
The difficulties we face to monetize our open source project - audionerd
http://www.locomotivecms.com/articles/we-tried-to-solve-the-open-source-revenue-equation#.VDxcEhHF8Wx
======
spanktheuser
I'm curious whether the business model is truly the problem. While I'm sure
LocomotiveCMS is a nice product, it's operating in a very crowded space with
numerous and established open-source, proprietary, and hosted solutions. From
the way it's described on your website, it doesn't seem particularly
specialized and thus highly valuable to a niche of the marketplace.

I wonder what would happen if a) you focused v3 on having features that
specifically made it awesome for dentists with HIPPA compliance issues. Or
cross-eyed investment bankers. Or someone with deep pockets and an unusual,
unmet need and b) shifted the value of open-source from shared development
costs to risk-avoidance. Namely: customers have an escape hatch if you cease
development because they can update the source, export data into novel data
formats, etc.

~~~
davidroetzel
This is certainly true. Content management systems are a dime a dozen.
Locomotive is nice, but others have more developers, features, mindshare,
exposure etc. Hard to compete with that.

Still, I believe Locomotive already serves a niche: It is one of the few
available ruby on rails cm systems. And it it possible to integrate Locomotive
with an existing rails app. That is why I guess their main audience is rails
developers who need some content management functionality in their apps. And
those do not need hosting.

This is consistent with what they describe in the post: Many people using the
open source software, many consulting gigs with developers but only a few
hosting customers.

I wonder if a better business model in this case would be some kind of
productized service. If access to Didier is a scarce but sought after
resource, they might want to try selling support contracts that guarantee a
certain amount of Didier's time.

~~~
sgdesign
> That is why I guess their main audience is rails developers who need some
> content management functionality in their apps. And those do not need
> hosting.

That's a great point, and another illustration that a business model that
works for one product might not work for another, even if they appear similar
on the surface.

~~~
elafforgue
That is correct, a vast majority of our users are Rails developers and we
don't have a paid product for them right now. So we'll have to reach larger
audiences for the hosting and find a good product for our early adopters. It's
not so easy to combine both and that makes our website copy not as clear as it
should be.

We're trying to talk to Rails developers because they are the most likely to
see the technical possibilities of the product and to other developers because
they are more likely to use our hosting solution. And we also insist on the
free and open source side of the business while trying to monetize the
project.

------
rachelandrew
I read this with interest as I'm a founder of another CMS -
[http://grabaperch.com](http://grabaperch.com) \- that I guess is a competitor
(although we're PHP & MySQL).

We launched in 2009, and have always been licensed on a commercial basis. This
means that we've been able to bundle top notch support in with license fees,
and continue to develop the product based on user feedback. I really love the
idea of things being open source and there are definite benefits of being so,
but in reality it is very hard to make that model pay.

Instead we've gone for the paid license route, meaning that we could - when we
were also doing client work - ensure that Perch was a "first class citizen"
and not abandoned for stretches while we chased client projects. As the
customer base grew, we could dedicate more time to it.

It's still a tough business to be in, but we've carved out a bit of a niche in
it. We aim squarely at small design agencies and freelancers who are rapidly
building smallish sites for clients. They buy multiple licenses per month and
know that we're around to support them and also that we listen and consider
features that they need.

~~~
elafforgue
Thanks Rachel, I really appreciate your comment. When we introduced our very
first paid services, we were very afraid to scare our open source community
away and consequently, we were way too shy in our marketing efforts.

But that was a mistake and this led to the situation we are in right now. And
of course, we can only offer limited support to our free users because it
would just kill our business otherwise. We'll work on improving our onboarding
process and be more agressive in terms of marketing to generate more revenues
that every one will benefit from in the end.

~~~
rachelandrew
At Perch our biggest cost is support in terms of our time and the requirement
for more people to scale it, it's why we don't offer any kind of free version.

We actually only hear from about 25% of our customers and only 10% raise more
than one query, but if you take a look at our forum you'll see a lot of the
support we get isn't even anything to do with our product. We're now experts
in the horror that is shared PHP webhosting, we end up helping people with
their CSS.

So we have a license fee that covers support. People can come into our forum
and we'll help them out. As a business focused product that is massively
important. If a designer has used Perch to create a site for their client and
they have trouble adding the free blog add-on for example, they need to know
they can come and ask us about it. That's the biggest difference between us
and a "free" product, you get help when you need it.

------
Matti
"Our only monetization strategy so far has been LocomotiveHosting. We had big
hopes for it, but it has gained little traction and too little interest from
our users."

[http://suckysales.locomotivehosting.com](http://suckysales.locomotivehosting.com)

~~~
malditojavi
So true, overall #2. There is room of improving the conversion rate. Also
what's a 'non white label' hosting but with a custom domain?

~~~
elafforgue
There sure is and these comments will definitely be taken into consideration
in our website makeover.

------
elafforgue
Estelle from LocomotiveCMS here. Thanks everyone for the comments! We're in
full agreement agreement that we need to improve our marketing, many thanks
for the suggestions.

You'll see huge changes on our sites very soon. We actually paused all our
marketing efforts for a while to focus on development but it seems that it has
to be our priority #1 right now.

