2024: Domino Containers - The Next Step. News from the Domino Container commu...
Open Source Business Models
1. Motaz K. Saad
msaad@iugaza.edu.ps
IT Forum3
12 -13 May 2009
Islamic University of Gaza - Palestine
2. Outline
Open Source Software
License Goals
Open Source Licenses
Open Source Software Freedoms
Open Source Business Models
Can I make Business from Open Source (Can I Relicense)?
Conclusions & Recommendations
2
8. Free software must respect 4 freedoms:
The freedom to launch software for any use.
The freedom to study the way software works and thus to
freely access its source code.
The freedom to redistribute and sell copies.
The freedom to enhance software and publish the results.
8
9. Free of use vs. free of charge:
Open sources licenses fulfill 10 criteria
Free redistribution
Access to the source code
Right to change the source code and develop derived
works
Respect of the integrity of the author’s source code.
Forbidding discrimination against persons and groups
Forbidding discrimination against fields of endeavor
Universality of the rights attached to the program.
Protection of the program, and not of the product
Lack of contamination of other products containing a
protected source code
Technological neutrality. The license cannot discriminate
against any technology or style of interface. 9
10. License Goals
Ensure certain code remains open source
Reserve control
Build a commercial coalition
Encourage third-party marketplace
Challenge competitors
10
11. OSI Approved Licenses
Academic Free License Lucent Public License (Plan9)
Adaptive Public License Lucent Public License Version 1.02
Apache Software License Microsoft Public License (Ms-PL)
Apache License, 2.0 Microsoft Reciprocal License (Ms-RL)
Apple Public Source License MIT license
Artistic license MITRE Collaborative Virtual Workspace License (CVW License)
Artistic license 2.0 Motosoto License
Mozilla Public License 1.0 (MPL)
Attribution Assurance Licenses
Mozilla Public License 1.1 (MPL)
New BSD license
NASA Open Source Agreement 1.3
Computer Associates Trusted Open Source License 1.1
Naumen Public License
Common Development and Distribution License Nethack General Public License
Common Public Attribution License 1.0 (CPAL) Nokia Open Source License
Common Public License 1.0 OCLC Research Public License 2.0
CUA Office Public License Version 1.0 Open Group Test Suite License
EU DataGrid Software License Open Software License
Eclipse Public License PHP License
Educational Community License, Version 2.0 Python license (CNRI Python License)
Python Software Foundation License
Eiffel Forum License
Qt Public License (QPL)
Eiffel Forum License V2.0
RealNetworks Public Source License V1.0
Entessa Public License Reciprocal Public License
Fair License Ricoh Source Code Public License
Frameworx License Sleepycat License
GNU General Public License (GPL) Sun Industry Standards Source License (SISSL)
GNU General Public License version 3.0 (GPLv3) Sun Public License
GNU Library or "Lesser" General Public License (LGPL) Sybase Open Watcom Public License 1.0
GNU Library or "Lesser" General Public License version 3.0 (LGPLv3) University of Illinois/NCSA Open Source License
Vovida Software License v. 1.0
Historical Permission Notice and Disclaimer
W3C License
IBM Public License
wxWindows Library License
Intel Open Source License
X.Net License
Jabber Open Source License Zope Public License
zlib/libpng license 11
12. The copyleft
The "reversed "c" in a full circle" is the copyleft symbol.
It is the copyright symbol mirrored.
Unlike the copyright symbol, it has no legal meaning.
Copyleft is a play on the word copyright to describe the
practice of using copyright law to remove restrictions on
distributing copies and modified versions of a work for
others and requiring that the same freedoms be preserved in
modified versions.
12
13. kinds of licenses can be identified
according to their permissiveness
13
17. Can I Relicense? Example 1
Open Open Open
Source Source Source
Code Code Code
Copy & Paste
Copy & Paste
My code My code My code
require the originally licensed code to remain requires all
sub-licensing under a
open but that the code can be (under certain combined works to
proprietary license
conditions) used in a larger, proprietary remain open
licensed work.
!
