

Open Source: The Model Is Broken - stillmotion
http://www.businessweek.com/technology/content/nov2008/tc20081130_276152.htm

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sadiq
What a poor article.

It's pretty much completely devoid of any evidence to substantiate any of his
claims.

He states: "The open-source business model is broken." and makes vague
references to companies that have faltered but gives no hard numbers, e.g how
do the numbers of companies using an open source business model failing relate
to companies with a proprietary model?

The article's filled with other assertions that are backed up by vague
statements. I mean:

"And therein lies the great paradox: Open-source code is generally great code,
not requiring much support. So open-source companies that rely on support and
service alone are not long for this world."

A rampant generalisation, followed by a complete lack of any evidence.

~~~
davidw
Yeah, it's not that good. I voted it up just because I think open source
business is a fascinating subject and interesting thing to discuss, and if
nothing else, the guy _was_ quite involved with it at OSDL.

My take is that 1) open source works very, very well, but that 2) "opens
source business" is not really a solved problem, and that the economics of the
whole thing are weird and interesting.

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sethg
My impression is that "sell consulting support for open-source products" is a
good business model _for the individual consultant_ (in the sense that if
you're good at it you can make a decent living at it). It's not such a good
business model _for an investor looking for growth_ , because the consultants
don't leave behind much profit for the investor, and the only way the
consulting firm can grow its revenues is by hiring more consultants.

~~~
netcan
That particular problem would imply that consultancies are not a scalable
business. There are large consulting firms. So that seems off in one way or
another.

~~~
sethg
You can build a small consultancy into a large one by hiring more bodies, and
some firms have done that. But you don't get much economy of scale.

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cabalamat
The article states that "The open-source business model is broken".

This is wrong, because there is no one "open source business model"; there are
lots of them. ESR lists 9 in The Magic Cauldron (
[http://www.catb.org/~esr/writings/cathedral-bazaar/magic-
cau...](http://www.catb.org/~esr/writings/cathedral-bazaar/magic-cauldron/) )

The article does have a grain of truth in that open source does close off some
possibilities for making money from a product.

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olefoo
BusinessWeek is one of the few magazines out there that is able to reliably
trigger the "that's not even wrong" reaction from me.

Open-Source is not a business model; it's an element in the business
environment sure; but in and of itself it has only the most tangential
relationship to the flow of money.

And yes, some companies, Sun in particular have badly botched their open-
source efforts, but that's mostly because Sun is in trouble in their hardware
business and still thinking that it's the mid-90's. But for every Sun having a
loud and spectacular failure; there's a Google or a Facebook building their
success on open-source infrastructure.

//BW is just bad, they get get facts, quotes and names wrong too often to be
an accident.

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brl
"For anyone who hasn't been paying attention to the software industry lately,
I have some bad news. The open-source business model is broken."

Yes, if you haven't heard that open source as a business strategy is broken,
it's because you aren't paying attention. Or perhaps the real reason you
haven't heard that is because not many people are reaching this conclusion
anymore after so many astonishing open source exits in the last year alone.

"This will require many to adopt a new mindset, viewing open source more as a
means than an end in itself."

Agreed, giving away software and source code for free does not directly
translate into revenue. Point scored for knocking straw man on his ass.

"The traditional open-source business model that relies solely on support and
service revenue streams is failing to meet the expectations of investors."

I think the only thing disappointing investors about open source business is
missing out on opportunities like:

"Consider Sun MicroSystems' (JAVA) $1 billion acquisition of open-source
database software vendor MySQL."

Now I know it wouldn't have supported the position about how much open source
business sucks, but it's worth mentioning some more examples here:

January 2008 - Nokia buys Trolltech for $150M

One from my own industry, open source network security:

March 2007 - Sourcefire raises $75M in IPO

I'm not sure exactly how many other software companies went public in 2007,
but it wasn't very many. 5? 10?

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bk
Call me naive, but I think it would be great for OSS to have a license that is
free (as in freedom), but free as in beer only as long as a certain revenue
threshold is not passed, basically, a "pay when you can" model.

Why shouldn't a company that makes 100k/month using linux, etc. spend 0.5% or
whatever of their revenues supporting that infrastructure. It could go a long
way to improve OSS project funding, quality and long-term maintenance. (I
guess it would be akin to a tax).

Another interesting idea with so much hosted software today would be to adopt
a sort of "Affero LGPL" (require hosted software to publish the source &
modifications of the code, but don't force the whole code base to become GPL).
Perhaps allow a fee for keeping modifications proprietary. Not for ideological
purists, but pragmatic imho.

Just trying to throw some ideas out there for discussion.

~~~
davidw
The problem is that it makes things very, very complex. What if GE has 10
linux servers - how much do they pay? How about a little startup (that makes
100K per month) that is entirely based on doing custom Linux work? What if I'm
in charge of a "skunkworks" project at IBM, with just me and two people
working on a new project - do we have to pay?

Basically, you take away one of the critical freedoms of free software with
that kind of license, as much as it would be very, very tempting to get some
of that money recycled into developer salaries.

~~~
tjr
And further, who would actually receive the payments? The programmers who
wrote the code? The folks who packaged up the distributions?

Would it be useful to have some sort of open source payment organization, a la
ASCAP for composers, such that a general fund comes from donations from happy
software users, and based on some formula, members of the organization get
payouts based on the frequency of the usage of their software?

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lsc
Heh. so the article basically says 'open source is really good for software
users, therefore it is bad for software vendors' - perhaps they are right, but
that seems more like a positive than a negative to me.

Personally, I wouldn't want to buy software from someone who wanted to lock me
into something broken.

