[sdrinf]

There was a pretty dense discussion on the first option at Stackoverflow: http://stackoverflow.com/questions/5069791/challenge-maximiz...

The most viable target market for self-hosted products are still entreprises ; deployment via virtual images might be the most feasable solution for all parties involved.

Second-best option, specifically for eg. PHP, might be compiling the code into executables (via eg. https://github.com/facebook/hiphop-php ), and distributing distro-specific executables.

Re: 3rd option, the specific worry about distributing code in any form isn't piracy (as pointed out by firstprimate, those aren't your customers); rather, blatant ripoffs engaging in marketing-only competition using a rebranded version of your own product.