AL MPL/LGPL GPL 17
18. Can I Relicense? Example 2
Open Open Open
Module 1 Source Source Source
Code Code Code
Module 2 Proprietary Proprietary Proprietary
Code Code Code
require the originally licensed code to requires all
sub-licensing under a
remain open but that the code can be used combined works to
proprietary license
in a larger, proprietary licensed work. remain open
18
AL MPL/LGPL GPL
19. Can I Relicense? Example 3
Open Open Open
Module 1 Source Source Source
Code Code Code
Proprietary
Code
Proprietary Proprietary
Module 2
Code Open Code
Source
Code
require the originally licensed code to remain requires all
sub-licensing under a open but that the code can be (under certain combined works to
proprietary license conditions) used in a larger, proprietary remain open
licensed work. (same as example 1)
! 19
AL MPL/LGPL GPL
29. Microsoft’s Perspective on Open Source
“We at Microsoft respect
and appreciate the
important role that open
source software plays in
our industry. We respect
and we appreciate the
passion and the great
contribution that open
source developers make
in our industry… That is not
what you have always heard
from us, and I recognize
that….”
Brad Smith, SVP, General Counsel & Corporate Secretary, Microsoft Corporation
OSBC (Open Source Business Conference), San Francisco, 3/25/08
29
30. Business Models
The revenue model:
Value creation: definition of the offer generating the highest
willingness to pay.
Capture of the value created through:
The sale of rights (sale of patents, licenses or even client files).
The sale of products.
The sale of services.
The cost structure:
Definition according to the cost categories (raw materials,
marketing, R&D, administrative) and their types (fixed or
variable).
Identification of the company’s specific skills which give a
competitive advantage.
Determination of the capital sources.
30
31. Typology of different business models
The services or
The value added
indirect valorisation
distribution model
model
Business
Model
The double licenseor
The mutualization
commercial open
model
source license model
31
33. The service model
The simple service model is commercialization of services that have no
link to a specific product.
The simple service model relies on two opposite levers; extending the
number of services offered, and Specializing the services offered to
develop a competitive advantage.
The indirect service model is commercialization of services associated
to software developed or packaged internally. The success of this model
relies on two levers;
increasing the size of the market by preferring a wide diffusion of the
solutions
increasing the monetization rate by offering services to a maximum number
of users.
The services offered are of different types like surveillance, technical
assistance, tests and grantees, training ….
An example of a company offering a service model: Spikesource. The
Spikesource Company is specialized in the testing, the certification and
the integration of LAMP open source software and the different
applications that may use it.
33
34. The value added distribution model
The value added distribution model consists in selling a
standard version of an existing product.
The “sale” is generally made as a yearly subscription to the
product and a set of attached services. This model offers a
triple client value:
Save time
Transfer of the risks related to the use of open source solutions,
from the client to the firm
Tested, certified and guaranteed versions.
Indemnification in case of serious problems.
Technical assistance services integrated in the packaging.
Regularly obtain new patches and updates
34
35. The value added distribution model
Red Hat. Red Hat specializes in
the distribution of Linux. It
reported for the 2006 financial
year revenue of $401 million and a
net income of $59, 9 million.
RH offer is made of 2 versions
The Enterprise version, which is
tested and whose interoperability
is warranted.
The «community» version
(Fedora). 35
36. The double (Dual) license model
The double license model relies on a discrimination of the
users.
Double license system:
An open source license for the standard product
A license that is more protected which comes with a guarantee and is
generally linked to a product that offers more functionality.
The open source license has to be proliferate copylefted because
every enterprise wishing to integrate the source code to a larger set
of products and keep it under proprietary license will then have to
buy the commercial version of the solution offered.
This solution allows the combination of the free licenses’
advantages
creating a community of programmers
fast diffusion to benefit from network effects
36
38. The double (Dual) license model: Examples
• PENTAHO, The leader in Open Source Business Intelligence (BI).
– In September 2006, Pentaho acquires the Weka project (exclusive
license and SF.net page).
– Weka will be used/integrated as data mining component in their BI
suite.
