Open Source Licensing: Is it a Viable Business Model?

1 Comments Written by on October 31, 2008 | Posted in Commercialization of Intellectual Property, Software Licensing

Open Source Software Licensing in its “pure” form is not a viable business model, reported CMS Wire on a study recently conducted by the 451 Group.

According to the CMS Wire report, the 451 Group study looked at the business strategies of some 114 open source vendors, and found as follows:

-The majority of open source vendors utilize some form of commercial licensing to distribute or generate revenue from open source software.
-Half the vendors assessed are using hybrid development models of free and commercially licensed software.
-Vendors using hybrid development and licensing models are balancing higher development and marketing costs with the ability to increase revenue.
-The license used for an open source project (reciprocal or permissive) has a strong influence on development, vendor licensing and revenue-generation strategies.

So what did the 451 Group conclude about the open source model?

According to CMS Wire, the 451 Group determined that “open source as a business model is nothing but an oversimplification” and that more than 80 different combination of development models, vendor licensing strategies and revenue triggers are being by the vendors in the study. Also, the findings indicated that proprietary extensions are generating an increasing amount of revenue and “blurring the lines” between proprietary and open source software.

This article was interesting because it shed some light on the revenue models, which are successfully being used by open source software companies today. Based on this study, it appears that hybrid proprietary/open source models are increasingly the model of choice rather than relying on support services to generate income from “pure” open source software, which is in line with what I have been seeing in industry myself.

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One comment...What do you think?

  1. Posted by Sigurd Magnusson 1st November, 2008 at 10:32 pm

    Yeah, and many CMS options are thinking outside the square, so that for instance, WordPress can make money off akismet.com, and Drupal off mollom.com, thereby linking free software with a hosted useful complimentary service.

    For many though, like SilverStripe, services pay the lion’s share towards the open source CMS development.

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