Tuesday, October 20, 2009

Free Software - How to make money

Short answer, Can't period.

Medium answer, if you are not a software company you can make money from free software. For example Google is not a software company..it doesn't sells software..it makes money from ads. Facebook is also not a software company..it also makes money from ads. Microsoft is a software company .. it makes money by selling software. TCS, Wipro, HCL are all software services companies. So in short if your business is not software, free software is for you. Use it to decrease cost of your business...release it to kill any one making the software of that kind..or to get goodwill and mind-share of the market or to get "free developers" or to define the "standards" in your business area.

Long answer, with open source selling software is no longer an option. So throw away the idea of making software and start with thinking about the business. SAAS, Web-API or Website, Iphone App, Android App, Facebook App, etc are some of the viable options where you end up making software but not selling it and yet can make money. What API market gives you is freedom from the GPL and single place of control and the freedom to charge if you can. It is better than writing free software, hosting it and giving it for free and then putting a "donate" button on the website. If you are successful, make parts of your software free or open source..and make it useless without your service.
This is just one way..their could be millions more. Take software services for example. LGPL is a boon for the software services companies, they can get almost everything for free and then customize it and make tons of money. The problem is not everybody can do it. Any CIO who love his job will pay 100 million to TCS but not 100K to some XYZ who claims he can do the same job. TCS provides peace of mind with redundant staff, long term maintainance contract, project planning and 24*7 support. Moreover CIO doesn't wants to deal with 10 different services vendors..maybe just 1 or 2. And it is easy for established players to provide it given the open source and free nature of the software.
Web companies like google, yahoo, facebook, etc are great supporter of free software. It helps them and they don't even need to worry about GPL. Mozilla made money by putting google as the default search engine in the browser.

Google extends deal with Mozilla
91% of the Mozilla Revenue comes from Google

The point is all these companies make money from a business which is built on software but is not selling software. It is hard to believe if these companies would have existed without free software. The software business has changed in the last 10 years. From "bursting of the internet bubble" the industry has came a long way forward where people are now actually making money. It is high time that the philanthropic free software gets a makeover. GPL was written in 1989.

Top 50 software companies in 1989

That is 20 years ago. It appears to me that the context in which it was written was the following:
1) Make software open (so that user can change it and know what it is doing) and free (to make more people use it)
2) GPL to make sure that people don't make money by selling the modifications made to the open source.

20 years ago, this was a great thought. Note the "user". It was written with software people use for personal use it mind. It was written with people need "software" to use computer in mind. Both these things have changed. Instead of "user" now we have companies, instead of selling software now companies sell "services" or "ads" and may be tomorrow something else.

In today's world what would make more sense would be something which has the following properties:
1) It should cover both software and hosted service.
2) It should cover both open and free.
2) Instead of free it should be more driven by volume and profit. For example Microsoft with BizSpark provides free microsoft software for startups which have less than 1m in revenue and are less than three year old. Other example is google app engine which is free upto a given usage. I think the software/service which is open/free should also provide a model which makes it financially viable for people to contribute to it.

The reason I would like it not to be "free at all scale" is that then it is simply mockery of the system by business model. GPL is tied to a business model and that business model is no longer relevant now. Hence the need to delink GPL from the business model. And secondly I want open source to create money for the people who created it. I think software is so much relevant today that it was 20 years ago and the people who make it should get their fair share of the work they have done. Infact I want open source to be the "business/development" model where people who are good at writing software should just do that and will make money without thinking about how to market it or create business from it and the people who are good at marketing and creating business from software should do just that but make sure that they pay the people who made it possible.

No comments:

Post a Comment