Free Software Licenses and business models
We speak here of one of the most common themes in the world of free software: free, ok, but I like it the ?
often happens that customers would switch to me for advice on how to choose a license over another, but in reality what they ask about the strategy “business”. The first few times I said “tell me your business strategy, I will tell you that licenses are available given the components you want to use.” But I realized very quickly that it is a classic hen-egg problem .
The first egg or the egg?
Often, neither option. Or both. Like a puzzle, you should start from the few known points. Almost it never starts from a situation totally virgin. Almost always you have a minimum of project sketchy, but a prototype. Sometimes there is not even a real product on the market that make you want to “open source”. Then the choice depends largely on external constraints; or by the desire to undo what has already been done, if the external constraints do not allow us to follow the road that would take.
In the jargon is called “ inbound ” (input) to define the existing software and licenses, software that will put in our work, and “ outbound ” (output) for the software we distribute and license that we will use for this distribution.
Something new, something old, something borrowed, something red
The license terms inbound may require that the software is derived under a certain category of license or licenses (outbound), or they may even exclude the licenziabilità software under one or more incompatible licenses. Therefore, any decision must necessarily start from a recognition of what’s already there, to see who it is, it must be thrown and if it threw what must go with it.
If the software is entirely developed by our contractor, no problem. Or is there? In theory it is possible that someone (an intern, a development environment, a library that was convenient and that you have forgotten) has not placed in the code something other, which is under a license, the terms of which are incompatible with the outbound license. Depending on the size of the project and of his seniority, or the fact that it was purchased by a third party (perhaps after the acquisition of the company that had created it), this information may not be directly available. In which case there are tools to analyze the source code , including Black Duck is the most famous and complete, for a fee, and others free. These tools return a more or less accurate, which is a good starting point.
To put it in technical terms, it is always necessary to make a minimum of control activities, which often is called “ due diligence technique”, to find out before what if it turns out after will weep bitter tears.
We choose the license, no business model, no, what?
The models most popular are: dual licensing , open core ( freemium ), subscription + customizations and (sorry the abuse of English), “I hope that I manage.” The last will not talk.
Dual licensing
The model “dual licensing” is gone very fashionable in the past, it was quite throat to outside investors ( VCs ) because it seemed the simplest solution. Have the benefits of free software and allowed to monetize as if it was proprietary software. Bingo!
Let us add that in the boom of technology companies was at least one successful example: MySQL AB, which with the same name database sales champion in the dotcom boom , it was bought by Sun Microsystems for two billion dollars. The idea that the trick could be repeated did tempting to many.
The operation is simple: same software, two licenses . The first is a free software license. I invade the market, distribute at no cost, create a name, create network effects, people develop on my product, I do become palatable. I also distribute it under a proprietary license. Why should one pay for something that is already available? To get assistance? Guarantees? Updates? No, that is the model “subscription” (see below). Here we are talking of a proprietary license.
To run this model, the free software license must be a copyleft license. The stronger the copyleft, the harder it is to use a proprietary product. So those who want to use the product with a license outbound owner must necessarily obtain a permit further, a ‘ exception to copyleft.
The model has two weaknesses: no matter how strong copyleft, its effects unfold on what can be considered “commodity”. Therefore it is necessary that the software incorporating both inseparable from the built, or is inefficient decouple the two systems to make them independent.
The second weakness is that to have the possibility to grant exceptions to the copyleft, you must permission to all holders . In a distributed development, it is difficult to obtain such a permit held by a single entity, because hardly a third invest in a product that others will exploit. But even so, it is necessary that the contributor signs a special agreement, assignment (“Contribution Assignment Agreement”), which gives the copyright on contributions, receiving in exchange an unlimited license. Not a very attractive to most. So you end up back in a development model “in silos” in which all the work is still on the shoulders of just one.
An example of the failure of this model, which led to a “forking” (division) of the project OpenOffice.org, Sun Microsystems always. Some developers have created the Document Foundation for a new project: Libre Office. Which now has a huge number of independent developers who contribute regularly. OpenOffice.org receives many, many less. They talk more about these columns, not deepen.
Open Core
The model “open core “is based on the concept of creating a nucleus (” core “) opened, in which possibly many participants contribute substantially.
In this way guarantees that at least as it regards the central infrastructure you can receive various contributions, since many can still benefit. And then realize value-added solutions in the “outside”, which also can be very small, but specialized. For example, create a database engine, and then carry out industrial-strength database (eg PostgreSQL), or a management infrastructure media streaming, used by those who wish to build on all types of multimedia applications (example: GStreamer).
Here, in contrast to the dual licensing, proprietary products and are free different (often the one contains the other) and the license usually is not copyleft copyleft weak or strong copyleft with exceptions. Cioò because the “core” is intended to be included in a product that will be the owner, and there could be incompatibility.
Often this is the path chosen by projects completely free, which begins with a licensing model completely free. Then evolution is estimated that the initial model is not sustainable, because the project semi-hobby became something serious and no longer manageable, or because to finance development needs an income resulting from development income.
subscription / customizations hybrid
The model that monetizes through the offering of “subscription” and customizations is to more typical of free software.
