Open Source Business Models

Forbes.com’s article “The Open Source Heretic” is about Larry McVoy, the CEO of Bitmover, and his comments on how open source business models are not sustainable.

Bitmover makes BitKeeper, a version control system system ideal for distributed developers. The Linux kernel currently uses it, and it has been given to the open source community to use free of charge. Until now. Apparently some developers wrote add-ons for the product, but doing so is in violation of the licensing terms. After arguing with some members of the development group, McVoy decided that he wouldn’t provide free support anymore. For more info, see Red Herring’s “An End to Free Linux Support”.

Anyway, McVoy made a lot of comments in the Forbes article regarding open source business models. Nothing truly innovative comes from it. If you take away the hardware companies that are funding most open source developers, the model fails. He can’t think of any way that open source can fund itself…

And though open source software may be “free,” sometimes you get what you pay for, McVoy says. “Open source software is like handing you a doctor’s bag and the architectural plans for a hospital and saying, ‘Hey dude, if you have a heart attack, here are all the tools you need–and it’s free,'” McVoy says. “I’d rather pay someone to take care of me.”

Oh! Oh wait! What’s this?! One of those business models! McVoy, you’re a genius! Since most people don’t give a damn about the code, and they don’t care to learn, and if they are willing to PAY for someone else to do it for them, THAT’s a business model. There is a demand, and you supply it. Huh. Who’d have thunk it?

I didn’t like how the Forbes article kept insinuating that “open source” means you have to give away your code for no cost. For instance, I use Debian as my distro of choice, and I use many of the packages. I only get the source for something when I explicitly ask for it. With Debian and most distros, I can get the source independent of the binary, but legally Debian doesn’t have to provide the source unless they provided me a binary for code under the GPL.

There are other business models. Dual licensing works wonders. Just ask Trolltech about their Qt library. Or id, which gives away the source to their old game engines and yet doesn’t find people trying to redistribute the original and proprietary Doom game data with the source code. There are embedded devices running open source, and I’m sure those hardware manufacturers aren’t too keen on going back to running proprietary and expensive operating systems. Zope was way more successful after the source was released than before it.

Support. Consulting. Custom development. Web services. Hosting. For some reason these are supposed to be the exclusive domain of software that is not open or Free? Right.

Once again, “FOSS” is not mutually exclusive with “commercial. “McVoy understands open source as well as anyone on the planet”, according to the Forbes article because his non-open source was used by many open source developers. While it is possible for someone who is against FOSS business models to be an expert on it, I’m a bit skeptical. Time and time again we’ve found that Coca-Cola isn’t exactly an expert on drinking patterns when they release drinks like “New! Lemon-Lime-Grapefruit-Extreme-Diet Coke”, and yet lots of soft drink drinkers use their products.

4 comments to Open Source Business Models

  • What’s your take on releasing indie games open source? I’d like to release Trichromix as open source so that my fellow game developers (and some aspiring ones, too :-)) can benefit from the code, but I’m still a bit reluctant to do it.

  • I believe I have mentioned it in the past, but I am definitely interested in releasing my own games as open source. http://www.prairiegames.com/ was supposed to be making open source games, but I hear the main person decided to go back to Torque once T2D was released.

    You can also look at http://caravelgames.com/ to see a company that is releasing open source games as shareware. I emailed them to ask about any challenges they experienced.

    Basically, like I said above, most people want to play a game. They don’t care about the source code. Open source allows more people to have access to your game, and I think it can only help increase sales. You can target Windows and Mac, but if you simultaneously target Gnu/Linux, BSD, and possibly other systems, won’t it help? Wouldn’t that be another application of The Long Tail?

    Essentially, releasing source code is scary because most people will tell you that you don’t do that. Most people think that open source means free as in beer, including a large number of those who are considered Free Software zealots. It may also require you to handle it differently. Maybe releasing a game open source doesn’t work well if you try to do the same thing as you would if it was under a different license. EULAs and proprietary licenses try to turn software, which is inherently easy to copy and distribute, into something like a toaster. Only sell one copy, you can’t just give away multiple copies, etc. It really depends on what you want to do.

    I believe there are challenges, but I also believe that they aren’t insurmountable.

  • eIT

    Nice article, thanks

    Making revenues from free & open source software is one of the most frequently asked questions these days. While there have been a few successful examples of companies (like MySQL, Red Hat etc) which are making money, I’d surmise that these are still very early days for open source revenue & profit models.

    While open source as an operational paradigm certainly has been having exceptional success against proprietary and closed-software models in the recent past, in my opinion, a lot more thought need to be given and experimentations done before the emergence of viable revenue models for the free & open source models that can successfully compete with the current proprietary software revenue model. Some specifics of the business models are emerging fast, but it will take a few years for the market to test each of these out and hopefully, the fittest will survive.

    A site that focuses exclusively on revenue models from open source is Follars.com – Free, Open-source Dollars!

    Ec @ IT, Software Database @ eIT.in

  • Thanks for the link to Follars.com, eIT! It’s seems to be a pretty comprehensive resource.

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