MTAT.04.44 – Software Economics Fall 2013 Lecture 11: Economics of Open-Source Software Marlon Dumas Institute of Computer Science 1 Open-Source Software (OSS) l Software made available publicly in source-code form and distributed “for free” under a license generally complying with the Open-Source Initiative (OSI) l Two broad categories of OSS: - Community OSS: Controlled by a community of independent stakeholders - Commercial OSS: Controlled by a single entity, with commercial ends l Two broad categories of OSS licenses: - Permissive: Apache, BSD, ... - Non-permissive (copyleft): GPL et al. 2 Socio-Economic Context of OSS OSS is a form of open production u Alongside other forms of user-generated content u Paradigm-shifting mode of production made possible by low entry barriers and global means of communication u http://tinyurl.com/54ush8 u Similar enablers as the “startup economics” u http://tinyurl.com/6mdcddd u Re: motivation of OSS, see also: http://www.youtube.com/watch?v=u6XAPnuFjJc 3 OSS Business Models Typical Community OSS models: l “Sell” your reputation (e.g. as speaker, consultant) or sell your brand l Sell the product with price discrimination l E.g. faster download, easier install (crippleware model) l Internet advertising (e.g. Firefox) l Books and training material l More at http://tinyurl.com/yd4ly84 4 OSS Business Models Commercial open-source models u Proprietary extensions (add-ons) u Novell's Exchange add-on for Evolution u Dual licensing u Services 5 Dual Licensing l Dual licensing mixes “free distribution” of open- source software with business models based on “sales”, e.g. - Distribute core product for free - But sell proprietary licenses with enhancements and/or technical support l There is only one core product, but two licenses l Requires some form of copyleft license (e.g. GPL) 6 Dual Licensing Model http://www.valimaki.org 7 Sleepycat l Sleepycat developed and markets Berkeley DB (BDB) – an embedded database system. l Initially distributed freely; eventually many open source and proprietary projects started using the product l As product gained commercial interest, programmers founded Sleepycat Software Inc. as owner of the copyright l It was relesed under Sleepycat License in 1997 (open-source license with strong copyleft) l Company developed a dual licensing model l Later acquired by Oracle 8 MySQL l Well-known relational DBMS. l GNU GPL on all platforms since 2000 l Development is directed inside the company; all contributions are checked and rewritten by company developers to avoid diluting the copyright ownership l When acquired by SUN (later Oracle), MySQL received more income from proprietary license sales than from branding and services… 9 OSS Business Models (Cont.) l Proprietary extensions (add-ons) - Novell's Exchange add-on for Evolution l Dual licensing l Services - Training, certification - Customer support, maintenance, customization, integration, deployment - Full IT Solutions on top of OSS http://www.youtube.com/watch?v=IJPqHiW1duo 10 Beyond Dual Licensing: Full Commercial OSS - Provision of an extended version of the product under commercial license - Provision of quality-controlled updates - Hotline support, bug-fixes on demand - Support and consulting 11 References l Open-source economic drivers - http://tinyurl.com/ykcw2yg l Series of lectures on OSS http://cs.anu.edu.au/students/comp8440/lectures.php l Overview papers on OSS business models - http://tinyurl.com/c77lz6 - http://tinyurl.com/y9um9ve l Dual licensing in Open Source Software Industry - http://www.valimaki.com/org/dual_licensing.pdf 12 .