Making money from OSS
Now we get to the part that the corporate members of the audience are interested in - how to make money off this stuff :) This is coming from Mark Webbink, Deputy General Counsel at RedHat.
As to "can you make money"? At this point, Mark popped up a slide showing RedHat revenue growth, which is now over $100M annually. Interestingly, their revenues started to trend up again in 2003 when they went to subscription licensing. In fact, 70% of the revenue is from subscriptions, 30% from services. Most of the subscription revenue is Enterprise based.
How you build a business model depends on which license (style) you choose - GPL or BSD. taking GPL first:
- Must include source
- All redistributed code must be GPL
- No restrictions on copy, modify (etc)
- No binary only (proprietary) code
- No per user (etc) fees
And the BSD:
- Does not requires source
- No need to push everything under BSD
- May impose other conditions
- May be embedded in proprietary systems
- May charge license (etc) fees
Retail model - not used extensively anymore, Redhat, Suse, (etc) have moved off. Did not provide scalable revenue, did not appeal to enterprise buyers.
The Loss Leader model: Early RedHat distro model to get mindshare, and now used by IBM (Eclipse) and other large vendors. Mostly used by OEMs. What about Dual Licensing? That's how MySQL used to do business (GPL or binary only). The license varies at licensee's choice. Allows a proprietary license for binary only uses. Experience? Creates market confusion (which license do I want/need? Why do I need to pay?) SleepCat software is seeing this now.
Where is it at now? The bundling model (i.e., services and subscriptions). Have to be creative about what you are charging for based on the license. You can charge for warranties, or "other" services so long as you don't interfere with downstream rights. So you create a bundle and charge a subscription license for the convenience of bundling. You can bundle technology instead of a service: TiVo, for instance. Typically in embedded apps.
Bundling with patents? Not really likely with respect to the GPL. With BSD, possible. The GPL, with its downstream obligations, makes it unlikely. What about a membership model? Mandrake used this model when retail wasn't working for them - somewhat similar to public radio funding.
What about the "Free Riders"? This is inevitable with Open Source models. You get non-developing distributors, non-contributing consultants - and not all enhancements go back to the community.
