Open source–going commercial with it

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I recently wrote a post (well, more of a ramble really) on the pros and cons of releasing a software project into the wild world of open source. My conclusion was something along the lines of it being a great thing to do, especially if you want to make money from it (not despite it). The open source movement, apart from its main point of producing useful products in the most ethical, open way possible, is also a great marketing platform.

But, you can only use it as such with,

1. A great commercialisation model,
2. A good bit of marketing savvy and,
3. Healthy respect for its true reasons for existing.

Commercialisation models for open source

I’ve been racking my brain about this, but I think I’ve come up with a reasonable list. There are some obvious answers, perhaps some less so. The only problem is that I have no real world data on what works and what doesn’t (I’d be interested to hear from anyone who does know more).

Anyway, here’s a list of my thoughts so far,

1. Donations

Yes, this is a very obvious one. Does it work? I think so, but I also think it probably takes a lot of effort and cunning to get decent results from it.

2. Customisations

Another pretty obvious one, writing custom versions of your application for specific clients (those customisations presumably being closed source). The obvious disadvantage here is that you’re having to do extra work in order to get paid.

3. Getting bought out

Not really one on which to rely. Any cliff business is risky, and it’s probably a lot more risky if it happens to be an open source example! That said, if you get lucky in this respect, well, lucky you. You don’t even have had to have thought of a way to commercialise your software—your buyer might think of how to do that for you.

4. Customer support, installation, training & certification

Paid for customer support and installation options are probably a reasonable way to go if you’re building an enterprise level piece of software, but I suspect the chances of getting small businesses or freelancers to pay for this kind of thing is rather low. They generally prefer to learn for themselves and rely on the support of the community (I know I do).

Also, going down this route is akin to corporate sales of any kind. Think long sales cycles and dedicated sales teams. Seems like hard work to me.

5. Selling binaries

Okay, this is pretty flaky at first glance. In principle, open source only demands that the source itself is available, free of charge, so in theory it is possible to make compiled binaries only available in paid-for versions (probably not all open source licences allow this, I’m not sure*).

Whilst this might be technically legitimate, I don’t think it’s really in the spirit of the thing. Most users are simply not set up to compile code. Most developers probably wouldn’t be up for it either, especially if it’s not a language with which they’re familiar.

I think there are some cases where this would be acceptable though. For example, binaries produced with a special proprietary compiler for higher performance, or packaged code that otherwise wouldn’t need compiling (e.g. PHP encoded with IonCube or similar).

In all cases though, there should always be code or binaries available that the user can run out of the box.

*Update: Of course, the licence isn’t a problem—licences only apply to the licensee, not the copyright owner. I guess I should have realised that for myself. Thanks to Dave Sherohman of NomadNet for clearing that up for me.

6. Advertising

Another dead simple one—just run advertising or affiliate schemes on your web site. The only trouble is that you either need very high traffic or need to be very clever to get this to work.

Out of the two, I’d say affiliate marketing is the one to go for, but only if you’re passionate about the product or products that you’re promoting. I even have a couple of affiliate links on this blog, although to be honest I’m not really doing anything to promote them and don’t really expect to get much from them.

7. Bootstrapping other applications

This is a good one I think. Again, it’s pretty simple. Offer your core product as open source, and offer paid-for products that give additional capabilities along with it. For example, MySQL offer an enterprise monitoring package to go along with the core database. Other examples could be plugins or skins.

8. Generating goodwill

A little like number 7 above. Just make some of your software open source and some not. The fact that you’re contributing to the open source community provides marketing and goodwill for your paid-for products.

9. Pro-versions

Selling an upgrade version of your application with extra bells, whistles, performance or whatnot is a pretty common tactic. Not much to say about it.

10. Writing open source to order

This one’s slightly unusual, but it definitely happens. Unfortunately, it’s also a little hard to control when it might happen to you. I’m referring to when a client asks you to develop a custom piece of software for them, but is also happy for you to release the software into the wild as open source.

I don’t think it happens frequently, but it definitely does happen. Clients get the benefit of having their name associated with a (potentially popular) open source project without the effort of writing the thing and combined with paid-for support and having it written to their own specification.

11. Partnership deals

Okay, this is very vague, because there are so many possible variations. A couple of examples,

• Sun have the Yahoo! browser toolbar packaged with their JRE install for Windows. And get this—you have to uncheck the tickbox if you don’t want the toolbar, not the other way around. Shonky! what would Seth Godin say?
• Mozilla get paid every time someone searches Google from the little search box in the top right hand corner of Firefox. No one has released exact figures, but Mozilla have said that they get in the order of tens of millions of dollars per year from the deal. Nice (although it would have been nicer if the deal had been revealed earlier).

12. Collateral material

This is probably one of the most promising strategies on the list. I was going to title this one ‘ebooks’, but then I realised that there’s probably a wider range of material that you can offer than that.

Anyway, essentially I mean writing and publishing ebooks and similar things (perhaps even real books?) around your product. For example, detailed tips and tricks, getting more from…, a guide to customising the code, etcetera.

This is one of the best ways to commercialise a blog, and I don’t see why it wouldn’t work for a piece of open source software. People will often pay for material in an ebook form that’s readily available elsewhere, just for the sake of having that information collected together and organised (of course, you should always tell them if that’s the case!)

Read this post on IttyBiz for a great tips on writing and marketing an ebook.

13. Hosted solutions or software as a service

Update: This one just in!

This is another fairly widely used model I think, as used by SugarCRM to name but one. It’s pretty simple—make an open source version of the software available, but also offer a paid for, hosted solution (these often come with extra features or benefits too).

I probably don’t need to mention that software as a service (SAAS) is a ver profitable model in it’s own right.

14. Paid for latest versions

Update: Yet another!

Another fairly simple one. Just offer the latest versions of your software in paid for format, with older versions as open source. I guess security and bug-fixes for all versions would always have to be free though!

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Anyway, those are my thoughts so far. Plenty to be thinking about. I’m fairly sure which I’m currently favouring for Renaissance (assuming I do end up going open source with it), and that’s to sell an IonCube powered version along with the free, open source download. Paid for customer support and ebooks could be other options.

What do you think? Any more ideas for keeping bread on the table whilst supporting the open source community?

(Note: I’ve not got my marketing hat on for this blog, but perhaps more on that side of things later).

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Tagged as: business, commercial concerns, open source