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Businesses Open Source

Open Source Software Licenses Versus Business Models 95

Posted by samzenpus
from the one-size-does-not-fit-all dept.
dp619 writes "Network World is running a guest article by Outercurve Foundation's technical director Stephen Walli discussing how FOSS license choice can affect a company's business model. Walli disagrees that a FOSS license dictates the business model or that the business model dictates the license."
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Open Source Software Licenses Versus Business Models

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  • by hairyfeet (841228) <bassbeast1968@ g m a i l.com> on Thursday January 24, 2013 @01:46AM (#42677887) Journal

    If you look at the businesses that have succeeded using FOSS every. single. one. has used one of the "blessed three" business models, selling support, selling hardware, holding out a tin cup.

    This is why for example no matter how many game engines are given to the FOSS community you will NEVER see a great single player masterpiece like Bioshock come from the FOSS community, because games do not fall under the blessed three and therefor they simply can't get enough funding to keep the doors open. This is also why we'll see Canonical close their doors in 3 years or less, they have already moved to the tin cup model after trying both support (Ubuntu One, Ubuntu Server) and selling hardware (Ubuntu TV, Ubuntu Tablet) but desktop OSes don't fit under the blessed three so they simply don't have a chance.

    This isn't saying that FOSS can't be successful, look at Red Hat, but your business needs to fall under the blessed three to succeed. The reason why is obvious, if anybody can make infinite copies and give them away you simply have to have some other way of making money. Personally I think there needs to be a subset of GPL with no redistribution clause so we can get things like games and software for home users that don't fit under the blessed three as without the redistribution clause the "printer story" that gave birth to the GPL would still be solved, but its so ingrained now I doubt you could ever get it to take off. So in the end stick to the blessed three if you are going FOSS or you'll end up like Xandros, Linspire, Mandriva, Loki, and soon Canonical.

    • Re: (Score:3, Insightful)

      by ozmanjusri (601766)

      If you look at the businesses that have succeeded using FOSS every. single. one. has used one of the "blessed three" business models, selling support, selling hardware, holding out a tin cup.

      Google.

      • Re: (Score:3, Informative)

        by Telvin_3d (855514)

        Google is not a business that is built around distributing FOSS. It is simply a business that makes heavy use of FOSS to support their needs.

        No one would think of describing Amazon as a FOSS business, despite their heavy use of it. Same with Google.

        • by ozmanjusri (601766) <aussie_bob@@@hotmail...com> on Thursday January 24, 2013 @02:11AM (#42677989) Journal

          Google is not a business that is built around distributing FOSS.

          Android.

          • by Zerth (26112) on Thursday January 24, 2013 @02:34AM (#42678047)

            Google doesn't sell Android. It gives away Android so it can sell the eyeballs of Android users to its real customers.

            • by DeSigna (522207) on Thursday January 24, 2013 @02:37AM (#42678061)
              ...which is a business model built around distributing FOSS.
              • Re: (Score:3, Interesting)

                by Anonymous Coward

                No, the business model is selling eyeballs. FOSS is one means to that end. Apple does quite well selling the means to the same end as well.

                • Google has increased their revenue by distributing and developing android; by increasing advertising revenue. It sounds like you are nitpicking to exclude this as a form of making money from FOSS development.
                  • by Xuranova (160813)

                    It's not nitpicking.
                    Google could close source Android (or make its own OS since the license for Android probably prohibits this) and just customize it for the OEMs themselves based on requested specs and get a similar result.

                    If everyone who uses Android didn't use any of Google's proprietary products, Google has a noticeably less amount of cash coming in.

                    Android is FOSS, yes. But the key to Google's success with it wasn't that it was open, it was that it was cheap/free and good(the primary reason their clo

              • by Anonymous Coward

                No, it isn't. The fact that Android is "FOSS" is irrelevant to the business model. It could just as easily be a no-cost proprietary license. Google's Android business is built around getting lots of people to use Google services so it can sell access and analytics.

                Compare that to Red Had or Canonical, where the model actually generates revenue directly based on the software. Customers are handing over money at some point in the chain with the end goal being the software.

                At Google, no one is paying money

            • Google doesn't sell Android. It gives away Android so it can sell the eyeballs of Android users to its real customers.

              No true Scotsman.

