Quick takeaways about open source business models:
- Dual licensing: Well, poison. Who's want to sign away their copyrights so that some company can make a buck? It's essentially proprietary software that also happens to be available open source under some as-tedious-as-possible licensing terms.
- Open core: Essentially proprietary software with an open source loss leader. Or for the supermarket chain variant of this business model: "We're opening a new supermarket! Free plastic buckets to the first 1000 customers", causing hours-long queues of people that really want a $2 plastic bucket for free. And as we've seen, it's not much of a protection against big cloud providers with armies of programmers that can easily recreate whatever proprietary juice you have added on top, adapted to their particular environment.
- Public goods: Like Linux Foundation projects like the Linux kernel or Kubernetes. Can work, but is not the direct core value of any of the companies participating. Similarly, a company in some other industry may share some code as open source in order to reduce the maintenance burden.
- Free software product: The flag bearer being Redhat. Code itself may all be open source, but a company call sell a particular version of it with support, training etc. Might not get the growth numbers and scale that gets VC's excited (as can be seen in the blog post the parent linked to), but can be sustainable.
In dual license, you offer the product alternatively under an open source license, or a commercial license. Typically the open source license is chosen to as onerous and scary as possible to force companies to buy the commercial license. And it requires you to hold all the copyrights so that you can relicense it, giving most contributors cold feet. A typical example of this is MySQL or Qt, or the various server-side licenses adopted by MongoDB etc (though those are onerous enough to not be certified open source by the OSI, but the principle remains the same).
In a free software product, the code itself is available under an open source license, often one that doesn't prevent use by companies. The product is some particular version of the code built, QA'd, vetted and supported by the vendor. The typical example being RHEL. But in addition to RedHat, this model can be used also by single-product companies.
Almost every one of these models is based on differentiated licensing. I want your software, but different features/licensing. There's really not much of a difference between open core and "dual licensing". I think for open source, there are only a few revenue models that really matter:
* Aggregators - Redhat and AWS (and cloud providers). They sell and deliver collections of open source software, driving value from configuration and easier deployment.
* Differentiated licensing - Toss all the variations on pay for something other than the GPL version or additional features into this bucket. It's a model that is rapidly becoming obsolete.
* PaaS / Saas - host it for the client. Value is delivered by better operations. Competitors often are aggregators in the form of cloud vendors.
* Support & Services - Free software, paid support, paid consulting. This limits the market to larger companies or at least people who need a much higher level of support. Competitors can be other contributors to the code base.
* App Store Delivery - I'm seeing lots of GPL software where the authors are putting the "official version" in app stores (lots of this going on in Windows) and charging for it. Competitors can be anyone who can build and deliver the app, but since many apps need a back end, the hosting of app data can be a moat.
Quick takeaways about open source business models:
- Dual licensing: Well, poison. Who's want to sign away their copyrights so that some company can make a buck? It's essentially proprietary software that also happens to be available open source under some as-tedious-as-possible licensing terms.
- Open core: Essentially proprietary software with an open source loss leader. Or for the supermarket chain variant of this business model: "We're opening a new supermarket! Free plastic buckets to the first 1000 customers", causing hours-long queues of people that really want a $2 plastic bucket for free. And as we've seen, it's not much of a protection against big cloud providers with armies of programmers that can easily recreate whatever proprietary juice you have added on top, adapted to their particular environment.
- Public goods: Like Linux Foundation projects like the Linux kernel or Kubernetes. Can work, but is not the direct core value of any of the companies participating. Similarly, a company in some other industry may share some code as open source in order to reduce the maintenance burden.
- Free software product: The flag bearer being Redhat. Code itself may all be open source, but a company call sell a particular version of it with support, training etc. Might not get the growth numbers and scale that gets VC's excited (as can be seen in the blog post the parent linked to), but can be sustainable.