Abstract: This article present a particular business model for commercial open source firms, called the single-vendor open source model. This model has long dominated venture capital funding for open source software firms, contributing to the long-term sustainability of open source. As such, it is of high economic relevance. It is also an excellent example to show how open source licensing and related strategies really are just tools in the design of a business model and not philosophies.
When the Open Source Initiative defined open source, it focused only on the license, and ignored the process. Smart entrepreneurs quickly discovered that they could provide to the world their product as open source code and benefit from it, while strictly controllling the process to keep competition at bay. This is called single-vendor open source.
Single-vendor open source is not closed source, not even “the new” closed source. The following 2×2 matrix illustrates the distinction between license and process:
In this talk, I explain the single-vendor open source business model (also: multi-licensing, open core) and in particular its intellectual property strategies. This is the slide deck of a previously posted video.
In this video, I explain the single-vendor open source business model (also: multi-licensing, open core) and in particular its intellectual property strategies. This talk is partly a reaction to the recent licensing changes by commercial open source firms and the resulting confusion. An upcoming article will go into more detail next year.
It is common to see members of the open source community at large bash companies that use an open core model to make money. I have always found that curious, because the open source community is not against making money, but many are against making money using this particular approach. Just why?
I’m at my Ph.D. student retreat, following the Open Core Summit, a commercial conference on the use of open source strategies by product vendors, on Twitter. From afar, it appears that the attack on the definition of open source has made it to the conference. This is regrettable, but possible because of a root problem with the open source definition as defined by the Open Source Initiative (OSI): It is about the licenses only. Only on the side, in the open source initiative’s mission statement does it say something about process:
I thought I’d illustrate how I’d solve the current licensing conundrum of single-vendor open source firms like MongoDB and Elastic using some graphics. In short: While open source application vendors can still dual-license, open source component vendors (like the companies just mentioned) need to triple-license to get the benefits of open source yet keep their competitors at bay.
As you may have noticed, the move away from approved open source licenses to commercial almost-like-open-source licenses by single-vendor-owned open source projects has created a lot of bad press for the vendors behind such software. I don’t really understand this, because for all that I can tell, a triple-licensing rather than just a dual-licensing approach could have solved their problems. Let me explain.
I’m pretty frustrated by some of the discussion around the recent relicensing decisions by commercial open source companies. A fair bit of it seems confused to me, and I think this is mostly due to commentators not understanding the purpose of community for the vendor. So I decided to write a hypothetical pledge for venture-capital backed companies that those can adopt to be clear about their intentions. Then, future behavior doesn’t come as a surprise. Non VC-backed companies may want to tone down the return-on-investment verbiage. With that:
Life is exciting in commercial open source land. On Tuesday this week, another commercial open source vendor relicensed its product while at the same time disavowing the open core model, which they call a tiered approach to their business. This disavowel piqued my interest, not because the open core model is good or bad, but because the argument seemed confused to me and illustrates how important it is to understand your users and the resulting market segmentation.