              • by hairyfeet (841228)
                Oh please, even Google's own fucking SCC filing lists them as a fucking AD company, alright? Even Google says THEY ARE AN AD COMPANY so don't give us the "true Scotsman" crap when the company contradicts you.
            • by mlw4428 (1029576)
              To some extent. It heavily relies upon Google's search engine (for most devices), Google's app market (for most devices), and it allows Google to sell their own hardware. Android was very much a business model, which is why Google is spending millions to defend it in court.
            • by unixisc (2429386)
              Google gives Android to OEMs and gets a percentage of their sales to end customers. But Google seems to be doing things more under a BSD license as far as its userland goes, so they don't exactly give away Android the way they would under GPL. Also, the Linux kernel that they use is already available from anywhere - Gentoo, et al, so there is nothing special that one would get from Google here.
            • Google doesn't sell Android. It gives away Android so it can sell the eyeballs of Android users to its real customers.

              Doesn't Google make a cut of all the apps sold from the Google Play? I think that's the model there. They make the platform, partners make the hardware, and they control the app store where they make money.

              This is the market that Microsoft is trying to tap with Windows 8. They have an app store now, too. And you can't even play Solitaire (even thought it's a "free" app) on Windows 8 without signing up, providing a credit card, and downloading the app from the MS app store.

            • by Patch86 (1465427)

              In what way is that not a business model?

              Their ability to sell Andorid users' eyeballs is directly realted to how many Android users there are. The number of Android users is dictated by how well OEMs adopt the system and are able to sell it. The OEM's enthusiasm for Android is partly driven by the fact that they like the source model- it allows them to have freedom to muck with the OS however they like (within Google's framework).

              Selling FOSS for money seems like a pretty niche business model in the FOSS w

          • Google is not a business that is built around distributing FOSS.

            Android.

            Android isn't Google's business model, services are. Android is just a means to an end, and that is to drive people to Google's services.

            • If Google was built around FOSS then their analytic engine would be open source. instead of secret sauce. That's what Google using FOSS to make money would look like. There's a difference between USING FOSS and making money WITH FOSS. We don't say Goggle makes money off the roads the employees use to drive to work because that's just something they use on the way to making money. Google uses a lot of free / freely shared/ open source things on the way to doing business - the question is do they make money
          • Google was selling ads way before they got involved in any FOSS. Ads on the internet is their business. Gmail, maps, and Android are interchangeable methods. The business model is to put ads on internet SaS.

            What Google shows is that FOSS can be effectively used, and even developed, by companies that have business models unrelated to FOSS. Similarly, a grocery store might increase sales by 1% by oferring delivery. They'd still be in the grocery business, not the transportation business.
            • by jedidiah (1196)

              ...which ties back into the whole "Bioshock Principle".

              Commercial game companies were taking advantage of Free Software long before most people ever heard of it or called it OSS or FOSS. The idea of selling a "box of software" has very limited potential. The real value of software is as a tool to do something else.

              Payware software more than anything else is a drain on the economy. Artificial constraints prevent a lot of software from becoming a commodity and being devalued. This forces business to waste mon

              • by tepples (727027)

                ...which ties back into the whole "Bioshock Principle".

                Commercial game companies were taking advantage of Free Software long before most people ever heard of it or called it OSS or FOSS.

                I'm somehow not understanding. If a video game like Bioshock is to be distributed as free software, how should it be financed?

                • by hairyfeet (841228)

                  It WON'T be financed and thus will never be made under FOSS, that was my point. How many KILLER game engines have been given to the FOSS community? And what do we have to show for them? Q3 Arena MP only DM and CTF crap...yawn.

                  This is the thing that has always blown my mind about FOSS zealots, or FOSSies as I call them, they seem to have NO problem if CEOs or doctors or even plumbers get paid for their labor but programmers? Fuck you you filthy programmer, you should work for free.

                  And I have said it before y

              • Artificial constraints prevent a lot of software from becoming a commodity and being devalued. This forces business to waste money that they could better spend elsewhere. ... Redhat seeks to devalue the entire server market.

