Scribd
Upload
30 views3 pages

Open Source Business Models

There are many business models for open source software, including: 1) Non-profit organizations that obtain funding through donations and grants to develop free open source software for public benefit. 2) For-profit companies that develop proprietary or premium versions of open source software and sell support services. 3) Companies that host open source software and make money through advertising or software subscriptions.

Uploaded by

azamfc256
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
30 views3 pages

Open Source Business Models

There are many business models for open source software, including: 1) Non-profit organizations that obtain funding through donations and grants to develop free open source software for public benefit. 2) For-profit companies that develop proprietary or premium versions of open source software and sell support services. 3) Companies that host open source software and make money through advertising or software subscriptions.

Uploaded by

azamfc256
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

OPEN SOURCE SOFTWARE BUSINESS MODELS COMPILED BY LABAN

Open Source Business Models

Business models or strategies for open source, depending on the mission, goals, licensing, context, and
numerous other factors or variables, e.g. geography, competition, market.

Quite often the number of business models, strategies, or tactics related to the development and
deployment of open source software solutions depends on the profit motive driving particular individuals
and organizations. For example, consider the following. There are:

 non-profit organizations or communities that are not interested in making huge profits from their
free and open source software (FOSS) solutions, but are more interested in simply creating and
distributing high quality, free software and solutions that will be of benefit to as many people as
possible.
 then there are those individual or organizations that want to profit from the development,
distribution, and retail sales associated with various open source products and commercial add-on
modules they have created and released using somewhat restrictive licenses; and
 there are also numerous individuals or organizations that want to make a living and generate
profits by offering a wide range of services in support of the open source solutions, e.g.
installation, training, maintenance.

Over the past decade, numerous entrepreneurial individuals and organizations have tackled the idea of
how to make money out of open source software. The idea that the only way of generating revenue from
open source software is by providing support services - has become outdated.

There are now a wide variety of business strategies, tactics, or business models being employed by to
generate revenue from open source software. For example:

 Many non-profit organizations obtain funding to support the development and distribution of
their free and open source software (FOSS) solution from membership dues, subscription fees,
donations, and/or grants.
 Many for profit organizations are paid for producing enhanced professional or enterprise versions
of an open source product governed by very restrictive licenses. They may also offer add-on
modules or bundle the open source software within other hardware and software products they
offer.
 Other for profit organizations charge for a wide range of services, e.g. consulting, installation,
documentation, training, system enhancements, software maintenance & patches.

Many other innovative companies are emerging and learning how to profit from the open source
marketplace, e.g. news organizations, marketing firms, hosting, software-as-a-service (SAAS), open
hardware, etc.

Other Examples of Alternative 'Open Source' Business Models

The following is a list of some of the more common alternative forms of open source business models
repeatedly described in numerous published articles:

Software Support Business Model


• In this model, companies sell certified distributions of open source software along with a range of after-

1
OPEN SOURCE SOFTWARE BUSINESS MODELS COMPILED BY LABAN

sale professional technical support services. Some companies provide immediate access to the latest
patched and certified version of the software to their paying customers only.

Software Services Business Model


• In this model, a company may sell installation, maintenance, documentation, and training services for
the open source software.

Software as a Service (SaaS) Model


• In a SaaS model, customers pay for the hosting, streaming, and delivery of the open source software
solution on a managed set of servers offering cloud-based services.

Ad Ware Business Model


• This is a variation on the SaaS model. The user doesn't pay anything for use of the open source
solution; the advertiser pays instead, e.g. Google, ZDNet.

Consulting Services
• Under this model, a variety of consulting services are offered by a company. For example, a company
may provide a range of management consulting, implementation, and training services related to the use
of open source solutions by specific domains, e.g. healthcare, finance, manufacturing.

Proprietary Software Model


• In this model, a company offers a more closed, proprietary licensed version of a similar open source
software solution. This protects them against some of the risks associated with developing products that
use open source GPL licensed software.

CAUTION: Under an open source GPL licensing, if the open source software is linked to your company's
proprietary software, the proprietary software also becomes open source. Consumers buy commercial
friendly open source licensed software to avoid this potential problem.

Premium Software Model


• In this model, a company sells premium commercial software add-on modules or applications in
conjunction with the open source software product, often packaging both together, e.g. Jaspersoft.

Dual Licensing Model


• This is a variation of the proprietary software business models just described. A company may release
the code they own under both a standard commercial license, as well as an Open Source License. Using
this approach, customers can be attracted to a no-cost and open-source edition, then later agree to acquire
a more robust, multi-user commercial enterprise edition.

Hybrid Model
• There is a related, hybrid model in which a vendor forks a non-copyleft software project then adds
closed-source additions to it and sells the resulting software. After a fixed time period, the company may
release the patches or enhancements back upstream under the same open source license as the rest of the
codebase.

Platform Integration Services


• with the introduction of service-oriented architecture, many companies no longer buy software from one
particular vendor. They build software using components from different vendors and integrate them to
best meet their unique business needs. There are numerous risks and issues that need to be considered
when mixing and matching open source with proprietary products.

2
OPEN SOURCE SOFTWARE BUSINESS MODELS COMPILED BY LABAN

Hardware Integration Model


• In this model, hardware companies may bundle open source software into their product. The software is
free, you just buy the box it runs in., e.g. Android smartphones. This may allow the hardware company to
significantly lower the cost of their products.

Indirect Services & Accessories


• Companies may choose to provide indirect services and accessories for open source systems. This may
include providing news and information, selling books, marketing, training materials, hardware
accessories, t-shirts, e.g. O'Reilly Associates, Open Health News.

Non-Profit Business Models


• Many non-profit organizations are not interested in making huge profits from their free and open source
software (FOSS) solutions, but are interested in simply creating and distributing high quality, free
software and solutions that will be of benefit to as many people as possible. However, they often need
some level of funding to support their efforts. Many open source software projects are supported by a
"sugar daddy", e.g. Firefox has Google; Eclipse has IBM; and VistA has the VA. Some establish
foundations that require membership fees. Some pursue charitable grants or simply ask for donations to
support their work. Sometimes the user community may come together and pool their resources to help
develop a desired feature or functionality.

Independent Contractors/Developers
• A growing number of programmers in the open source software community offer their services as
independent contractors to develop, install, maintain, or enhance open source software for others. You'll
run across many of them on SourceForge, GitHub, or particular community web sites, e.g. Drupal,
Wordpress.

Public Domain Model


• Governments or other non-governmental organizations may develop software internally or hire a
contractor for custom in-house modifications to software, then release that code under an open-source
license.

Defensive Business Model/Strategy


• Some companies may choose to pursue an open source business strategy or model to gain access to
innovative new ideas, software code, or to reduce software development costs and timeframes. It also
allows them to take a portion of market share for services and support for popular open source solutions.
It may also allow them to join a community and beak a monopolistic hold a company may have on a
particular area, e.g. web browsers, server software, etc.

Remember, a company doesn't have to use just one business model. They can mix-and-match models as
they see fit, moving to a more profitable model as needed.

You might also like