Open source does not, at first glance, appear to go hand-in-hand with monetization, but this is based on a common misconception. Because Open Source Software (OSS) is commonly referred to as Free Software, many wrongly assume that this means it is free of cost. In fact, within the context of open source, “free” refers to the freedom of open source, as users are free to inspect, derive work, redistribute and run any OSS.
Due to these varying definitions, there is some navigation that open source providers must undertake to get the balance right between open source and monetization. Many believe open source should remain free of cost to stay in the true spirit of OSS. However, some companies are designing paid-for solutions that assist OSS users by providing a service that makes accessing OSS easier – therefore helping the freedoms of the open source users.
There are, of course, some companies that have monetised OSS by removing the freedoms of the software and placing them behind a paywall. However, many organizations have also successfully monetised OSS without compromising the spirit of the software, and there are four main methods for doing so.
Pay for convenience
Anyone is able to run and use open source software on their computer. Yet not everyone has the requisite skills or understanding to operate OSS. One barrier to accessing this software is the cumbersome process of installation.
A solution presented by some organizations is to offer convenient access to OSS, either by designing an easy installer or having it pre-installed onto their systems. Raspberry Starter Kits are an example of this process, as users could buy SD-Cards with the NOOBS system pre-installed, which sped up the process of accessing NOOBS.
When conducted this way, monetization opens a revenue stream by providing a service for users who are too busy to undertake a complicated installation process. In addition, solutions like this enable companies to maintain the integrity of OSS as there are no paywalls to the software itself.
Pay for support
The open source community is based on open access to knowledge and prides itself on being a collaboration space for everyone. Therefore, it is common to see questions asked and answered by the community, especially regarding problems that arise while running said software.
There is, however, no set rule for deadlines for replying, and some users can be left waiting for answers indefinitely. Furthermore, the responses tend to be left on a “best effort” basis. Without a firm solution, the software can leave many users frustrated and overwhelmed.
Seizing the opportunity to offer a paid-for service, some companies have sought to provide a solution to this through an answering service that resolves enquiries within a set timeline. Known as support models, this form of monetised service enables any OSS user to use the software successfully, regardless of coding experience. Red Hat was built on this model, and it provided support to large organizations using open source, so they didn’t have to use more expensive proprietary software. It is easy to see the financial value of this model due to the price IBM paid to acquire Red Hat in 2019: $34 billion.
Pay for open source management
As the technology continues to evolve, OSS is becoming increasingly complex and harder to operate. Consequently, many find they need a highly specialised team to understand and fine-tune their internals and utilise OSS.
One option is to hire this team yourself – however, this can be costly and take a long time to source suitable candidates. As a result, some find a preferential option is to employ companies who can offer this service to them.
Using an external company to maintain or fully manage open source projects ensures the code functions at a high level behind the scenes, so it never impedes an organization’s work, and ensures companies have access to sufficient open source expertise to maximise the use of the technology. For example, Ovo Energy required a flexible solution that could scale rapidly in order to support the applications that collect and analyse the data from Ovo’s smart meters across the UK, but lacked the internal resources to manage this themselves. Utilizing an external company provided a cost effective way for Ovo to focus their energy developing these applications, while having the open source infrastructure that underpins them maintained. This model can be beneficial to businesses, as it allows them to run efficiently without compromising the quality of their open source projects.
Open source projects can be highly complex and elaborate. Some projects maintain a core of open source, which requires active maintenance work and significant amounts of financial expenditure on upfront payment and investment for additional features.
As a result, some companies may develop these features outside the open source project and under their own proprietary software. Open-Core models grant paid access to these new features and enable the maintenance of the open source project without the high cost for the company.
Open-Core is similar to the “freemium” model in the gaming industry, where a game is free to download but has in-game purchases that upgrade particular elements or allow access to unique game modes.
Several companies have adopted this model. It is worth noting, however, that many believe this form of open source somewhat defeats the purpose of open source software because it utilizes open source but does not contribute innovation back into the software. Despite the Open-Core model’s ability to keep a user’s freedoms intact, it stifles the collaborative nature of OSS as a large percentage of the innovation happens behind closed doors. Due to this, many prefer the first three monetization models as they align more closely with the spirit of open source.
A balance can be struck when monetizing open source. In order to maintain its integrity, a project must be open to all users so they can freely invest their time and resources. Yet, companies offering services that make accessing and contributing to these projects simple - or services that improve the quality of the projects - uphold the true identity of open source. Monetization models that follow these lines not only serve to bring money to their owners but can also benefit the overall quality and use of the software.