
Open Source and the Challenge of Making Money - crapshoot101
http://bits.blogs.nytimes.com/2014/07/23/open-source-and-the-challenge-of-making-money/?ref=technology
======
rosser
FTFA: "Moreover, by definition it implies that open source projects have many
more mistakes, bad code and failed efforts on their way to succeeding,
compared with conventional projects."

Wait, what? How, exactly, does OSS "by definition" have more mistakes?

~~~
jeffdavis
That statement alone is enough to dismiss the entire article.

Perhaps if you include every half-hearted attempt to throw code in the open as
a "failed effort", and ignore such half-hearted attempts for proprietary
software (because they are hidden), then perhaps you could reach such a
conclusion.

But I doubt the author even bothered to look for any data; instead he just
printed it because it made sense to him at the time.

I guess that's also how he reached the conclusion that "it’s time to admit
that this idea didn’t work out" despite the wild growth, unimaginable reach,
ubiquitous use, and general acceptance of open source.

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vasquez
I don't think open source is really about making money for most companies,
it's more about improving quality and keeping costs down. At a former employer
we did follow the give-it-away-and-charge-for-a-service model, but we also
worked on several of the open source libraries and frameworks we built our
products on.

We shared all of this work with the upstream projects, as we had no interest
whatsoever in maintaining private forks and because better quality
infrastructure attracts more users, which again leads to further improvements
or at least ensures the project stays maintained.

~~~
rwl
> it's more about improving quality and keeping costs down.

Yes. This point seems to be lost on the author of the article. Even the
founders of the Open Source movement thought that.

I can't find it now, but I remember once reading an essay by Bruce Perens
where he pointed out that the vast majority of software that's written lives
on the cost side, not the revenue side, of a company's balance sheet, because
the vast majority of software that's written is custom in-house software. If
you can share those costs with others who have similar needs, everyone
benefits.

As a kid who had only ever thought of software as "something you have to pay
for when you want a copy for your computer", this was eye-opening for me. The
idea that the software I was familiar with was the exception, rather than the
rule, made it plausible that there were other ways to get high-quality
software through besides paying a license fee to Microsoft. As a result, I
found that idea very attractive.

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awwstn
Building a viable business on top of an open source project is totally
possible. But, like building lots of other types of businesses, it can be
difficult.

These challenges cut close to some things we are aiming to solve at Assembly
[[http://assembly.com](http://assembly.com)]. One such question we hope to
answer is this: "how can people build a real, profitable company in a
collaborative, open manner like they build in an open source environment?"

An example is Coderwall, which makes more than $25,000/month [1] and is built
and maintained by the community. Each month, revenue goes to the people who
are building the product. All the code is publicly available [2], and licensed
to be used non-commercially. A core team of contributors guide vision and
quality control, but anyone can participate.

It's not exactly open source, but products on Assembly are built in the open
and anyone can dive in and help out. Some products have lofty ambitions to
make big revenue, and others are are more aimed at being a public offering
like a traditional open source project.

[1] [https://assembly.com/coderwall/posts/coderwall-coinholder-
up...](https://assembly.com/coderwall/posts/coderwall-coinholder-update) [2]
[https://github.com/assemblymade/coderwall](https://github.com/assemblymade/coderwall)

------
jeffdavis
"An entire economy where you gave a little [software] to get a lot [of
software] ... it’s time to admit that this idea didn’t work out"

If this article was published in 1998, and we revisited it in 2008, we would
have concluded that the author was proven wrong by a landslide.

The idea that someone still thinks this in 2014, and is confident enough in
his opinion to publish it, is ridiculous.

~~~
_stephan
The sentence immediately before the one you quoted is: "Remember how the open
source software movement was supposed to be like Woodstock, with everybody
sharing and everything free?"

I think the author wants to express that open source has changed a lot from
the early days. As far as I remember it, open source originally was driven
mainly by students, academics and hobbyists, and by service companies like Red
Hat or maybe IBM. Nowadays, many of the larger, successful and enduring open
source projects are mainly developed by professional developers working for
companies that use the open source software for their commercial products or
infrastructure.

