struggling to find an open source business model
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Struggling to Find an
Open Source Business Model
The Puzzle
At the heart of this talk is a puzzle:
A seemingly successful open source application
Plenty of users in a range of business and research institutions
A business model based mainly on modest payments for support
But the business model hasn't been working
And as a result, I'm now planning to make a
proprietary Pro version
Topics for discussion - is there a realistic alternative in this case? And when might pure-play OSS be good business?
SOFA Statistics
SOFA Overview
A Python software application
Open source
Produces reports, charts, statistical analyses
Works with Excel, CSV, MySQL, PostgreSQL, SQLite, Google Doc Spreadsheets, ODF spreadsheets, MS SQL Server, MS Access
Runs on Windows, Mac, and Linux
Output is HTML
SOFA Architecture
SQLiteMySQLMS Access
Linking
PostgreSQLSQL ServerExcelCSVGoogleODFImporting
Python scripts ready to glue together
HTML with Javascript and dynamic images. Printable and web-ready.
Display within SOFA GUI
Dojo Javascript/SVG Toolkit for Charts
Matplotlib (and Boomslang) for Auxiliary Charts
wxPython for Cross-platform GUI Toolkit
The Popularity/Revenue Puzzle
Always Together?
Popular enough for Revenue?
Global Downloads A Positive Picture
65,000+
Reviews A Positive Picture
My hope is that this program becomes an adopted industry
standard of sorts, mentioned in everyday conversation by
organization workers the world over. And, given its free and
multi-platform nature, ... this hope of mine may not be an
unrealistic one.
John Knight. Linux Journal
Some Very Encouraging Responses
Videos being viewed and embedded
Wide range of users
Professor of Childrens Health
in US
Geotechnical researcher
in Israel
Lead Researcher in an Asian genetics lab
Nutrition teacher in French part of East India
Agricultural statistician
in New Zealand
Small fruit company
researcher
Brazilian University student (estimated 1/3 of all users are students)
Freelance researcher
in Sweden
Aid worker
Malawi
Verdict project seems popular enough
The Struggle for Revenue
Monetisation
Surely must be possible to sell affordable support
to at least 0.5-2% (apparently a common rate for single-vendor
commercial open source firms)
Warning Notes
When you play the role of market spoiler
its much easier to be famous than rich. Dave Kellog
(Technology commentator, former CEO of MarkLogic)
Theres heaps of people out there that have said Wow, the app stores a goldmine. Im going to get on this. Reality is a bit harder. Knowing what will work and what wont is just as hard as it is for any other business. Perhaps more so, because theres so much competition.Just look at how much duplication there is out there in the app market. Ive got a friend who sends me ideas for apps every now and then. In almost every circumstance, somebody already has something that does it, and I just send him the link back.http://buildmobile.com/featured-app-nodedroid/
Success and Developer Business Success
The goal - profitability
Current reality
Total Income (over 2 years)
$100
(less Paypal, taxes etc)
Finding an Open Source Business Model
Why an Open Source Business Model?
A positive contribution (satisfying
to share something that helps lots
of people across the world)
The challenge could I do it?
Ability to gain a global profile on
top of which a business can be
built
Can operate with very low
expenditure low risk of losing money
Preference for openness
Successful OSS Business Models
Android Google advertising
Red Hat Enterprise Guarantees
Mozilla Sugar Daddy
Moodle - Partnerships
Eclipse - Competitors
Acquia unique expertise
MySQL Dual licensing
Other options
Merchandise
Books
Customisation
Integration
Charity-ware
Being bought out
(even 0.01% of the MySQL buyout would net US$120K)
NB potential effectiveness of business model depends on product and context
More Business Models
The Bee-Keeper Model
The Bears and the Honey
The Bee-Keeper modelBees are meant to make honey
The Bee-keeper's job is to keep bees
happy, healthy and safe
Bee-keeper sells honey to customers
SOFA ProblemI make nearly all the honey
There are few bees
There are no customers
The bears scoff everything!
(no criticism of bears of course I have only contributed money to a
tiny percentage of the open source projects I rely on)
Whatever the reason, no income = no business model
Just keep twiddling the dial?
Joel Spolsky and the Importance of
Persistence and Morale
In my mind, an entrepreneur is like a kid playing with his first
shortwave radio. He takes it home and turns it on, and what
does he hear?Nothing. Static.This might be demoralizing. So he
tries a
different frequency.Nothing. Static.And this might be demoralizing
again. Until his mom wanders by and plugs in the antenna on the
radio, and suddenly, he picks up the ghost of a station! It sounds
like it's far away, and they seem to be speaking -- what is that
language they're speaking? Never mind, it's a station! ...
Twiddling the business dial ...
You can be one small change away from success
(if you don't give up too
soon)http://www.inc.com/magazine/20090301/
how-hard-could-it-be-start-up-static.html
As the business progresses, you start trying to turn all the
various knobs on your fancy radio set in order to get better
reception or to find a station you like. And fortunately, in
business, we founders have a lot of knobs to play with. There's
price. Location. Employees. Marketing. Advertising. Return
policies. Trade shows. Products. Search-engine optimization. ...At
this moment, a founder who is incapable of careful morale
management will think to himself, Maybe a career in HR management
isn't so bad after all. Meanwhile, the determined founder will
start playing with the dials -- rethinking the menu, trying new
promotions, and adjusting prices. And what he'll find is that, just
like the tuner on a radio, certain aspects of a business can be off
by only a little bit and then, one tiny adjustment, and BING! The
thing starts working.
[Emphasis added]
Experiments
Version 1.0 Release
After 2 years
the verdict is in
Reluctant Conclusion - Pure play doesn't always work
Add closed extensions to the core, still 100 percent open source
project. Customers get full access to the source code to view and
modify it. The user community loses nothing, but the company adds a
compelling reason to pay it money for those ... that otherwise
won't or can't. [Emphasis added]
Matt Assay
A time to reap, a time to sow: A phased approach for open-source
businesseshttp://news.cnet.com/8301-13505_3-9945870-16.html
Matt Assay reluctantly concluded that pure-play strategies don't work for everything. Started promoting Open Core as a viable alternative.
Pro Version / Open Core Model
Keep the Community Edition 100% open sourceKeep supporting and improving Community EditionAdd extra features to a proprietary extended versionKeep price low (student discounts etc)No loss to community users
Controversial
This is not a good idea, you have to
choose another business model .SOFA is an excellent tool. But pro
version
will kill the project, because free users fall on a
second-class citizens category. Sell statistics
books based on SOFA, or t-shirts, but don't
sell the software.
Anonymous feedback
[V]ery few people who complain about the
open-core model have actually tried building a business using any
of these models. I suggest
you go and try it for yourself.
James Dixon, CTO, Pentaho
Money for Work is Fair Enough
Need feeding, clothing,
educating etc
Unable to find a successful pure-play OSS business model after 2 years
Substantial projectThousands of hours coding, documenting,
making video, packaging etc
30,000 lines of code
Not just a small utility
Taken on big challenges (i18n, cross-platform)
Not cripple-ware
Providing free support and documentation to community
Can't continue to prioritise SOFA work if no income (4 children to support). No tenured position to fall back on
So Open Core it is
Questions/Reactions
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?
?
Your thoughts:Is there a realistic alternative in this case?
And when is pure-play OSS good business?
SOFAPaton-Simpson & Associates LtdAuckland, New Zealand
SOFAPaton-Simpson & Associates LtdAuckland, New Zealand
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