

Why you should sell open source software - witten
http://luminotes.com/blog/why-you-should-sell-open-source-software

======
huhtenberg
The biggest problem with open-sourcing commercial software is the risk of a
blatant ripoff.

Some entrepreneurial spirit _will_ come along, replace the application icon,
repackage the whole thing and start selling it as his own. Perhaps just in his
own country, perhaps you won't even notice, but it will eventually surface and
you will need to deal with the situation. Now the question is if you want to
spend your time and nerves on resolving the issue or would you rather continue
working on the product. _Especially_ if you are a "lone programmer" and
especially if opening the source doesn't give you much to begin with.

~~~
witten
Let's say this happened, and someone in a random foreign country made a clone
of my software and started selling it there. Would that really cut into my
sales? Or would that perhaps increase the legitimacy and recognition for the
type of software I'm selling, if not for the specific brand I'm hawking?

~~~
huhtenberg
It has less to do with cutting into your sales, and more with jeopardizing
your IP and ownership rights. If this sort of theft is left unattended, the
other side may start asserting its non-existing rights and escalate the
situation.

It all really comes down to the risk tolerance. Opening the source establishes
great deal of a goodwill towards your customers and potentially provides you
with an access to free improvements and bugfixes. On other hand it opens you
to the risk of needing to actively protect your IP rights, which is something
that not everyone want or can do.

That's not even getting into how emotionally draining these incidents can be.
It requires a really thick skin and a strong ability to ignore being taken an
advantage of. Again, not everyone's traits.

~~~
witten
If the source is open, then anyone who bases a product on it has to abide by
the license. Are you talking about the case of someone who downloads the
source, and bases a derived product on it without abiding by the license and
releasing the source code? Can't illegal distribution happen with closed
source software as well? Or are you saying it's more likely to happen if the
source is open, and therefore more of a potential headache?

~~~
trapper
If the software is behind the companies web server they can do what they wish
(at least before gpl3).

~~~
witten
That's very true, although AGPL does fix that now.

------
sgrove
Witten actually gave me quite a bit of advice on open sourcing my application,
and he mentioned quite a few of these points. I think there might have been
some additional benefits as far as marketing/legitimacy are concerned that he
might have mentioned, but he makes a good case for selling open-sourced
software.

Depending on your market, only a small minority are driven to invest the
energy (time is money) required to get no-cost software - paying someone to
have a ready-to-go package is simply more efficient.

~~~
cschwarm
I believe he misses some important points:

(1) The core problem are professional "free-riders" -- Linux distributions
being the main candidates. As soon as they include his software in their
repositories, his sales will probably stop to increase.

(2) For Linux distributions, it's also hard to make ready-to-go packages.
Looking at his download page, there's no sign whether his package installs
properly. Can I even use it? Is it RPM or DEP? Or some sort of .run package
that needs to be made executable, first?

(3) Expensive software is unlikely to be sold under an Open Source license:
think dental office billing systems, for example. Everything more expensive
than, say, $25 will make people get the software elsewhere or use the source.

Nevertheless, I agree that selling open source software may provide some
benefits for the seller.

~~~
witten
1\. I've actually considered not charging for the Linux version and only
charging for the Windows and Mac versions. From a cultural perspective, Linux
users simply don't buy software. No value judgment there, but simply a
statement of fact. (I'm a Linux user myself.)

2\. I don't yet have official packaging yet for Linux, but I plan to start
with Ubuntu and Debian debs when I do. Right now it's just a tarball.

3\. You're probably right that expensive software is going to be a harder sell
when the source code is available for free. When I wrote the article, I had
end-user software in mind, which generally isn't that expensive.

~~~
cschwarm
Sorry for the misunderstanding. I thought you meant selling open source, in
general, not just to end users.

You know, I'm glad you submitted your post here. I'm currently working on an
article about a similiar topic. The discussion has been very helpful.

