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The incompatibility of open core and profit

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Re: The incompatibility of open core and profit

#81

Post by throw_human »

yuhaa98 wrote: post #60
throw_human wrote: post #48

Earlier quoted context omitted.

The license is only granted to natural born persons. The only people who don't grasp this simple fact are the ones who have never worked in a corporation. They very much own and run things legally. Which is why when the liquidation man comes a knocking you don't lose your shirt for owning stock in Enron.

Now let's say somebody in a corp uses the software for some minor task. Are they allowed? Is it the person or the corp "using" it? If the latter, let's say me and my buddy both use the software individually, legally. We sit in the same room. Ok? We are together working on some non-profit project not involving the software. Ok? Now we use the software for it. Ok? Niw we make a profit. Ok? Where do you draw the line? R…

> Now let's say somebody in a corp uses the software for some minor task. Are they allowed? Is it the person or the corp "using" it?

Not allowed.

>If the latter, let's say me and my buddy both use the software individually, legally. We sit in the same room. Ok? We are together working on some non-profit project not involving the software. Ok? Now we use the software for it. Ok? Niw we make a profit. Ok?

All allowed.

The answer to all those questions are pretty simple and straight forward. I'm not sure why you're trying to muddy the waters here.

>RMS would be pretty opposed to these ideas.

RMS has failed catastrophically in his goal of letting users have access to the source code of the applications they use. I don't really care for what he has to say.

Re: The incompatibility of open core and profit

#82

Post by jrochkind1 »

> When you break down the go-to-market strategy, it’s easy to see that open core is just freemium with extra steps. The goal is to get as many people reliant on the open source product as possible so they can eventually be monetized.

> The free product you use is propped up by the deep pockets of venture capitalists, and at some point, rent is going to come due. Open core companies need to make a significant return for investors or it will not have been worth it. It may not be tomorrow. It may take 5 years. But rest assured, the pressure will take hold at some point.

> When that inevitably happens, the most likely outcome is that the open source product will stagnate and be “good enough” while the majority of development focus goes towards the money maker. New features only get added to the cloud product.

> Of course, companies will make promises that this will never happen. But these promises exist to assuage the concerns of the current moment, not to guarantee a future state. It’s important to keep up appearances after all.

Re: The incompatibility of open core and profit

#83

Post by jrochkind1 »

armchairhacker wrote: post #20

Open core is the only way to really monetize open-source software. You see this issue with core-js, you see it with mold linker, which went "open core" in a desperate attempt to get more funding. At the end of the day we must remember that people need to make money and most simply don't have the time or desire to make open-source for free. And until more people actually get adequately paid for making open-source, ope…

The story the essay paints is that for "open core" to be profitable, eventually the company will have to make the "free" version basically unattractive compared to the paid one. It is described as basically a "freemium" model.

So what is the difference between this and if it just weren't open source at all? I see the marketing benefit to the producers of having people consider it "open source", even though eventually they'll be locked in and have to pay for the value they want.

What is the benefit to the consumer? Real question. I'm not certain there is none. Perhaps the open core being truly open source, at least other developers can look at that code as a learning resource, or even fork it into something else? (Note that requires it being really open source, that is legally forkable under a really open source license that will allow it to achieve a life of it's own. Entities trying to do "open core" where the core is licensed under a non-OSI-approved license... we could talk about that). I could be persuaded that makes it better than if it were just proprietary license altogether? Anything else?

Re: The incompatibility of open core and profit

#84

Post by jrochkind1 »

ThePhysicist wrote: post #74

Open core makes sense to simplify the sales funnel, especially in areas with a strong open-source culture. Most data engineers are quite skeptical towards closed-source software, so packaging something as open-source makes it easy for people to interact with it. Then, if companies already use the tool it's often an easy pitch to sell the enterprise version. Look at Hashicorp for example, people invest hundreds or tho…

> So the value of open-core is that companies can get locked into a product without knowning it and without you doing any real sales effort.

I see the obvious value to the people selling the software!

Is there any value to the consumer, or is it basically just a trick?

Re: The incompatibility of open core and profit

#85

Post by gitgud »

Another sad fact, is some open-core projects reject user contributions that add features rivalling the paid product... as you'd expect I guess

Open-core is a red flag to me. Don't expect the OS product to get better over time, more often it gets worse...

Re: The incompatibility of open core and profit

#86

Post by mooreds »

blakeburch wrote: post #19
mooreds wrote: post #2

Interesting look at a tough problem (OSS business models). I'm not sure I buy the solutions, but it sure doesn't hurt to take another look at the issue.

Author here. Would love to hear what solutions you would suggest! I only mentioned those I'm aware of that I find admirable (which is not the same thing as them actually working).

