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Problems With Open-Source Business Models

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Re: Problems With Open-Source Business Models

#41

Post by john_moscow »

tinyvm wrote: post #34

I strongly disagree with the hypothesis raised in the article. First , most open source companies these days are Ventured Back ( Elastic , CockroachDB, MongoDB etc..) meaning the core of the issue isn't "AWS" not paying license fees or people creating tech on top of Open Source , it's VCs who want their money back times ten. Companies like MongoDB/Elastic have raised hundred of millions and yet are still not profitab…

VCs don't care about profits anymore. Their bet is on getting hockey stick growth using tricks good enough not to spook the uneducated retail investor (that often involves selling dollars for cents) and then dumping the hot potato into the public market.

It isn't long-term sustainable and it will result in a major correction one day, but that's the game currently.

Re: Problems With Open-Source Business Models

#42

Post by ghaff »

zzzcpan wrote: post #36
ghaff wrote: post #22

Earlier quoted context omitted.

You can absolutely charge for a product that is based on an open source project. A simple example is you charge for support of an open source project. However, you cannot tell users that they can't use the (unsupported) open source bits for commercial purposes without paying you. Doing so would not be allowed under any approved open source license.

> However, you cannot tell users that they can't use the (unsupported) open source bits for commercial purposes without paying you. Doing so would not be allowed under any approved open source license. OSI approved open source that is. And you can tell users anything you want actually. What you can't do with OSI approved open source license is choose a license not approved by OSI, doesn't matter what it says. But OSI…

The SQLite distinction is because it's public domain which the OSI doesn't consider open source mostly because "public domain" can have a somewhat funny legal status. https://opensource.org/node/878

So, yes, you can have an open source license that isn't OSI approved. However, leaving aside a few edge cases like public domain, there's pretty wide acceptance of OSI licenses as the population of significant open source licenses.

[ADDED:In practice, the FSF's list of free software licenses and the OSI approved license list line up pretty closely--with the exception of PD+source. If someone wants to argue that the FSF's list is the one we should go by, I'm not really going to argue.]

I do think it is potentially appropriate to have thoughtful discussion over whether the current open source definition is too narrow but I also think it is useful to have a generally agreed-on definition.

Re: Problems With Open-Source Business Models

#43

Post by cryptonector »

The best open source business model I've seen yet is SQLite's. That business model goes as follows:

  0. produce something very widely useful
  1. wait for it to become essential
  2. create a consortium and profit from the dependence bred by #0
Granted, bootstrapping that is really really difficult.

Re: Problems With Open-Source Business Models

#44

Post by ghaff »

kemitchell wrote: post #27
MrTonyD wrote: post #3

I've been working in Open Source for a long time now - decades. The problem I see is that so many rich and wealthy companies (and their billionaire owners) are the big beneficiaries of open source. Look at Spark, Hadoop, Linux, gnu tools and others - who uses them at a large scale? It is the wealthy companies who avoid paying salaries for the development of those tools. So I've become convinced that we should disting…

The difference between where we think the advantage of open source goes and the reality of who it advantages, overall, is the root of a great deal of confusion and helplessness. Your point reminded me immediately of this article from late last year: https://redmonk.com/sogrady/2018/12/21/cycles-oss/ The article's reasoning struck me as fundamentally sound, but it began with the false identification of open with the p…

This post by Stephen Walli is also good: https://medium.com/@stephenrwalli/there-is-still-no-open-sou...

I think Stephen probably coined the "There is no open source business model" expression a couple of years back.

Re: Problems With Open-Source Business Models

#45

Post by stingraycharles »

cryptonector wrote: post #43

The best open source business model I've seen yet is SQLite's. That business model goes as follows: 0. produce something very widely useful 1. wait for it to become essential 2. create a consortium and profit from the dependence bred by #0 Granted, bootstrapping that is really really difficult.

The problem with this model is that quite a few of these open source companies are funded by VCs. In this case, a “consortium” is just never going to cut it, revenue-wise.

The most profitable way appears to be to offer a cloud-hosted solution, and herein lies precisely the problem with AWS et al providing these services by taking the OSS software for free.

Re: Problems With Open-Source Business Models

#46

Post by davidw »

To have a viable business, you need to figure out what sort of scarcity you're going to take advantage of:

https://journal.dedasys.com/2007/02/03/in-thrall-to-scarcity...

If the software is open source, the software itself is not scarce, so it makes it a bit trickier to figure out.

Re: Problems With Open-Source Business Models

#47

Post by EGreg »

Once you begin with the premise of “I need an open source business model”, it leads you down a path of “I need to monetize my project” rather than “I need to build a product that delivers value”

And where do the resources come from to hire people and build it?

Re: Problems With Open-Source Business Models

#48

Post by EGreg »

john_moscow wrote: post #41
tinyvm wrote: post #34

I strongly disagree with the hypothesis raised in the article. First , most open source companies these days are Ventured Back ( Elastic , CockroachDB, MongoDB etc..) meaning the core of the issue isn't "AWS" not paying license fees or people creating tech on top of Open Source , it's VCs who want their money back times ten. Companies like MongoDB/Elastic have raised hundred of millions and yet are still not profitab…

VCs don't care about profits anymore. Their bet is on getting hockey stick growth using tricks good enough not to spook the uneducated retail investor (that often involves selling dollars for cents) and then dumping the hot potato into the public market. It isn't long-term sustainable and it will result in a major correction one day, but that's the game currently.

I think this is finally a very insightful comment about a common unspoken approach in the VC industry.

Re: Problems With Open-Source Business Models

#49

Post by eruci »

I was pondering this very question as I just launched an open source reverse geocoding/geolocation name service API ( https://3geonames.org/api ) whose business model consists upon selling a nicely packaged server AMI on AWS.

It works well both ways, in the sense that those who are capable coders may download and configure/install the software themselves.

Some others will just skip the hassle and buy the Marketplace version.

It is a win-win situation, insofar as someone does not take the time to repackage it and sell a competing version on the AWS Marketplace or some other sales channel.

I have not figured out that part yet. Any suggestions?

Re: Problems With Open-Source Business Models

#50

Post by tracker1 »

MrTonyD wrote: post #3

I've been working in Open Source for a long time now - decades. The problem I see is that so many rich and wealthy companies (and their billionaire owners) are the big beneficiaries of open source. Look at Spark, Hadoop, Linux, gnu tools and others - who uses them at a large scale? It is the wealthy companies who avoid paying salaries for the development of those tools. So I've become convinced that we should disting…

You do that and companies just switch to a comparable and freer platform... From linux to BSD, from Mongo to X... etc. In the end, a lot of these changes are to stop resellers from building a larger business on the open-source version that competes with their own open-core model.

In the end, they probably should have had those provisions to begin with, but were more concerned about early growth and first to market.

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