Would you mind if I contact you directly using your support E-Mail adress? I'd
be really interested in your feedback.

~~~
witten
No problem. You're welcome to email me.

------
orib
One interesting point to note it is certainly not an issue to sell the source
to your program in a bundle with the binaries, allowing enterprising hackers
to modify and update the software. You could even allow distribution of these
changes.

Allowing this doesn't mean that you are forced to give up copyright on the
source, or release it under an open source license. A license that says "You
may have, modify, and distribute modifications to the source, but not
duplicate or redistribute it" is certainly something that I would find
interesting, and would love to see more software released under.

~~~
cschwarm
You may like to look at the license used by TheKompany [1].

[1] <http://www.thekompany.com/products/licensing.php3>

------
vizard
Doesnt Pascal's wager type of argument apply here? Opening the source has very
little benefit in most cases while opening the source presents a very real
danger of clones.

~~~
procrastitron
Pascal's wager only applies if you simultaneously discount the benefits of
having contributors and play up the risks of clones. This seems backwards to
me; it would take much less effort for someone to contribute to your project
than to fork a new one. As such, you should get more contributors than
competition.

------
aditya
I think this is a fantastic idea, but aren't you worried that someone will
take your source code, launch a clone, market it well and make a billion
trillion dollars?

~~~
witten
I suppose it's possible, but pretty unlikely.

But let's say it does happen. I'm still the foremost expert in the world on
this particular piece of software. Chances are I can develop it faster and
better than anyone else. (This isn't to say that I'm a really good coder --
I'm not. It's just that I wrote this software and understand it very well.)

Now, you brought up marketing, so I suppose in this hypothetical example,
someone could clone the product, rename it, and just concentrate on marketing
rather than development.

Well guess what.. Anyone can do that anyway even without the source code! Most
web-based software is fairly easy to clone. Having the source code just makes
that a little easier.

------
sovande
Since your product seems to be coded in python the source is kind of "open-
source" already isn't it? Also its not the commercial competitors that will
screw you, the real danger is if someone will find your project interesting,
disagree with some small thing, fork it and release it as a new free open-
source product, get a few more people interested to contribute so you as a
one-man-shop can't keep up and thereby replace your product with a _real_
open-source product. Heck, I'm almost tempted to copy your repository, do some
simple query-replace and put it up on google code just to make a statement and
see how you turn-coat and will start complain and whine in your next blog
post.

~~~
witten
I could very well strip all comments and distribute just pyc files. Those can
be reversed to commentless source, but it's not exactly as useful as the
original source code. And honestly, anyone could clone the product just fine
even without the source code.

If you really want to fork the project, go for it. That's within your rights
as per the GPL license. Just as long as you continue to abide by the license
yourself. If your fork turns out to be better than my code, and more people
end up using it, then you probably deserve any users you "take away" from me.

If, on the other hand, you're just forking the code to be surly, then that's
within your rights too.

------
trapper
The biggest thing you are missing is that it potentially limits growth. Most
entrepreneurs I know want to create wealth far and beyond what you can make
with a small business. You are much less likely to do that with open source,
as you either have to scale service (e.g. people, your costs increase linearly
as revenue increases) or compete on price (as you get more popular, your
margins decrease as the market becomes more competitive) while maintaining the
product.

I'd like to hear from some people with a 10-50M sales revenue (not service)
product per year who have made the switch, or considered it. Somehow I can't
see it happening.

------
known
A smart thief may exploit a bug (buffer overflow etc) in closed source banking
software system and siphon away funds. This may continue till someone from the
bank or the software company notices this bug.

------
Anon84
In most cases, the big question is...

 _Why should you buy open source software_ (assuming the source is freely
available)

