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WEB/DIGITAL How does open source make money? (if it does)

Discussion in 'Business Models, Niches, Industries' started by Byakko, May 20, 2017.

  1. Byakko
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    Byakko Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Do open source frameworks like Django, node.js, meteor js, etc... Make any money? And if they do, how do they do it?

    Open source as a business model is something that I don't really understand, I would really appreciate if someone could explain it.
     
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  2. Digamma
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    Digamma Gold Contributor Read Millionaire Fastlane Speedway Pass

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    The project itself usually doesn't make any money.

    People working on it profit from being experts in it, and from having a tool that is better than they would have working isolated.

    Some projects have commercial entities associated with them which profit from professional services, training and support.
    For example, SensioLabs with Symfony.
     
  3. V8Bill
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    Not trying to be a dick but I actually found your question interesting so I quickly googled it and found lots of great insights and answers.

    The best answer I think is "By far the most common method of income is to provide a service alongside the OSS product." - source
     
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  4. Byakko
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    No problem, I know that through google I can find answers to almost any question. But the advantage of doing this through this forum is that I might be able to find someone who can speak from their personal experience.

    Recently I was faced with the opportunity of building framework, I know there is a need for a framework like that, what I don't know is how frameworks are monetized since almost all of them are open source.
     
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  5. Andy Black
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    Andy Black Any colour, as long as it's red. Staff Member Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I remember liking the book "Free" by Chris Anderson when I read it a few years ago.
     
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  6. Alxander
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    Sometimes people open $ bounties for fixing a bug. Other than that I don't know, donations that will be split?
    Oh yeah and I know someone who does consultancy for bigger projects who uses his open-source project.
     
    Last edited: May 20, 2017
  7. loop101
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    You can write books about how to use the software, and/or provide support services for companies using the software. Redhat makes a lot of money on services. Indie developers like Josh Owens, who works with Meteor, charge $600 a hour. Sometimes a big company, like Google, will hire the developer for prestige/support. For example, the guys who wrote VIM and Postfix work at Google. There are a lot of ways to make money with open-source software.
     
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    Remember that saying everyone keeps bringing up about selling shovels to miners (or something like that)

    Well the open source guys are making the shovels and going mining.

    They create a tool, give it away for free (and let people do what they want with it). Then they provide a service, using the tool they created. After all, if you create something, you are probably the world leading expert.
     
  9. AndrewNC
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    I used open source software for one of my businesses. Took me 2 weeks of ripping my hair out to learn how to do it.

    They offered to do the install for $149.
     
  10. Byakko
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    I really liked this analogy, it fits really well.

    But doesn't it sound like quite a long shot to make a company around the ideia of building an open source framework? It probably takes a lot of time to be able to make money out of it.
     
  11. Napoolion
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    Meteor also sells very easy way to host along side with their framework.

    For example WooCommerce is free on wordpress, but they sell a lot of extensions, what sometimes feel pricey.
     
    Last edited: May 21, 2017
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  12. mentalic
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    If you're referring to open source frameworks (like Django, Metero etc) then companies usually make money out of the following
    - Events
    - Seminars
    - Training material (eg books, online courses)
    - Donations
    - Certifications
    - Providing highly priced development services

    If you're referring to open source software like Wordpress, Drupal etc then services is the way to go most of the times (eg you get Wordpress installed on a secure server for an X amount of money) or paid plugins. Most of the open source software businesses have the two options
    1. Here is the source code, here are the docs and here is the community forum, now go figure out everything on your own
    2. We will install the source code and help you whatever for you for an X amount of money plus you get support from our super experienced team (instead of relying on 'community forum' )
     
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    You probably wouldn't make much money developing an open source software. But, I know someone who built a 7-figure business reselling open source software to consultants and businesses.
     
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  14. Byakko
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    That sounds really interesting. When you say reselling did he built a product on top of the open source software and sold it?
     
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    Take Discourse - opensource forum software. It makes now $120k/mo. The business model they have is giving great software for free but if you want to get it hosted by them then it costs from $100/mo to $400/mo.
     