It is not incompatible with a dual licensing model, in fact, the dual licensing projects that I know to be more successful in actually combine a dual model , an open heart and a subscription model. For example, Zimbra, Alfresco, OpenBravo, Zarafa not bet a lot, to be included in larger projects, because to have a channel “Community”, in which the community is to users and integrators of developers, and offer a “premium” to those who need support levels guaranteed, including perhaps portions of proprietary software for specific purposes, not available in the community version.
This type of strategy has some advantages, for example is a guarantee of independence to the customer, which at most will migrate to a version of “Community” somewhat similar, and replace proprietary parts or with versions developed by the community, or from competing entrepreneurs (in the case of Zimbra, for example, ZeXtras), or specially created by specialized companies on technology. Also you segments the market , offering a premium solution to those interested in service levels and higher performance, while not renouncing the effect of network data from the use of much of the codebase for those without resources or need to justify the premium level.
Templates subscription “pure”
Here there are often misunderstandings. It may happen that a point of view outside, the legal form of the relationship between a trader and the customer is, so a little ‘surprising sales of “licenses”.
” But how, “the most attentive will have already thought of” free software you can buy. ” Ni. Buying a copy of the software concludes however a contract of sale in both cases. In contract to purchase proprietary software you buy, in addition to the copy itself (software, whether it is delivered on a support or an online resource) a right to use one or more copies, as well as a number of performance accessory. Instead of buying a copy of free software, you do not buy the right to use , because that is already guaranteed under the original license, and the license is granted for the same effect of the distribution.
The distributor can not make to pay a sum of money or the approval of agreements supplementary rights already granted by the license, in this then the surprise of reader is legitimate. But no license requires distribute free software that holds, even what has changed. So the legitimate holder of that version of the software can claim compensation for to return a a copy. The recipient can then in perpetual exercise all the rights assigned to it, including the right to distribute copies or, in the case of copyleft software, to obtain the complete corresponding source code for the copy he received.
Whatever the mode of acquisition, the relationship between the parties in a subscription model may also have characteristics somewhat similar to that owner. For example it is easy to observe a maximum limit of copies installed or the requirement to install software on all machines of a certain category (Red Hat). Even here, the limitation is not imposed by the license, but the contract and it is a condition for support under other contractual services. Still, it can happen to find the conditions a ban on modifying the software or to load compiled versions for themselves. Even here, it is a contract condition, not a condition of the license. The main difference is that in case of violation, the penalty will of nature contract , for example, the inapplicability of the guarantee, the non-collection obligation of assistance, the resolution contractual. Never losing the right to use the software, or loss of license.
At the end of the contract, even in the event of termination, the client knows that will keep the installed versions of the software, change them, install them on other machines. In short, it will be secured against lock-in because the agreement failed, the software will still free software.
The client You may transfer copies to third parties? According to the license, definitely. Under the contract, probably yes (otherwise there could be a constraint incompatible with license). However we have to consider an element of which have not yet spoken, and that concludes our discussion.
The mark
As for the monetization of the brand obviously has the function of increasing the value of the supplier, making it recognizable and allowing you to reconnect, in view of users, Positive values of the product to its manufacturer (also negative, but that’s another story) and vice versa. With a cautious policy of the mark (“ trademark policy “), you can distinguish your product and your service from that of competitors, even if it is Software somewhat similar. And even in the case where the software is just the same, bit by bit. An example will illustrate better: Red Hat produces one of the best-known Linux distributions, especially attractive in industrial installations. Oracle has been able to take the entire distribution of Red Hat and offer it to their customers (almost) that-what. The only difference is that it has been able to “sell” with Red Hat’s trademarks. In this case it is obviously difficult to determine whether the brand is worth more than Red Hat or Oracle, what matters is that the products have a brand different so everyone is “worth” as are the merits of its business, and there appropriates that of others.
The fact remains that the name of the product from which the product is derived may be rebranded still present, but a descriptive function , to designate the origin, then, in good faith, in a manner not apparent as the mark of the second operator, in so as not to cause confusion as to the origin of the product and the identity of the producer. Such use is lawful and does not require the permission of the owner.
Similarly, in the case of an entity which develops software open core, dual licensing or hybrid, with a recognized brand, a competitor can claim to support the community version of its counterpart, using it to offer its products and services the trademark of the original manufacturer, descriptive version, ie without giving the impression of being “official” or “authorized “(worth, in addition to trade mark infringement, a possible censure for unfair competition)
It will be possible for the competitor distribute Version community of its counterpart? The answer is basically negative.
principle of exhaustion provides that the mark (but also copyright) can not be used to control the further spread of a product by those who have purchased a copy. Once purchased this copy, it can therefore be sold (see the judgment UsedSoft for copyright) without asking permission.
It is quite evident, however in the case of a free software license, who acquires the copy has not only the right to use that copy, but have many more rights. By circulating copies of the original product, is not “reselling” their copy, is therefore not re-distributing a single individual of the species, but is doing an activity of creation and distribution of “new” (the quotes are a must ), activities to be authorized by the trademark owner.
Conclusion
We have only scratched the surface, the business models obtainable by free software are many and infinite combinations. We have not covered the models that use the software to sell hardware, or to populate its offering in the cloud, not a question of models in which the software is distributed the main course. But it is a model that can not be omitted, in a world where some of the largest companies in the world are based almost exclusively on free software used for the cloud, from Amazon to Facebook, from eBay to Google.
That concludes, therefore, our brief review of open declined on the world of software.
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