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The incompatibility of open core and profit

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Re: The incompatibility of open core and profit

#21

Post by ergonaught »

> Open core is a relatively new model

Sure, if twenty years ago is relatively new. Since that doesn’t seem to be the way “modern devs” prefer to think regarding “age”, I’m going to have to stop reading here.

Ex: MySQL was, technically, open core 20 years ago, they weren’t the only ones, and it didn’t turn out to be a major disaster despite some stupid decisions.

Amazon may make more money with MySQL than anyone else on the planet, but “open core” certainly was compatible with a sustainable business.

Re: The incompatibility of open core and profit

#22

Post by Entinel »

josephcsible wrote: post #18
Entinel wrote: post #9

There is no incompatibility between Open Core and profit. There is an incompability between FOSS and profit but the motives of "Open Core" are transparent and always have been. It's always been a marketing scheme to entice people into using the full product once your business scales and I don't see the problem with wanting people to buy-in if they are using in at that scale.. I also think the "solutions" presented he…

> There is an incompability between FOSS and profit Red Hat says hi.

Red Hat uses a very similar business model providing managed enterprise features on top of open source.

Re: The incompatibility of open core and profit

#23

Post by nonethewiser »

j6zauas4gz wrote: post #11

I might be willing to buy that open core/open source and the standard VC funded "startup" esq business model are incompatible. But I don't think open core and open source are incompatible with profit or with sustainable business models. Sure, the nature of open source might preclude you from breaking into the millions of dollars of revenue / funding (I dont buy that though, to be honest) but even if thats true those…

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 same “problem” of open source maintainers not being able to make a living off open source. It feels like we’re in denial about free software being free.

Re: The incompatibility of open core and profit

#24

Post by imiric »

I'm puzzled by this article.

It criticizes the open core model by listing some hypothetical ways that it can skew incentives, but completely ignores and delegates to a footnote all the success stories it has made possible. It's missing the entire point of why open core, _when done right_, is a good thing for both users and the business.

In the case of sanity.io, how is it beneficial to the user that the editor is OSS, when their data—the most valuable part of a CMS—is kept behind a proprietary service they need to subscribe to? It's using OSS as a hook to get users tied into a proprietary product.

Secondly, the source available model is indeed not open source, nor, more importantly, free software. Users have no assurance that the software they're using is actually built from the source they have access to. Crucially, they have no rights to modify, distribute or even build the software. This is the antithesis of free software.

Releasing only OSS components is also hardly useful. Sure, developers might benefit from using certain libraries, but the core value of the full product remains locked away. There is no incentive for companies to keep developing these components, since the business doesn't rely on them directly.

All of these approaches are much inferior to the open core model.

When done correctly, with an open core, users have access to a _fully functional and featureful_ product that exists standalone as free software. Only certain features, typically intended for advanced users or enterprise customers, are offered as a commercial product. This can be accomplished in many ways: cloud SaaS, commercial extensions, priority support, etc.

The crucial aspect of making open core successful is that the OSS product should be, as the name suggests, _core_ to the business. This way the incentive will always be to develop this component, which will benefit both your OSS users and paying customers.

There are many companies who've done this successfully: GitLab, Elastic, Redis, Hashicorp, Grafana, etc. These are loved by OSS users and customers alike, and they're certainly not "relatively new in the grand scheme of business".

The reality is that open core is the most successful model to make free software sustainable. There are far too many projects that failed because the developers weren't able to monetize them properly. It's worth celebrating that we have as many successful OSS projects as we do today, and in large part this is thanks to the open core model.

Re: The incompatibility of open core and profit

#26

Post by twelvechairs »

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…

People exist who do open source for a living outside the open core bubble. Take a listen to this video [0] from Paul Ramsey who has built a successful career working on PostGIS (database for geospatial information). It covers his thoughts on the future of open source (spoiler: its not open core).

[0] http://blog.cleverelephant.ca/2019/05/foss4g-keynote-2019.ht...

Re: The incompatibility of open core and profit

#27

Post by kgodey »

I've been thinking about this problem a lot, since I'm trying to figure out how to sustain our open source project. Our project is complex enough that it requires a few full-time people to maintain it. Our current funding comes from a grant, which is not sustainable in the long term.

I'm philosophically opposed to open core because tying revenue to proprietary features seems like the wrong incentive structure, I can't imagine how you'd avoid conflicts of interest. Plus, I'm building open source software because I believe in user freedom, so proprietary features leave an icky taste in my mouth.

My theory so far is that the open core model makes sense for VC-backed companies that are targeting enterprise customers. Most open core products seem targeted at enterprises, not small businesses or individuals. I assume this is because only enterprise deals can make the amount of money that VCs expect from investment. Of course, this leads to enterprise features being prioritized, which sucks for smaller organizations or people using the software.

I'd like my project to focus on meeting the needs of everyday people. I think we need more consumer focused open source software that is so well designed that it will displace proprietary SaaS software, where the incentive is to provide a service that customers get locked into. Software should be a tool, not a service.

The only project that I can think of doing a great job here is WordPress. WordPress is very easy to use, Automattic builds it, but they are not the only ones to make money from it, and I think the incentives are well-aligned.

I'm hoping I can find a similar funding model where I can build a sustainable project for everyday users without going after the enterprise market and all the sacrifices that entails. We are a non profit now and that keeps our incentives aligned with users.

Re: The incompatibility of open core and profit

#28

Post by jrm4 »

This article seems pretty devoid of basic microeconomics? All of this is pretty simple. Unless you go non-profit (which is probably a better move for a lot of these things) you have to stare directly in the face of the following: What are we willing to tell the people -- you can't have X unless you pay for it.

in the long run, you can only get paid for what has a marginal cost; which usually ain't code OR data; so then it's "labor." That's support, maintenance, customization, someone you can call to get help, etc.

Re: The incompatibility of open core and profit

#29

Post by bodecker »

> It’s simply not economically viable to continue adding functionality to a product that does not generate any revenue.

I'd gently push back on this. If the primary purpose of the open source component of an open core project is to acquire new free users (top of funnel for paid users), then it provides some value. Any work spent keeping the open source experience good is essentially marketing spend and may make sense depending on the ROI. Agreed the incentive is to eventually get those users converted to paid users, but that's not inherently a bad thing IMO. Acknowledge there are better and worse ways to go about incentivizing users to convert to paid.

Overall I enjoyed the post. The latter half felt a bit less concise but intro was strong.

Re: The incompatibility of open core and profit

#30

Post by [deleted] »

esperent wrote: post #12
dasil003 wrote: post #8

Earlier quoted context omitted.

Yes, but that read is a bit cynical. I think it's totally reasonable to create some tool that any college student or tinkerer can use to get a cool idea off the ground, but also want to get paid when it's leveraged to significant financial success. Pure open source is nice, but in practice it means corporate sponsorship or ramen lifestyle, both of which, it seems to me, have worse downsides than the loss of ideologic…

> Yes, but that read is a bit cynical Is it? I've found that all open core projects I've used over time gradually lock more and more features away with each update and usually end up being more expensive than the closed source alternative. The latest example is RocketChat which a year ago had a couple of features and one or two gentle reminders to upgrade to enterprise, but now it's getting really naggy. And when I d…

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