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    In this free e-book, the author John Mark Walker describes an interesting point of view about quality open source software as an viable business model. Very interesting to read. One quote from the e-book: "Some think that services and support are the only way to build a business on open source software, and this book is an active attempt to counter that."

    Link: Learn the Secrets of Building a Business with Open Source

    What do you think about this?
     
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  17. Byakko
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    That looks really interesting! I'll definitely check that out. Thanks!
     
  18. jasoncuellar123
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  19. fastbo
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    Redhat Linux.

    Free to download. Millions use it and pay zero.

    Only thing the company sells is support/integrations.

    And they sell $2.4 Billion a year worth of it!

    Edit: Often with Enterprise software the initial purchase price is far less than the annual cost supporting the employee's software/hardware needs.


     
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  20. Millenial_Kid5K1
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    Your comment makes me curious what percent of open-source developers actually have some sort of end-game, or if they're mostly hobbyists programming with their spare time.

    Even if they're all trying to get rich, that wouldn't make it much different than what we've seen in the video game community. Tons of people hoping to make that 'breakout' game, shooting for that lottery. In fact, only about 260 steam games have sold over 1 million copies(guesstimating). Given that there are now almost 20,000 products on steam, your odds of getting a return in the millions of dollars on a product that will likely take you over a year to make are about 1.3%.
     
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  21. Alexlewter
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    I think you've got a few options:

    Give away the software, but charge for support. For B2B, this would seem to be a decent model, especially for big businesses, where the idea of running a server without support, is unthinkable. Basically, we're talking about RedHat, and companies like that.

    Give away the software, but lock it down anyway. This is basically the Android model, Android is free and Open Source, but Google Play isn't, so while Google can simply give away Android, what provides a lot of the value, the Google apps and store, are not Open Source, so OEMs pay for them.

    Use software to provide a paid-for-service. Basically this is like GitHub, git is free of course, but GitHub wrapped a nice service around it and charged money for it. I don't care if git is free or not, I pay GitHub to provide me with the service, not the software.

    Ultimately though, those business models are not going to work everywhere, if the next Call of Duty was free, but they charged for support, that's not going to work and everyone knows it.

    While I do use a lot of Open Source stuff, most of the software I make cannot be Open Source because it doesn't suit any of the business models which you can use for Open Source.

    I think in a sense, we should stop treating Open Source like it's some kind of freedom issue, because it's not. There is nothing wrong with wanting to charge money for your work, and if to do that, we need to keep our source closed, then so be it.

    All the Open Source business models suit larger companies, so if we insist on Open Source we're basically saying that there is no place for smaller software companies, the cottage industry of software development. Ads don't work for niche products, but charging $99.99 most certainly does.

    If you give away the software, you're going to need to make money elsewhere, that might be through support, it might be through ads, it might be by providing locked down products on top of it, but at some point money is going to have to leave the pocket of someone, and end up in the pocket of someone else. I think in a very real sense, closed source products are actually kind of a very honest way to do that.

    Closed source is simply, I make something, someone wants it, they pay me for it. Done. I don't really see how it's different to building a TV, no-one expects to download the schematics and firmware source code.

    Open Source as a business is about finding workarounds either via support contracts, ads, or some other way to make money. Not all businesses can run on ads, not all businesses can burn up VC money. Some of us actually need to charge for software.
     
  22. Chromozone
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    For B2B software just have a look at how Salesforce did it. Marc Benioff wrote a book called Behind The Cloud, which is very insightful.

    For a lot of open source software, it's not that the whole software is open source (e.g. Google's search algorithms), but it allows developers to create a lot more functionality to solve their own needs = more customers = more money.

    I think anyone who is creating software should really consider open source from the outset. It's very important.
     
  23. ClaverCasley
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    I think we are on the same path. This might help.
     
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  24. Byakko
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    Did a quick scan through the contents, looks awesome! Thank you, I'll definitely read it!
     
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  25. ClaverCasley
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    It's been a while...How's research? Found this validated based on the paper I sent you.

    Neverware: Wikipedia and Official Website.
     

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