~~~
jeffdavis
What in the article lead you to that interpretation?

~~~
_stephan
I understand the article as making the argument that in the past companies
tried to make a business out of the open source project itself while nowadays
the open source project is more often a byproduct or a basic infrastructure
component for other commercial projects.

I don't think the examples and quotes used by the author are great, but I do
think that there is some truth to this argument.

------
raamdev
I work on open source software with two other developers and our business
makes enough to pay for three full-time salaries (they're low-end software
developer salaries, but we all live comfortably in the USA and Mexico).

We sell two WordPress plugins, both of which have free counterparts (think
Lite/Pro). The source code is GPL for both versions.

Why do people buy the Pro version of our software? That's we've asked many
times over the past few years. I feel they buy the Pro version for both the
features and, more importantly, for the fact that it will be _updated_ and
_maintained_, and they will have _access to support_. Site owners that want to
use one of our plugins recognize that by paying for the plugin they get access
to support and features not available in the Lite version, whereas the free
version has limited features and only community support.

Could someone copy the source code for the Pro version and sell it? Sure. (And
people have.) But can they copy our Pro support and sell that? Not so much.
Can they copy our reputation? Nope.

I've learned over the past few years just how valuable "access to support" is
for many people. Even if they never contact us, just knowing that we're there
_in case something goes wrong_ is comforting enough for them to pay for that
comfort.

If more open source projects started offering support, I bet you'd have a lot
more open source developers making money.

For example, if I decided to set up `mutt` for the first time to switch over
from web-based email, would I buy a "mutt support service" from someone that
allowed me to submit `mutt` questions through a ticketing system while I was
setting up and getting familiar with `mutt`? Yes! I would, especially if that
person had a reputation in the community as someone who knows `mutt` inside
out.

It's also worth noting how offering support helps drive documentation. If the
documentation is great then a developer can easily point people to the
relevant information and save him/herself time (so that support doesn't take
up all available time). I basically used this type of "ask me a question, I'll
create documentation for it and then reply with a link" method with my
Independent Publisher WordPress theme project [1].

[1]: [http://github.com/raamdev/independent-
publisher](http://github.com/raamdev/independent-publisher)

------
rmason
Its extremely difficult to make money with open source. With the notable
exception of Red Hat there aren't a lot of open source companies that are
known to be consistently profitable.

Most of the bigger companies raised money when VC's believed in the open
source business model and are still operating on those funds. That's an avenue
that is no longer open to today's open source entrepreneurs.

One possible exception might be the WordPress model of offering hosting.

~~~
chc
The way you make money with open-source is by not trying to sell the open-
source product. Apple releases lots of stuff as open-source, but it's not a
problem because they don't want to sell you Clang. Similarly, Red Hat aims to
sell big corporate contracts, not licenses to their open-source software.

~~~
clarry
_> The way you make money with open-source is by not trying to sell the open-
source product. Apple releases lots of stuff as open-source, but it's not a
problem because they don't want to sell you Clang._

In other words, the way you make money with open source is by not making money
with open source. The downside of this is that you don't make money with open
source.

Unless you count using open source (as it contributes to the development and
monetization of the non-open-source software you make money with). But then
you could say everyone is using open source to make money, which I think
misses the point the article is trying to make.

~~~
pessimizer
>But then you could say everyone is using open source to make money, which I
think misses the point the article is trying to make.

Which is that you can't make money by selling open source software? That's
pretty obvious. I think the point of the article is to discuss possible ways
(or whether it is ultimately impossible) to make money for a company that
_produces_ open source software, which is not something everyone can claim to
be doing.

------
fred_durst
The economic system in the US in based on very, very strong property rights.
This greatly skews the advantage from the ones doing the work to the ones who
own the result of this work.

If US property rights were not so strong there would not be such enormous
advantages given to those who produce proprietary software. This isn't as much
an issue with open source business models as much as it is with US economic
policy.

~~~
knocte
>If US property rights were not so strong there would not be >such enormous
advantages given to those who produce >proprietary software.

Why? Can you elaborate on that?

------
drblast
I don't find open source as a product has the benefits we assume it must.

Theoretically, yes, if I have the source every change and customization I want
to make is just a recompile away.

Practically speaking that almost never happens because now I'm likely forking
a huge code base and almost always abandoning the support contract I paid
money for to do so.

Unfortunately, because theoretically speaking anyone can change anything,
authors seem to neglect the whole documentation and API portion of open-source
software, and that's what I typically want in practice.

Obviously there are exceptions, but most people pay money for support,
warranties, integration with existing systems, documentation and available
training. All of those things have very little to do with whether the source
code is open or not.

------
taylodl
It's a shame our options have been reduced to a false dichotomy of pay-for
software where you have no access to the source, and pay-nothing-for software
where all you have is the source. There was supposed to be another option for
pay-for software where you have access to the source and may make changes to
that source to suite your needs: "free" was supposed to refer to "freedom" and
not "cost." But no one seems to have gone that route. Is it just not viable?

