Greed is good: 9 open source secrets to making money

Low-cost marketing, hard bargains, keeping competitors in check -- profiteering abounds in the open source community

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Open source profiteering strategy No. 5: Tapping open source to launch a competitor

The open source license makes one thing simple: Starting up a rival. All it takes to create a new company from scratch is access to the source code repository. After you download it, you can hang your shingle and start competing from the first day -- heck, the first few minutes.

Starting up a competitor, though, is far different from sustaining the effort. Downloading the code is easy, but gaining even the basic competence takes months. Becoming a true expert can take years. Really competing means building a team that can offer real expertise.

This is why competition only appears in rapidly burgeoning areas where demand far exceeds supply. When interest in Hadoop exploded several years ago, new startups appeared quickly. All began with the same Hadoop core, but they quickly began to specialize by offering their own special add-ons.

Open source profiteering strategy No. 6: Open-source to keep competition in check

Competition in the world of open source is a two-way street. While anyone can come along and snarf source code in seconds, they are often bound by a license that forces them to contribute all of their innovations back. If the new competitor does anything clever, all of the old teams also gain access to everything. Some of the most popular licenses like the GPL guarantee that everyone must share alike.

This share-and-share-alike rule makes it hard for any upstart to challenge an effective leader. Any neat innovations that come from the upstart can be absorbed by the leader, making it hard for the upstart to gain any real traction. The rule that makes it easy to start up a competitor also makes it impossible for the competition to flourish.

Michael Tiemann, one of the founders of the early open source powerhouse Cygnus, once said presciently, "Fortunately, the open source model comes to the rescue again. Unless and until a competitor can match the 100-plus engineers we have on staff today, most of whom are primary authors or maintainers of the software we support, they cannot displace us from our position as the 'true GNU' source. The best they can hope to do is add incremental features that their customers might pay them to add. But because the software is open source, whatever value they add comes back to Cygnus."

While this can sound like an evil monopolist speaking, the idea has limits. If the leader does a bad job, invests in silly enhancements, or squanders its revenue on worthless add-ons, a new fork can steal the momentum. It's not impossible.

This rule limiting the power of forks doesn't hold if there are two legitimate reasons for the separate code bases to exist. If there are two distinct uses for the software, two different groups can easily specialize in both. The competition can survive if it serves a different and distinct market.

Open source profiteering strategy No. 7: Open-source to drive a hard bargain
While many open source licenses are flexible, some are increasingly Draconian. One of the newest, the Affero GPL, insists that the code must be shared if the code is merely running on a public server. The license emerged after some in the open source community noticed that some developers were benefiting from open source software but avoiding the requirement to share their own contributions. They weren't "distributing" the software, just running it, and the GPL only forced sharing when you "distributed" the software.

Some developers find this requirement easy to follow. They may be just experimenting or merely offering a free service. Sharing their own improvements doesn't put them at a competitive disadvantage. But many in business find the rule more trouble than the cost of buying a commercial license. The strength of the license helps nudge them to support the product.

The AGPL is a popular choice for many of the newer projects like the various NoSQL data stores. MongoDB, for instance, adopted the license for its core tool: the database. The company chose to protect the drivers, though, with the more lenient Apache license to encourage people to link to its core offering.

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