how to make money with oss – business models t-76.651 seminar on distributed product development...
TRANSCRIPT
How to Make Money with OSS – Business
Models
T-76.651 Seminar on Distributed Product Development
Helsinki University of Technology
Arttu Heikkilä
2004-DEC-07
Introduction
Open source software communities have understandable amount of knowledge, motivation and resources
Open source ideology is widely pontificated by Stallman, Perens, Raymond OS religion/ideology
Backround
Ideology is against the business attitude
Anti-business organizations founded by ’OS founders’ e.g. GNU, FSF
GNU GPL license is totally against the business
Backround
OS License
Most of OS uses GPL GPL cannot be combined with other OS
license
Backround
Business model
Business model needed to convert the technology to economic value.
Business model describes the core value creating logic of the organization
OS license plays key role in business model
Backround
Markets needs OS business models
” One of the common concerns fo entrepreneurs and investors are potential ”business models” that enable for-profit firms to take advantage of free or open source software ” (Cusumano, 2004)
Backround
Business vs. OS communities
Goals of free software ideology and business do not match
What kind of OS license should be selected?
OS is interesting in business point of view, OS communities are against business
Motivation
Goal of the research
A literature research
Which business models seem to be suitable for small software companies?
This paper do not try to list all possible money making methods, but the basic ones. Also, this paper does not describe the business models for hardware manufacturers.
Research question / Method
Paper structure
Introduction OS Licenses OS Business models Discussion Conclusion
Paper structure
OS Licenses
Public domain Ideal for commerializing Rarely used
GPL and LGPL Most used Virus –effect ”distribution is trigger” -loophole
OS Licenses
OS Licenses cont.
BSD Can easily be taken within business University of California has to be mentioned
Artistic Not widely used Option if wanted BSD-styled but less restrictive than GPL
MPL / NPL leaves more rights for the original author Good option in business point of view
OS Licenses
OS Licenses - conclusion
(Valimaki and Oksanen, 2002)
OS Licenses
OS Licenses - conclusion
If business is: Software development with help of OSS
BSD or artistic OSS Public domain (difficult to find suitable) GPL OSS cannot be used (virus-effect)
Outsource the R&D MPL/NPL (GPL)
OS Licenses
OS Business models - selection
Thompson (1999) Research Service Customization
OS business models
OS Business models - selection
Strategies by Koenig (2004) Optimization Dual Licensing Consulting Subsription Patronage Hosted Embedded
OS business models
OS Business models - selection
Classifications by Open source initiative (2004) Support Sellers
distribution, branding, after-sale services Loss Leader Widget Frosting
Drivers/interfaces etc Accessoring
books, coffee cups, t-shirts etc
OS business models
External R&D
Idea The whole internet becomes your R&D and QA
Idea does not work, it’s ideal Slower than internal R&D Difficult to control
OS business models
Dual Licensing
(Valimaki, 2003)
OS business models
Dual Licensing
Wide distribution by ”poison pill” Some basic right (view, use, modify,
redistribute) is restricted
Glorified business model by articles Needs balancing between ideology /
business Examples: MySQL, Sleepycat software
OS business models
Consulting - Customization
Idea Consulting in using OS Customization of current OS products for specific
purpose
Clear logic of money making Consulting and services markets are rising
OS business models
Services – support and maintenance
Idea Money from media dirstribution, branding, training,
consulting, custom development and post-sales support
”Support sellers” Customers do not want to pay from
Code refactoring documentation
Example: Cyclic, Cygnus, Yggdrasil
OS business models
Hosting
Idea Rent the software (do not distribute / sell)
GPL license not in charge before distribution Enables to piggyback from large amount of
OSS Examples: Amazon, Google, salesforge.com
OS business models
Brand licensing
Idea Make product open, but leave the rights of
product trademarks and related IPRs for original author
Companies have to pay when using rights to the trademarks / IPRs
Not a business model for small company (difficult)
OS business models
New license
Idea Possible to create some new, contrivance license
to piggyback others effort
Developers are suspicious Do not write your own license if possible
OS business models
Classification of investigated OS business models
Software business concept Dual licensing Cusomization Own license
Services concept Services Hosting business
Research External R&D
Marketing Brand licensing
OS business models
Conclusion
OS business future is bit risky to predict Literature presents very sceptic, neutral and really
optimistic opinions
Future research What are the needed actions to enable OS
developers to interest to develope software licensed under other than GPL license?
Conclusion
Conlusion
My own opinion OS is great opportunity for some products Limited amount of cathedrals in the bazaar Sceptic to believe in piggybacking others results The best ideas remains
Conclusion
Conclusion – about the course
Thanks for the interesting course with professional visit-lectures
4 DLs model was great in order to get the paper ready =)
LaTex Use of %-marks Compiled result differs in different computers
References
Cusumano, M.A. (2004) Reflections on free and open software. Koenig, J (2004) Seven open source business strategies for
competitive advantage Open source initiative (2004) Open source case for business Thompson, B (1999) Linux means business Valimaki, M. (2003) Dual licensing in open source software industry. Valimaki, M. and V. Oksanen (2002) Evaluation of open source
licensing models for a company developing mass market software
Questions?
Business models
LicensesStructure of paper etc