~~~
lurcio
Even with my dev hat on I'd say marketing should always be top priority :-)

Go for low-hanging fruit. This may stimulate office discussion

[http://www.labnol.org/internet/blogging/how-wordpress-
makes-...](http://www.labnol.org/internet/blogging/how-wordpress-makes-
money/7576/)

------
rushabh
I am the founder of another open source project
([https://erpnext.com](https://erpnext.com)) and we monetize from the end-user
(non-developer community). This is the community which values hosting services
else they would need a third party to host your product. If you identify that
group, they are more likely to trust your service rather than go with someone
else.

If you have a product that is targeted squarely on the developer community, it
is hard to monetize unless you are a platform (i.e. GitHub). On similar lines,
Wordpress makes money from bloggers, not web designers, hence the "hosting"
service is value for money.

Do you target end customers for LocomotiveCMS? Look at your hosting customers
and see why they signed up for your hosting. Identify a niche and focus on
marketing to that niche.

Blog posts like this will definitely help. Wish you all the best!

~~~
elafforgue
No, we don't target the end customers. Though V3 and it's new user interface
is definitely aimed as making content editing way more fun for them.

You know, at first if felt really good talking to developers and trying to
solve their problems rather than having to provide support to non technical
people.

But we are indeed considering serving a niche we think is underserved and that
would actually need only a fraction of the features we've developed. That
would be a more manageable project though I hate the idea of letting down our
early adopters and all the people who believe in Locomotive.

------
seanmccann
If there's truly a need and the product is a 10x improvement on the
competition (even for a small niche), you shouldn't need to pay people to work
on an open source project like this. There are plenty of niches, and the main
one I can think of is focusing on a super lightweight drop in CMS for existing
Rails apps. Perhaps it generates static files into the `public` directory.

~~~
never_snapped
Exactly this.

One of the biggest flaws of the CMS space is assuming or requiring that they
are completely in control of the application. When in reality, all I need is a
CMS for is a subset of pages. At most it can be in control of a subset of
domains -- but never all of them.

For example, a common requirement is a faq-like page, a blog section and
easily being able to edit other public pages (about, team, contact, index,
etc.). Then the real bread and butter of the application is behind some sort
of login wall or is all internal and requires custom code and logic. I
shouldn't have to stand up two applications to achieve this (increasing
application maintenance by an order of magnitude in the process), fight the
cms, or roll my own every time.

Ideally I should be able to tell a CMS a single page it can control (or subset
of domains), and it takes the existing content and allows editing and saving
of it.

Start with that idea, then add premium features like easy a/b testing.

edit... Also, in my experience CMS is a race to the bottom when it comes to
client quality. You end up making very little money per project as the person
looking for a wordpress/cms solution is either pinching pennies or just plain
cheap. The real money clients come from those looking for real solutions
(which are almost always custom solutions) to enhance their business' bottom
line, not give it a crappy web presence that wont change for the next 10
years.

~~~
jaredklewis
> For example, a common requirement is a faq-like page, a blog section and
> easily being able to edit other public pages (about, team, contact, index,
> etc.). Then the real bread and butter of the application is behind some sort
> of login wall or is all internal and requires custom code and logic. I
> shouldn't have to stand up two applications to achieve this (increasing
> application maintenance by an order of magnitude in the process), fight the
> cms, or roll my own every time.

I think your approach is good, but LocomotiveCMS takes a different (I think
also very valid) approach. A single LocomotiveCMS instance is designed to
serve the static pages for dozens or even hundreds of sites. You keep the meat
of your application in the platform that fits the project (rails, node,
clojure, whatever) and let LocomotiveCMS handle the plain content pages for
all of your sites. You can get the content into your app using JSON APIs or
you can proxy pass to the pages themselves.

So it's true that you have to spin up two apps the first time, but after that,
you can keep using the same instance to add pages for as many sites as you
want. You provide the app, LocomotiveCMS provides tools for your clients to
edit and create the static pages.

------
tootie
Here's a marketing tip, your comparison page only compares to WordPress.
"Better WordPress" doesn't impress me. Try comparing yourself to a better
product. One that people are currently paying money for.

~~~
llamataboot
Millions of people pay money to wordpress developers, wordpress hosting
companies, wordpress themers, wordpress plugin makers, etc. Wordpress runs
half the web. I'd say building a better wordpress is a worthy goal.

~~~
jljljl
A majority of those customers won't consider a "better wordpress", either
because choosing wordpress is the safe option, or they are invested in the
Wordpress ecosystem.

The customer looking at the LocamotiveCMS webpage has probably already decided
they want a better Wordpress, and they are trying to compare between the other
options available.

I'm not saying they shouldn't compare against Wordpress, but it wouldn't hurt
to include a few more comparisons.

~~~
sgdesign
I don't think it's debatable that there are people out there familiar with
WordPress who don't like it much and are looking for something else.