– Weka will be still available as GPL open source software.
– PENTAHO offers 2 editions: Community edition, and BI oriented
edition.
• Rapid Miner, the world-wide leading open-source data mining solution due
to the combination of its leading-edge technologies and its functional
range.
– It is available in two versions: community version which licensed under
GPL, and Enterprise version which licensed under proprietary licenses.
– Community version is supported by community while the Enterprise
version has official support.
– Rapid – I also offers a set of services such as professional training,
consultation, data analysis. So, it can fall in service / value added
business model too.
38
39. The mutualization model
• The mutualization model rests on the successive
development of several modules.
• Consists in the development of a relatively simple
version of the basic product and the subsequent
development of modules on demand.
OpenTrust is an open
source company
specialized in
information security
software.
It internally develops a
basic PublicKey
Infrastructure module.
39
43. Conclusions & Recommendations
We presented the importance of open software in software
industry growth and acceleration.
Presented open source business models.
Discussed the importance of choosing software licenses for
different business models.
Guide IT graduates and professionals to the way to make their own
business. (make business from open source).
43
44. References
Dahlander L. ,“Appropriation and approbility in Open Source Software”, International Journal of Innovation Management Vol.9 No. 3
pp. 259-285, Sept. 2005
Gosh Rishab Ayier, MERIT (2006), “Economic Impact of FLOSS on innovation and competitiveness of the EUICT, sector”,
http://ec.europa.eu/enterprise/ict/policy/doc/2006-11-20-flossimpact.pdf
Goulde, M. et Mulligan, J.A. (2007), “How to Turn an Open Source Product into a Commercial Business”, Forrester Research, January
23th 2007
Goulde, M. (2005), “Open Source Usage is up, but Concerns Linger”, Forrester Research Paper, June 23th 2005
Iansiti Marcoand Richards Gregory L. (2006), “The Business of Free Software: Enterprise Incentives, Investment, and Motivation in
the Open Source Community”, Working paper, Harvard Business School, http://www.hbs.edu/research/pdf/07-028.pdf
J Aaron Farr, Making Open Source Work, ApacheCon Europe 2008. Sep 2008
Krishnamurhty Sandeep (2003), «An Analysis of Open Source Business Models», Working paper, University of Washington ,Bothell
Lerner, J. and Tirole, J. (2000), “The Simple Economics of Open Source”, NBER Working Paper, No.7600
Lerner, J. and Tirole, J. (2001), “The Open Source Movement: Key Research Questions”, European Economic Review, 45:819-826
MuselliL. (2007), “Business models and the payment of open-source software publishers. Mutualisation: an original business model
”Conférence“ The diffusion of FLOSS and the Organisation of the Software Industry: From Social Networks to Economic and Legal
Models”, Nice-Sophia Antipolis, May 31th and June 1st 2007
Pal, N. et Madanmohan, T. (2002), “Competing on Open Source: Strategies and Practise”, MIT Working Paper
Schiff Aaron (2002), «The Economics of Open Source Software: A Survey of the Early Literature», Review of Network Economics,
Vol.1, Isssue1- March 2002
Stürmer, M. (2005), «Open Source Community Building», Working Paper, Open Source Community, MIT,
http://opensource.mit.edu/papers/sturmer.pdf
Välimäki, M. (2003), «Dual Licensing in Open Source Software Industry», Système sd’ Information et Management, 8(1), 63-75
Walli, S., GynnD. Etvon RotzB. ,(2005): ”The Growth of Open Source Software in Organizations”, Optaros White paper,
http://www.optaros.com/en/publications/white_papers_reports
XU, J., GaoY., Christley ,S. et MadeyG. (2005), “A Topological Analysis of the Open Source Software Development Community”,
Proceedings of the 38th Hawaii International Conference on System Sciences, 2005
faberNovel Consulting 2007, “Business models of open source software and free software: a few landmarks”, September 2007
J Aaron farr, “Making Open Source Work”, September 2008.
J Aaron farr, “Making Sense of Open Source Licenses”, ApacheCon Europe 2008
44