                Agreed, RedHat specifically and Linux in general HAVE in fact made it possible, and in fact made it the most common case, that people spend zero dollars on server software. Does that not prove false the idea that "Artificial constraints prevent a lot of software from becoming a commodity"? In fact, is it not true that the only software you ca't get at no charge is special, non-commodity software, those cases where there are not enough interested users to support a free project? The only type of software I

              • by hairyfeet (841228)

                How EXACTLY were "Commercial game companies were taking advantage of Free Software long before most people ever heard of it or called it OSS or FOSS" because I've been gaming since the days of DOS and frankly FOSS had little to nothing to do with gaming then and little to nothing to do with gaming now. The closest i can come up with is some games have the OPTION of using OpenGL but that's all it was, an option, and OpenGL itself wasn't really designed for gaming in the first place (it was developed by SGI f

          • by ChatHuant (801522)

            Google is not a business that is built around distributing FOSS.

            Android.

            You're confusing the means with the end: it's like saying a fishing company has built its business around distributing free bait. The fishing company wants to catch fish, and Google wants to catch eyeballs; those are the products the companies sell. Both the bait and the code are just production expenses, and not part of the business model.

      • Re: (Score:3, Insightful)

        by tlhIngan (30335)

        If you look at the businesses that have succeeded using FOSS every. single. one. has used one of the "blessed three" business models, selling support, selling hardware, holding out a tin cup.

        Google.

        Google doesn't provide FOSS as a product. They provide search as a hook to attract eyeballs for ads (AdSense, DoubleClick, AdMob, practically all the other advertising companies are owned by Google).

        Otherwise we could say Apple as well since they use and provide a fair amount of FOSS. But FOSS is not their primar

      • If you look at the businesses that have succeeded using FOSS every. single. one. has used one of the "blessed three" business models, selling support, selling hardware, holding out a tin cup.

        Google.

        So is there a 4th model - selling targeted advertising? Or is this just selling support where the customer is an advertiser rather than a user?

        • I would have said selling a service, selling hardware, holding out a tin cup.

          Selling a service can be a lot of things: support, web hosting, advertising

        • by hairyfeet (841228)

          Well since I'm the guy everybody is responding to i think I can answer that and I would say Google falls squarely under the "selling support" category, its just not the end user that is being supported but the website devs and ad companies. They provide the infrastructure for Gmail, Google Play, Google docs, search and all the other proprietary bits that OEMs carry on Android phones and provide a way for advertisers to get to those eyeballs so I don't see how anybody could argue that Google doesn't sell su

      • Re: (Score:2, Interesting)

        by Anonymous Coward

        Google makes almost all of their money on proprietary code which runs as a service.

        Google open sources certain pieces of software which is secondary to their business. In these cases (such as Chrome and Android) they went the open source route to foster adoption, with the end goal being that their proprietary services make more money.

        Call me when Google's search algorithms or their complex services like Google Docs become open source.

    • by yuhong (1378501)

      Yea, I am well aware of the problems with artificial scarcity. I even wrote a series of blog posts about it.

    • There's another model that has worked. You can GPL your code, and then sell licenses to companies who don't want to release their modifications.
      • by unixisc (2429386)
        How would that work? If one's code is GPLed, anybody who gets them, whether for $0.00 or $100.00 would still be bound by the terms of the GPL. Or would you sell them the same thing, but under a different license?
        • If you own all the code, you can dual license it. Trolltech did this for a long time with QT. If you were willing to pay back to the community by releasing your source code, you could use it for no cost under the terms of the GPL. If you didn't like the GPL, you could pay to use a different license.

          Trolltech owned all the code, so they could legally write a separate license to each individual user. LZO is another project that does the same thing.
    • by ctid (449118)

      Am I misunderstanding something about what you are saying? The article has one or arguably two examples of companies that didn't use one of your "blessed three" models.

    • Others have mentioned google. There is yet another model. Having customers pay for features to be developed and implemented is one that for instance PowerDNS uses. The sixth model is using a "free" version that is essentially the same as the paid version, minus a few features. Wine is the free version of a commercial product, Atlassian sells most if not all of their products this way, or as a hybrid where you pay almost nothing for a small number of users but only start paying once you outgrow the limited

    • by pieterh (196118)

      So much wrongness.

      Let's start with your conclusion, "Canonical doesn't follow the arbitrary pattern I believe I've identified therefore I think it will fail". This isn't science, it's looking for evidence to support your (quite poor) theories.

      You started by saying, "businesses that succeed using FOSS". This today covers 95% of successful businesses.