I don't have any solutions, unfortunately. I have written some thoughts here: https://www.mooreds.com/wordpress/archives/3438

But I feel like we need a new model of economics to get the incentives right. Zero marginal cost goods are a new thing.

Re: The incompatibility of open core and profit

#87

Post by ThePhysicist »

jrochkind1 wrote: post #84
ThePhysicist wrote: post #74

Open core makes sense to simplify the sales funnel, especially in areas with a strong open-source culture. Most data engineers are quite skeptical towards closed-source software, so packaging something as open-source makes it easy for people to interact with it. Then, if companies already use the tool it's often an easy pitch to sell the enterprise version. Look at Hashicorp for example, people invest hundreds or tho…

> So the value of open-core is that companies can get locked into a product without knowning it and without you doing any real sales effort. I see the obvious value to the people selling the software! Is there any value to the consumer, or is it basically just a trick?

I mean you get software for free, isn't that value? I know e.g. tons of people / companies using Terraform that get enormous value out of that without ever paying for it. Personally I run Gitlab CE for my company and that also gave me tons of value for free, so I don't think it's a trick.

If you curtail your software so much that no one can use it without paying you won't get much traction, you have to provide something that's useful enough for 90 % of the users without paying.

Re: The incompatibility of open core and profit

#88

Post by jrochkind1 »

ThePhysicist wrote: post #87
jrochkind1 wrote: post #84

Earlier quoted context omitted.

> So the value of open-core is that companies can get locked into a product without knowning it and without you doing any real sales effort. I see the obvious value to the people selling the software! Is there any value to the consumer, or is it basically just a trick?

I mean you get software for free, isn't that value? I know e.g. tons of people / companies using Terraform that get enormous value out of that without ever paying for it. Personally I run Gitlab CE for my company and that also gave me tons of value for free, so I don't think it's a trick. If you curtail your software so much that no one can use it without paying you won't get much traction, you have to provide someth…

I'm talking about the scenario you describe where the free version is meant to lock in the customer and funnel them to the paid version.

I mean, you just said: "companies can get locked into a product without knowning it and without you doing any real sales effort." You can see how that sounds like trying to trick the consumer? But you don't see trying to get companies locked into a product without knowing it as a trick?

I guess thats the normally quiet part out loud. As a customer/consumer, getting tricked into getting locked into a product, where you intentionally try to make the free version _not_ good enough for me (but not obvious to me at first) so I have to go to the paid once locked in -- which is what the OP is describing too, I think you accurately described it -- this isn't feeling like a benefit to me?

But ok, maybe there's some benefit, let's go with that for a second. That benefit of the "freemium" model, the free initial offering, is there with or without the free initial offer having an open source license.

The reason to actually give it an open source license (or something you claim is open source) is just because it's good marketting, it makes it even easier to lock companies into the product without knowing it, because of their wrong assumptions about what open source means?

Re: The incompatibility of open core and profit

#89

Post by [deleted] »

jrochkind1 wrote: post #88
ThePhysicist wrote: post #87

Earlier quoted context omitted.

I mean you get software for free, isn't that value? I know e.g. tons of people / companies using Terraform that get enormous value out of that without ever paying for it. Personally I run Gitlab CE for my company and that also gave me tons of value for free, so I don't think it's a trick. If you curtail your software so much that no one can use it without paying you won't get much traction, you have to provide someth…

I'm talking about the scenario you describe where the free version is meant to lock in the customer and funnel them to the paid version. I mean, you just said: "companies can get locked into a product without knowning it and without you doing any real sales effort." You can see how that sounds like trying to trick the consumer? But you don't see trying to get companies locked into a product without knowing it as a tr…

[deleted]

Re: The incompatibility of open core and profit

#90

Post by DannyBee »

ahepp wrote: post #54
nonethewiser wrote: post #23

Earlier quoted context omitted.

If your value can be completely replicated by cloning your repo and self hosting then I think that’s maximally useful for open source but leaves no reason for you to exist. Meanwhile if you can open source your software and protect your profits then your software isn’t actually that valuable. I suppose there may be some exceptions but generally speaking I think it’s an inverse relationship. And it’s basically the sam…

Aren't dual licensing and support contracts kinda solutions to these problems? They're certainly not perfect though.

For the latter, Not everything has a high enough recurring engineering cost to make reasonable money.

Lots of things simply have high non recurring initial developmemt cost.

Lots of things are also done enough at some point. Not everything requires constant new things.

In these cases the main value over replacement is upfront dev cost of whatever features they need (not what you provide)

That is probably not going to make you money, even if it took you a long time, as it is a fairly fixed cost

open source also sucks at making products rather than projects, and then complains they can't often make money doing it. That is actually true outside open source too.

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