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How to make money from open source software

Paul Rubens | Sept. 3, 2015
Ditching the GPL may be the key to running a successful commercial open source software business.

Open source illustration

Last month we looked at the argument that the open source business model is flawed because selling maintenance and support subscriptions doesn't provide companies with enough revenue to  differentiate their products from the underlying open source software or to compete with the sales and marketing efforts of proprietary software companies. The argument was advanced by Peter Levine, a venture capitalist at Andreessen Horowitz.

But Levine's argument only holds – if it holds at all – for companies commercializing open source software using GPL-type licenses.

That's the counter argument put forward by Daniel Raskin, a former Sun Microsystems executive who is now vice president of strategy and marketing at San Francisco-based open source identity and access management software company ForgeRock.

"Peter Levine talked about conventional open source business models using the GPL license where you can't monetize software so you struggle to raise money to invest in innovation," Raskin says. But he points out that companies can use other open source licenses which do allow the monetization of software.

Not all open source licenses are created equal

For example, the source code to ForgeRock's products is licensed under the Common Distribution and Development License (CDDL), a FSF-approved free software license produced by Sun Microsystems, based on the Mozilla Public License (MPL). What's interesting about this license is that software executables compiled from this source code can be offered under a different license: in ForgeRock's case, a commercial license. There is a requirement that any executable must be supplied with the source code.

ForgeRock offers annual major releases of its software which are made available to developers under a commercial license free of charge for use in non-production environments, along with the CDDL’ed source code. Anyone is entitled to take the source code and compile it themselves and use it in a production environment, although they would have to develop their own bug fixes and security patches themselves.

Subscription customers are allowed to use the software in production environments, and get minor and maintenance releases which include bug fixes and security patches, as well as support and legal indemnification. Only they get the source code for these minor and maintenance releases.

"So we give one release a year away, but for every other release you have to be a paying customer – so the subscription monetizes the software itself," says Raskin.

And that, he says, is the key point: the GPL business model makes open source software hard to monetize, but other models, such as ForgeRock's – based on the CDDL for the source code and a commercial license for the executable – do allow for monetization of open source software. The source code for interim releases is "open" – but only to those who pay for a commercial license to the software.


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