      You've ignored the many FOSS-based businesses (those that make and distribute it, not just use it) such as IBM, Amazon, Google, Facebook, Twitter, GitHub. None o

      • by bws111 (1216812)

        IBM doesn't fit his blessed three? How so? According to their earnings report, in the last quarter they sold more mainframe capacity than they ever did before, and over half of that was for 'new workload' engines. Linux is a huge part of that 'new workload'. So that falls squarely in his 'sell hardware' category.

        IBM also has a very large services division, so that falls squarely in his 'sell services' category.

        However, there is one more reason IBM supports Linux so heavily - so that they can sell propri

        • by snadrus (930168)
          Looks great until the last paragraph. Facebook wouldn't have gotten off the ground unless PHP, Apache, Linux, & MySQL were all very available for initial development. Had it needed ramp-up & investor buy-in, it would have been taken from the original developers.
          Google's cloud services are much cheaper than the competition because of unification which was possible because all code could use the same open foundation (IBM, even Microsoft could not).
          Twitter's cost & proprietary competition, wha
          • by bws111 (1216812)

            My point was that none of the companies he mentioned have open source as a business model. Sure, they all use open source software as a tool. But claiming they are 'FOSS-based businesses' is just silly. You may as well claim they are 'realty-based businesses' because they shop for the cheapest location to have their datacenters, or 'Square D-based businesses' because their electricity goes through a Square-D load center, or 'Cisco-based businesses' because they have some Cisco equipment. Amazon is a ret

            • by snadrus (930168)
              Those businesses could be labelled all those things. Facebook at start-up needed the savings of the Linux stack. Since then, Facebook has hired many open-source-trained engineers & contributed back various open technologies. Software was originally a freebie to sell hardware. There could easily, soon be no "Open-only companies" while open-source would continue to grow inside each company that recognizes its value even to the extent that their business model depends on it.
    • by unixisc (2429386)

      This is exactly what I've been arguing!

      GNU's Freedom 2 - Help your neighbor - while altruistic in its own right, forces software development to be a hobby, and a pretty expensive one at that, instead of allowing developers to profit from their work. Drop Freedom 2, as well as the part of Freedom 3 that allows re-distribution of modified work, and allow a customer to use or edit and use the software he has bought on all the computers that he likes.

      This is a win-win situation for both customer and ISV:

      • With your model, we are countlessly duplicating the work, and the whole point of FOSS kind of is lost. Plus, it exists for game engines at least, and it doesn't fit much into OS.
      • by hairyfeet (841228)

        And its worse than you think. If you don't know the guys that "made" CentOS? USED to BUY RHEL for their HARDWARE, that's right, in any other arena they would be called what they are which is fucking leeches yet you DARE to point that out and listen to the FOSSies scream bloody murder. "Oh Red Hat doesn't say anything bad about Cent"...well what the fuck do you expect them to say, quit being fucking dirtbags?

        The simple fact is if you remove the redistribution clause the "printer story" would still be solved.

        • by Anonymous Coward

          If you think that CentOS is bad, Oracle is even more predatory. Even while they ended OpenSolaris and are now said to be in the process of either closing or dropping MySQL (which is why we had that story about Debian or Red Hat looking @ MariaDB), they had no qualms about taking RHEL and rebranding it. What's worse - they are guilty of exactly what the DoJ accused Microsoft of in their anti-trust case - Oracle uses its clout in databases and application software to make customers who use those on RHEL to

    • by tlambert (566799)

      If you look at the businesses that have succeeded using FOSS every. single. one. has used one of the "blessed three" business models, selling support, selling hardware, holding out a tin cup.

      I think you are missing the "Open source the tactical portions of the product, since they are not your bread and butter, and sell the strategic portions of your code under a different license" model.

      This would technically be the Mac OS X model, although I think most open source people don't care about Mac OS X, even though there are serious security and other kernel improvements in the BSD parts of the kernel, and significant improvements in libc and other portions of user space that they actually do releas

  • "Open Source Software Licenses Virus Business Models"

  • It scares me that we even need to have this discussion.
  • The examples in the article are pieces of software that are distributed in the hundreds of millions of copies. Things might look different if you produce software that is even slightly specialized. It's no cheaper to make special-purpose software, but your customer base shrinks exponentially with the degree of specialization.

A holding company is a thing where you hand an accomplice the goods while the policeman searches you.

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