~~~
witten
Because for end-users, it's more convenient than building the software from
source.

~~~
coffeeaddicted
I'm using a lot of open source software which I didn't build myself from
source. That's what distributors are doing. It seems to me you are selling the
additional service of building the software. I guess it might work because you
also got the name - people who know it want to get it from you.

------
wizlb
"In other words, if you decide to make your end-user software open source,
most of your users probably won't even notice!"

So, why do it then? The two points made by this article don't really motivate
me.

1) "Selling closed source software is roughly analogous to selling someone a
car with the hood welded shut."

First of all, we are not selling cars. Software is sold more like an HDTV, dvd
player, mp3 player, etc. How many of those products really make it easy for
you to fix it yourself? The answer is: It doesn't matter. These are throw away
products. If it stops working for you, buy a new piece of software or an
upgrade.

Don't give away your product just to please a couple of gear-head customers
that can code.

2) "Your source code,...is very likely completely uninteresting to almost
everyone else."

This is such a bullshit statement. The fact is that while my source code may
not be that special, it's ALREADY DONE. If I don't open source it then
potential competitors have to spend the time to get to where I am at.

~~~
witten
1\. It's a rough analogy as I said, and honestly I don't think either the car
analogy or the consumer electronic analogy is a good one. Most software is not
a commodity, and unlike a DVD player, if it breaks you don't just go out and
get a new one. At the very least you fix it so you can figure out how to get
your data out of it. And of course, software isn't exactly a physical thing,
either, so both analogies break down even further.

2\. Any legal competitor who uses your source code will have to abide by the
exact same open source license (unless it's BSD), meaning that you can
incorporate any improvements they make directly into your original product.

~~~
wizlb
1\. I agree that both analogies break down. However, my point stands: Just
because a consumer can't fix a product themselves doesn't make the product
inherently evil or bad or anything like that.

2\. Okay, but that doesn't really address my point. If you don't open source
the software in the first place then there are less potential competitors and
therefore more potential money for your business.

Look at how well Salesforce does against SugarCRM. Which one do _you_ want to
be?

~~~
witten
1\. All morality aside, you can decide to open source or not based on simple
cost-benefit analysis. Will your customers be more likely to make the purchase
if the source is available? Will you get more contributions and goodwill if
the source is available? If the answer to both questions is definitely no,
then I think you have your answer for your particular product.

2\. I don't think it's as simple as saying there are fewer competitors if your
product is closed source, and therefore more money for you. If all your
competitors base their product off of yours, then you have a strong case to
make (to your prospective customers) that you are the market leader and
everyone else is just a wannabe follower.

And even with more competitors, that doesn't necessarily mean you're losing
out on sales. Competitors can also expand markets, increase
awareness/legitimacy for the type of product you're selling, and as I
mentioned, improve the product if it's open source.

In regards to Salesforce and SugarCRM, I'm not familiar with the product
space. But I assume you're suggesting that in that particular case, Salesforce
is more successful, and therefore closed source is preferable. That may be the
case with those particular products, however there are a lot of factors that
go into running a successful company beyond whether the source code is freely
available.

~~~
wizlb
I agree that for a single developer, open sourcing a product can be very good.
You get peer recognition and probably some job offers. But I bet those job
offers come in from places that make closed source software.

For businesses, the risk associated with closed sourcing your app are finite
and simple:

1) The people that want source code with their app won't buy it. As was said
in the article "not that many people will even notice", so it's not a lot of
people.

2) You lose out on _possibly_ getting some work done on your product for free.

It seems to me that there are more and larger risks associated with open
sourcing your app:

1) Lower bar to entry for competitors. 2) Definitely losing sales to customers
with IT departments that know how to compile source code. 3) Possibly losing
control over your own creation. 4) Fragmentation - IMO Linux would be better
and more popular if there weren't so many distributions.

~~~
witten
Just to look at one of your points..

> Definitely losing sales to customers with IT departments that know how to
> compile source code.

Quite possible, but I can say that I've gotten some of my best and most
valuable feedback from these sorts of "customers". They don't pay me a cent,
but they provide me with really good feature requests and bug reports.

Now you might argue that if the source was closed, I could get the feedback
_and_ the sale. Perhaps. But perhaps the savvy IT departments only install
open source or freely available software.

