1. How to Make Money with OSS – Business Models T-76.651 Seminar on Distributed Product Development Helsinki University of Technology Arttu Heikkilä 2004-DEC-07

2. Introduction Open source software communities have understandable amount of knowledge, motivation and resources Open source ideology is widely pontificated by Stallman, Perens, Raymond  OS religion/ideology Backround

3. Ideology is against the business attitude Anti-business organizations founded by ’OS founders’ e.g. GNU, FSF GNU GPL license is totally against the business Backround

4. OS License Most of OS uses GPL GPL cannot be combined with other OS license Backround

5. Business model Business model needed to convert the technology to economic value. Business model describes the core value creating logic of the organization OS license plays key role in business model Backround

6. Markets needs OS business models ” One of the common concerns fo entrepreneurs and investors are potential ”business models” that enable for-profit firms to take advantage of free or open source software ” (Cusumano, 2004) Backround

7. Business vs. OS communities Goals of free software ideology and business do not match What kind of OS license should be selected? OS is interesting in business point of view, OS communities are against business Motivation

8. Goal of the research A literature research Which business models seem to be suitable for small software companies? This paper do not try to list all possible money making methods, but the basic ones. Also, this paper does not describe the business models for hardware manufacturers. Research question / Method

9. Paper structure Introduction OS Licenses OS Business models Discussion Conclusion Paper structure

10. OS Licenses Public domain Ideal for commerializing Rarely used GPL and LGPL Most used Virus –effect ”distribution is trigger” -loophole OS Licenses

11. OS Licenses cont. BSD Can easily be taken within business University of California has to be mentioned Artistic Not widely used Option if wanted BSD-styled but less restrictive than GPL MPL / NPL leaves more rights for the original author Good option in business point of view OS Licenses

12. OS Licenses - conclusion (Valimaki and Oksanen, 2002) OS Licenses

13. OS Licenses - conclusion If business is: Software development with help of OSS BSD or artistic OSS Public domain (difficult to find suitable) GPL OSS cannot be used (virus-effect) Outsource the R&D MPL/NPL (GPL) OS Licenses

14. OS Business models - selection Thompson (1999) Research Service Customization OS business models

15. OS Business models - selection Strategies by Koenig (2004) Optimization Dual Licensing Consulting Subsription Patronage Hosted Embedded OS business models

16. OS Business models - selection Classifications by Open source initiative (2004) Support Sellers distribution, branding, after-sale services Loss Leader Widget Frosting Drivers/interfaces etc Accessoring books, coffee cups, t-shirts etc OS business models

17. External R&D Idea The whole internet becomes your R&D and QA Idea does not work, it’s ideal Slower than internal R&D Difficult to control OS business models

18. Dual Licensing (Valimaki, 2003) OS business models

19. Dual Licensing Wide distribution by ”poison pill” Some basic right (view, use, modify, redistribute) is restricted Glorified business model by articles Needs balancing between ideology / business Examples: MySQL, Sleepycat software OS business models

20. Consulting - Customization Idea Consulting in using OS Customization of current OS products for specific purpose Clear logic of money making Consulting and services markets are rising OS business models

21. Services – support and maintenance Idea Money from media dirstribution, branding, training, consulting, custom development and post-sales support ”Support sellers” Customers do not want to pay from Code refactoring documentation Example: Cyclic, Cygnus, Yggdrasil OS business models

22. Hosting Idea Rent the software (do not distribute / sell) GPL license not in charge before distribution Enables to piggyback from large amount of OSS Examples: Amazon, Google, salesforge.com OS business models

23. Brand licensing Idea Make product open, but leave the rights of product trademarks and related IPRs for original author Companies have to pay when using rights to the trademarks / IPRs Not a business model for small company (difficult) OS business models

24. New license Idea Possible to create some new, contrivance license to piggyback others effort Developers are suspicious Do not write your own license if possible OS business models

25. Classification of investigated OS business models Software business concept Dual licensing Cusomization Own license Services concept Services Hosting business Research External R&D Marketing Brand licensing OS business models

26. Conclusion OS business future is bit risky to predict Literature presents very sceptic, neutral and really optimistic opinions Future research What are the needed actions to enable OS developers to interest to develope software licensed under other than GPL license? Conclusion

27. Conlusion My own opinion OS is great opportunity for some products Limited amount of cathedrals in the bazaar Sceptic to believe in piggybacking others results The best ideas remains Conclusion

28. Conclusion – about the course Thanks for the interesting course with professional visit-lectures 4 DLs model was great in order to get the paper ready =) LaTex Use of %-marks Compiled result differs in different computers

29. References Cusumano, M.A. (2004) Reflections on free and open software. Koenig, J (2004) Seven open source business strategies for competitive advantage Open source initiative (2004) Open source case for business Thompson, B (1999) Linux means business Valimaki, M. (2003) Dual licensing in open source software industry. Valimaki, M. and V. Oksanen (2002) Evaluation of open source licensing models for a company developing mass market software

30. Questions? Business models Licenses Structure of paper etc