Open source business models must be voluntary

Quoting: you don’t build businesses on wishes. You build them by creating value people are glad to pay for. This is what I will be looking for in 2009, value that makes me want to open my wallet.

I actually agree with something that Dana Blankenhorn said. Brandy, quickly! Lots of it!

Quoting:You build them by creating value people are glad to pay for.

And if you don't do that, it doesn't matter if the code is open or not. Conversely, if you do create value, it's irrelevant whether the code is open or closed. So the question is, what's the value? And holding the code to ransom by keeping it closed it not a value add, it's extortion.

>And holding the code to ransom by keeping it closed it not a value add, it's extortion.

Yawn. How else will you get paid for the R & D and development effort for code if there is :

a) No support need sufficient to pay it back, or b) no hardware ?

The "we make money on support" model only works on software sufficiently complex/unreliable/insecure to require expensive support.

If you have the means, talent, and desire to write great software, but no money tree and nothing to hook to it, your only choice is to hold on to the code.

I see you missed the point is dino. Funny thing is the company I work for and many others like, many of which I've also worked for do very well by not holding the code to ransom.

TA -

So --- how do they make money?

I presume that they have something OTHER than the software with value sufficient to pay for any investment in the software itself.

That is not true for every company and every piece of software.

By writing software to the customers needs. In our case that would be web applications, but it could be as easily custom extensions to FOSS applications, or custom extensions to proprietary applications (via the API... there is usually one).

The point is we provide a service, we don't keep the source code, of what we write, and extort money from the customers, the customer owns the source code, what they choose to do with it is entirely their choice. If they don't like our service, they are free to go else where.

dinoT, There are many FOSS based business that make money. Some have both a free version of their software and a paid version. Some allow single user or non-profits free use and charge the corporations. Look at HeliOS Solutions or Larry the Free Software Guy.

The traditional ways of doing business are over, Look at all the traditional business going belly up these days, and that is world wide. This computer stuff is tricky, it has changed the world and the world needed that change.

And some people just do it for love!

CP and TA:

A FOSS based business can not make money from FOSS. It must make money from support or sales of custom code, or other software/hardware. There is no money in FOSS itself.

And no, the traditional ways of doing business are not over. You cannot do business unless somebody pays you a quantum beyond your costs. That's the way it works.

HeliOS Solutions is not a counter example. Ken does not make money from free software. He makes it from installations and support. He is, more or less, the equivalent of a Microsoft VAR, except that a VAR gets a cut of software sales. Ken's business model cannot, in the long run, provide the kind of income that a VAR makes because he has no software sales. He can make inflated money on support and service so long as the total package is competitive, but. If he succeeds, others will be moved to compete. At that point, the ability to collect premium support money will begin to dissipate. Ken himself is likely to be ok -- network effects and growth can keep him in a nice business. Others, not so much.

@dino, please reread my initial statement. I spoke about value people are glad to pay for. that's what we, the company I work for, do, as indeed has almost every other company I've worked for.

From the article.

Quoting:you don’t build businesses on wishes. You build them by creating value people are glad to pay for.

I then gave you real world examples of what that value might be.

Tracy,

As Dino has already mentioned, your comment:

Quoting: And holding the code to ransom by keeping it closed it not a value add, it's extortion.

makes no sense for cases where code is the major value and there is not much other than code to provide for sufficient returns. It may be the case with your company since it seems to provide for customer specific software/service but, as Dino has pointed out, extrapolating it to all cases is poor understanding. My company, for example, is into creating software products. We do provide for incident based support but (in my estimate) that will about pay for the support and sales staff. There is no way for the engineering to keep going unless the software is paid for by the customers. Sure the API and many of the algorithms (by way of being published in journals etc) are "open" but thats about it.

All -

It's the old "every problem is a nail when you're holding a hammer" thing.

Certain software -- vertical market stuff, stuff that encapsulates lots of specialized knowledge, etc does not lend itself well to FOSS.

Two examples come to mind:

1. Tax software. There is substantial knowledge, a need to react to the laws, and a potential for serious liability. A government agency could do FOSS tax software, but who else really could?

2. Games.

There are FOSS games, to be sure -- but, the most elaborate ones, the ones that everybody wants, ain't. Games take programmers, artists, writers, all kinds of skillsets that FOSS land is not generally good at bringing together without a little moolah changing hands.

And that's without touching on moral rights issues and the like.

Quoting:A government agency could do FOSS tax software, but who else really could?

One group in Poland, at least. But, to be fair, it was only a reaction to the goverment-sponsored tax software, which is not FOSS, is crap and has a history of FOSS license violation. I don't know how they (the group, not the government) handle liability and such.

BTW: I think what TA is trying to tell is that if software is the *only* value you have, you have a problem.

Quoting: BTW: I think what TA is trying to tell is that if software is the *only* value you have, you have a problem.

So why do you say is it a problem if a company creates wonderfully good software which requires little support and continues to enhance it?

> 1. Tax software.

I'd think a tax framework could be written which allows for local laws and tax structures, but I agree that the customization for the local area would probably be a paid or government function,

> 2. Games.

Pretty much the same thing here. High quality artwork and music tend to cost money, yes.

> So why do you say is it a problem if a company creates wonderfully good software which requires little support and continues to enhance it?

As long as the company has another income stream to support this, there isn't.

jdixon -

Exactly. But that's a problem, isn't it?

You couldn't have a company staffed with creative and technical types who are devoted to just making the greatest games possible.

It couldn't make money.

The games would not get made.

Quoting: As long as the company has another income stream to support this, there isn't.

No, its a question. So far there have been only assertions that a company whose only major value is the code has problems.

>So far there have been only assertions that a company whose only major value is the code has problems.

Only assertions? I believe there is, in fact, a pretty reasoned argument:

People pay for value. A company that gives away its product, and has no other significant value to offer, cannot survive. Developing products costs money. Keeping the lights on costs money.

Check out Eazel for a case in point. Better still - find a list of thriving free software companies with nothing to offer but software.

Quoting: A company that gives away its product, and has no other significant value to offer, cannot survive. Developing products costs money. Keeping the lights on costs money.

The case I was referring to is that of companies that do not give away the code, and whose major value is code which was in response to Tracy's comment that holding on to code amounts to "extortion".

@jezuch, Actually I was seeking to discuss various ways in which one might provide value. The companies I've worked for do so by writing custom code to order, holding on to the code does amount to extortion. The point is it's irrelevant whether the base code is proprietary or FOSS.

One way in which it is conceivably possible to make money off of self produced FOSS, would be to build an extensible framework that is released as FOSS for download, and contract to extend it for different clients in ways that meet their needs (DNN is an example of a freely available template that I'm actually quite familiar with - I hesitate to call it FOSS though - as we've used it.). If the client owns the code, what they do with it is entirely up to them, it may not even be of use to anyone else, in most cases that is certainly true of what we do, even if someone wants something similar to what we've done for another client. In those cases we set up communication between the two clients, so that they can negotiate an agreement, it doesn't always get us work, but it does build trust, and where it has it has advantaged all of us.