation purchases based on a bundle of units and services is different again from a volume license to a smaller organization. No one accuses Microsoft of "dual" or "multi-licensing" their software. The fact that MySQL began closed licensing royalties as well as selling service agreements subscriptions (i.e. product) of their GPL distributed software does not mean that they invented "dual licensing".
The fundamental question around which this all revolves is the confusion embodied when one asks, "How can you make money when you give the software away for free?" Large "software" companies (Microsoft, SAP, Oracle, Adobe, etc.) have spent a lot of time questioning the scale of "the business model(s)" rather than looking at the opportunities the tools provide. In the end, they need to understand that it's not the "software" that a customer is buying but the solution and the support and maintenance and certified tested warranted removal of risk embodied in their product packaging and testing capabilities. (This is a core competency Microsoft has over most "software" companies when you consider the size of the test matrix defined by OEMs, ISVs, and device manufacturers that needs to be exercised between code complete and release-to-manufacturing.) Whether you call it a "license" fee and then charge 20% of the license fee per year for maintenance, or distribute the "license" fee into the maintenance "subscription" over time isn't a discussion about open source. It's just business.