~~~
drewcrawford
The problem is that for-pay software that gives you some freedoms manages to
piss off everybody. It's not "open source". It's not "free software". It can
be characterized as trying to astroturf your way into free goodwill. And you
have minimal real protection against someone cloning your software.

I am currently trying to build a product on this model, because I think it is
pragmatic. Not sure how it will work out.

------
_stephan
Dual licensing, like Trolltech did originally with QT, could also be a viable
commercial strategy for certain open source projects, but that seems to be
going out of fashion lately.

~~~
general_failure
Qt and not QT.

Digia still does dual licensing of Qt and doing OK.

~~~
_stephan
Yes, they still do dual licensing, though I suppose the additional licensing
under the LGPL by Nokia changed the business a bit.

In any case, I wonder whether the original success of Qt would still be
possible in today's business and open source community environment.

------
lumberjack
What about the software maintainers that are often salaried employees?

And what about the main users of the software that are saving money by using
free software?

But of course your whole competitive edge is that you are giving away those
rights to keep the software proprietary and to dictate who can use it, for
what and for how much. You cannot simply expect to put a price tag on it and
sell it, "as is".

------
clarry
> The open source method may be effective if enough people play along, but it
> does not make money in itself. Moreover, _by definition it implies that open
> source projects have many more mistakes, bad code and failed efforts_ on
> their way to succeeding, compared with conventional projects.

Which definition of open source (method?) do they go by?

------
forgottenpass
_Remember how the open source software movement was supposed to be like
Woodstock, with everybody sharing and everything free?_

No?

I'll go back and finish the article, but it's starting to look like the
something you'd see in a tweet from @nytonit "Building a business around a
product you give away is hard and The Times is ON IT."

------
cottonseed
> A regular company couldn’t have experimented with creating 10 versions of an
> online photo album, then picked the best one.

Yes, but often 10 companies try to make an online photo album and the market
picks one (or a few). The comparison between open source projects and the
dynamics inside a company doesn't seem like the right one.

------
mqsiuser
Linus Torvalds knew that "the GPL would turn _as many_ people away as it would
attract" and exactly of that (it attracted a lot) he considers his decision
_for the GPL_ "to be the _best_ decision he ever made" (though he disagrees
with the too strong ideological believes of RMS "I want to (be able to)
reprogram my printer's software"... sorry what?!). Linus used the big wave
(pro & cons discussion on the GPL) for getting his Linux off the ground (which
he succeeded with). And he is so incredibly smart and doing things right
(showed it again with git... slamming CVS&SVN basically to death in a talk he
gave).

Google, Facebook and others are open sourcing a good amount admitting, that
this attracts skilled people (probably to be hired) and benefits their code
(in the open)... "companies that use your code are never competitors". Though
they remain the major force behind these projects, e.g. being accused to be
show offs (hiphop vm) "look how great we are, but you'll never get it to
work".

The default license on git hub is MIT. Sorry GPL, but forcing everyone to open
source on modifications they make. NO way _for me_ : Take it ([http://www.use-
the-tree.com](http://www.use-the-tree.com)) and make it proprietary (and
better and make a business), you are so welcome. When you succeed with that,
then congrats to you.

Enterprises _want to pay_ and they go for FUD "no accountant was ever fired
for buying IBM/Microsoft/HP". It's hard to break into that and they are even
right with it, because when buying from a large vendor they are also buying
into the huge support/manpower.

How does Ubuntu want to generate income? Selling shirts and Coffee-cups with
"Ubuntu" printed on (okay advertising for Amazon in Unity) and diverging from
"Linux for people/the desktop" to Ubuntu-Server/Cloud? But the fact that they
sell T-Shirts and coffee cups (and others sell likewise silly things, like
boxes with CDs and printed manuals), wow... that's a confession of failure
(for _this type_ of doing open source).

So "open source (almost) everything" (2011) [1], what a late(!) and great
contribution to this discussion (free from ideological believes and focused on
business).

Does RMS still live for free on the Harvard/MIT campus? And sorry I was in the
group that was turned away back in the times.

[1] [http://tom.preston-werner.com/2011/11/22/open-source-
everyth...](http://tom.preston-werner.com/2011/11/22/open-source-
everything.html)

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jfoutz
Lucky for us the free market isn't Darwinian.