Whether this is 90%, 50%, or 1% of WordPress developers doesn't matter much.
Even in the worst-case scenario it's still going to be a big enough niche if
you're able to reach them.

------
dredmorbius
Holy Contrast Rebellion, Batman!
[http://www.contrastrebellion.com/](http://www.contrastrebellion.com/)

LC;DR - Low contrast, didn't read.

------
ZenoArrow
Considering why this happens, perhaps the issue is... paid support on a small
personal project feels like cheating, even if it saves you tons of time and
reduces headaches. I guess people take pride in knowing their software stack
from top to bottom. For larger projects egos are put aside because the more
important factor is reliability.

I don't have any answers of how to change things for your project, but
hopefully this comment can be of some use.

------
chromaton
In the Joomla world, at least, there are a lot of companies who seem to be
making money off of open source plugins. One common model is to allow
downloads only after you've subscribed. (Yes, the plugins are typically GPL.)

These usually come with automatic updates for a year for subscribers.

Sometimes this can be bundled with "priority support" for 3x the price.

And, of course, there's always the classic "upgrade to the pro version" pitch

------
dorfsmay
They really need basic marketing, for example, they aren't mentioned on the
wikipedia list of CMS...

------
iagooar
I have worked for a company that did / does a lot of money by providing a
closed-source CMS for mainly Rails apps to its clients.

I must say that getting paying customers for any CMS is a lot of work.

If you are going for larger companies, you need to have an entire sales
department that is going to try selling your product together with customized
solution.

Actually, what worked best for that company was selling a licensed CMS +
consulting and building really customized solutions.

Maybe your business could work out this way too, but with an open-source model
at the core. You could extend the open source version with some enterprisy
features, charge for it and offer support and consultancy in order to build
truly customized solutions.

Still, the really tricky part, is selling the product in a market that is
pretty crowded by now.

~~~
elafforgue
It seems like we're heading in that direction. One thing that LocomotiveCMS
did bring us is clients who need a custom CMS. In most cases, they'll start
from some of Locomotive features and we build whatever they need from there.
These are usually high quality clients though it means that we have way less
time to devote to the open source version.

------
sarciszewski
If I were a Ruby guy, I might have contributed code by now. I frequently look
at popular PHP frameworks on Github to see if I can improve them. Sorry to
hear nobody's volunteering any contributions to your Ruby project.

------
jordanlev
One recommendation for you: I wanted to try out this CMS after reading the
blog post, so I click on the "Get Started" link on your website... it requires
me to subscribe to an email list?! Huge stumbling block there. There are SO
many CMS's out there, and if I can't get a feel for it within a few minutes
I'm going to just move on to the next one.

As a developer, I'm looking for easy-to-find docs. Having it in a downloadable
PDF is already not so great... having to register for it is terrible.

~~~
elafforgue
I understand your concern. To be honest, until a year ago, we didn't have a
CTA on our homepage. We opted for that solution that was meant to be temporary
and that should have been replaced by a demo website. And this is one of the
many projects that was postponed because we needed to speed up product
development.

But once more, this proves that we should pause product development for a
while (the only thing that Didier really likes to do) and focus on onboarding,
good marketing and a good demo of the product.

------
dbla
I guess the grass is always greener on the other side. My start-up (also
roughly a CMS) is considering going open source to increase awareness and the
size of our target market. We were also considering continuing to make money
via a hosted solution, although their revenue numbers don't get me too excited
about the prospect.

------
deze
Don't think "code & features", think "product". We developers often miss the
product side of what we do, yet it's often the gut feeling that makes people
follow certain trends while ignoring others. Any solid logic can be defeated
by instincts (yes, we too can behave like our girlfriends). A more compelling
product is better at sales that a more clever one. Yes, it's more often
irrational than not.

From the presentation standpoint, your website likes identity. It's bland and
super easy to forget. It just doesn't grab me. Product needs to imprint itself
at the unconscious level, it gotta be likable. Use your creative vision or ask
for help.

------
gedrap
While unrelated to the content, I find it it really hard to read when so much
text is in bold. It's hard to focus on the sentence I am reading at the moment
as my eyes are unconsciously jumping to the emphasised bits. I guess it shows
how powerful bold font might be, and at the same time how negative it can be
when abused. I think bold text is great in short paragraphs (e.g. on landing
pages) but probably not on a text as long as this.

------
chaostheory
Doesn't Locomotive help you acquire new clients?

~~~
Mc_Big_G
I like how people just assume that HN is where the writers of any random blog
post will go to respond to questions.

~~~
grayclhn
Update: Ah, apologies for assuming it's "his" post. The author is clearly a
woman and I'm a moron. Sorry.

Original:

I think it's a pretty reasonable assumption that someone who's trying to run a
web services company/consultancy would know when his post is on the HN
frontpage. If he isn't, that probably says more about the business than
anything in the post.

~~~
elafforgue
We're in Europe. We made it to the HN frontpage during the night and I have
better things to do during the night than anxiously monitoring what progress
the post is making.

