Category: 1.5 Commercial Open Source

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The Commercial Open Source Business Model [AMCIS 2009]

Abstract: Commercial open source software projects are open source software projects that are owned by a single firm that derives a direct and significant revenue stream from the software. Commercial open source at first glance represents an economic paradox: How can a firm earn money if it is making its product available for free as open source? This paper presents the core properties of commercial open source business models and discusses how they work. Using a commercial open source approach, firms can get to market faster with a superior product at lower cost than possible for traditional competitors. The paper shows how these benefits accrue from an engaged and self-supporting user community. Lacking any prior comprehensive reference, this paper is based on an analysis of public statements by practitioners of commercial open source. It forges the various anecdotes into a coherent description of revenue generation strategies and relevant business functions.

Reference: Dirk Riehle. “The Commercial Open Source Business Model.” In Proceedings of the Fifteenth Americas Conference on Information Systems (AMCIS 2009). AIS Electronic Library, 2009. Paper 104.

Available as HTML or PDF file.

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The Perils of Going from Community to Commercial Open Source

The growth and corporate adoption of many community open source projects is hindered by the lack of commercial support. At the same time, well working community open source is a temptation for startups to make a buck by turning the community project into commercial open source. We can currently observe the unraveling of such a story.

TWiki is a community open source project, a successful wiki engine, and the company TWIKI.NET is trying to turn it into a commercial open source project. This post discusses some of the levers and dynamics of this process. But first, to clarify terms: Community open source is open source owned by a community with no single dominant stakeholder, and commercial open source is open source owned or dominated by a single legal entity, typically a software firm that wants earn money with it.

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Open Source is a Business Strategy not a Business Model

Following up on related discussions, another common confusion in my opinion is to think that “open source” is a business model. It is not. Open source is a business strategy, in support of a business model. You still need to know how to make money, and it doesn’t happen by giving software away for free. That is to say, you need a business model like selling subscription or implementation services.

The most common commercial open source business strategy is the “dual-license strategy” as demonstrated by MySQL, Alfresco, etc. This particular business strategy is mostly a go-to-market strategy, a way by which the commercial open source company penetrates customers and fosters the sale. I’ve blogged about this before here and here.

There is more to say, obviously, and I’m working on it. Any thoughts would be appreciated!a

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SDN: Is Open Source Competing Unfairly?

Commercial open source firms go to market trying to create an “unfair” competitive advantage that lets them win customers more easily than their competitors. So do most other companies. Commercial open source firms do this by bypassing the traditional purchasing process by getting their software into customer companies for free, before the customers even know they will need the software. But is an employee’s decision to install a piece of open source software a good decision for the company? After all, every software locks in its users, whether open source or not.

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Commercial, Professional, and Community Open Source: Resolving the Naming Confusion

As a researcher, imprecise naming bothers me. The general confusion around the terms commercial open source, professional open source, and community open source warrants closer analysis.

First my proposal, then some litmus tests, followed by a bit of history.

  • Commercial open source is software provided as open source where a single legal entity owns the rights to the software (SugarCRM, Alfresco, etc.)
  • Professional open source is software provided as open source where a dominant firm provides services around the software without actually owning it (JBoss, Spring, etc.)
  • Community open source is software provided as open source where multiple stakeholders hold the rights and no player dominates the software (Linux, Apache, etc.)

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SDN: Is there Money in Open Source Services?

IDC’s Matt Lawton recently released a new report about open source adoption:

“However, project vendors, project partners, and vendor partners need to step up and provide support and attendant services in order to move the adoption of OSS from early adopters to the mainstream. Only 12% of all projects are supported by a commercial software vendor, and, incredibly, less than 1% of the projects have attendant services sourced from service providers.” […]

Wow! Open source is in the enterprise, and only 1% of those off-the-shelf software components have attendant services for them?

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