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16 September 2009

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» Mind Your Own Business (Model) from Simon Phipps, SunMink
I'm not sure why, but the "there is no open source business model" discussion has woken up again, with Matthew Aslett and Stephen Walli in particular chipping in views. Last time this debate arose was when 451 published a report of the same name. [Read More]

Comments

Carlo Daffara

Dear Stephen, many thanks for the interesting post. I would like to point out a thing about our research: while the classification of business models we developed was derived from real-world observation (on more than 200 companies) I am not claiming that there is a 1-1 matching between company and model- the reality is that companies are usually mixing more than one model, and changing that mix with time (as I wrote: "We found that the most probable future outcome will be a continuous shift across models").
The reason for study them is related to what differences may be introduced in a company by adopting one model versus the other; and this has an impact in helping businesses align their expectation and strategies.
I would not subscribe to your point that "OSS business models don't exist"- they clearly do, and in some cases are radically different from traditional ones (for example: dual licensing, that is possible only when one of the license is a strong copyleft license). It is true that OSS does not change the basic economic facts of a company- the fact that it must sell something.

Swashbuckler

“People don't want to buy a quarter-inch drill. They want a quarter-inch hole!”

Fun quote, but... not really accurate. How many people just want a quarter-inch hole? What they really want is:

- To make the room nicer by hanging a picture (which requires a hole)

or

- To have a TV in the kid's room (which requires stringing out cable, which requires a hole in a wall to be done safely)

Stephen Walli

@Carlo: Thanks for the commentary (and indeed for all your continued great observations). Your example of "Dual Licensing" is exactly the sort of example I object to when people discuss "open source business models". It's an artifact of copyright law. I can license my intellectual asset to as many people 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 selling closed licensing royalties as well as selling service agreements (i.e. product) of their GPL distributed software does not mean that they invented "dual licensing". It's just business.

Stephen Walli

@Swashbuckler: Thanks for the commentary. I do agree with you. I like the quote more for the shock value of reminding a company that what they're selling isn't name-of-their-own-god-like-technology but rather a solution to a customer's problem. It's the difference between core value proposition (outward customer focus) and the core competencies (inward focus) that enable the value proposition. Microsoft wasn't a software company to its customers, they were a business appliance company that enabled business people to break the chains and the wait with corporate IT departments. The core competency was software. Indeed today Microsoft really does the certified warranted binary (competency) better than anyone when you consider the size of the test matrix they need to exercise (OEMs, ISVs, devices). But people think Red Hat some how invented it as an "open source business model".

Carolyn

Good article. But can you please give a definition of an 'open source business model'? I can't tell who is right about its existence or non-existence without knowing what it is.

Simon Phipps

I'd go further, Stephen. To assert there is "an open source business model" is to lose sight of the nature of open source.

An open source project is a community of participants that gathers around a free software commons, with each participant aligning a fragment of their interests with the interests of all the others there in order to collaborate. Each participant comes to the community with their own individual interest, which in the case of a business will stem from their business model.

An open source community is thus a mix of many motivations. If there's only one motivation present - only one "business model" - it's unlikely there is any true community either.

Carlo Daffara

Dear Stephen, thank you very much - I also enjoy all your contributions.
I absolutely agree that most of the discussion on OSS business models is usually not very solidly grounded, but I am still unconvinced that the example of "dual license" is just an artifact (it would not be possible without the GPL...)
Anyway, the real problem is the fact that most discussion on OSS is based on very vague definitions and some myths that are not a good basis for real discussion- both for research and for structuring a business on.
Pragmatic discussion is a good way to clear away misconceptions :-)

Simon Phipps

Carlo: Dual licensing is an artefact of the aggregation of copyright, not of open source per se. when any single entity owns the full copyright to a work, they can license it as many ways as they want. Moreover, the license they use can contain whatever terms they want - including terms that reverse the freedoms in the license itself.

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