Free software business model
By Sandip Dev on Mar 18, 2009
I wrote this article for my college magazine sometime late 2006
The Free Software Business Model: How to make money from something that is free
The term “Free Software” has been misunderstood a lot.So lets set it
straight.Any software classified as free software must give you(the
user) 3 freedoms-freedom to run the software as and when you wish,
freedom to access and modify its source code,freedom to redistribute
copies(modified or otherwise) of the software with or without a fee.It
also allows you to keep your modifications private.But the question
that comes to mind is…..
…. how do I make money from free software? There
are various ways in which a software company can make money from free
software.Look at HP,IBM,Sun,Red Hat,Google and MySQL.They are thriving
examples of companies making money from free software.Its easy,all you
need is a sound….
First you must realize that free software is not a business model in
itself. It is only a production and distribution method.Keeping this in
mind there can be two alternatives.
….the dual - license model
where businesses offer a free version but charge a fee for a commercial
license. MySQL and Sun, with Openoffice.org, follow this model.For this
you need a compelling value proposition -a software that does,what it
is supposed to,very well.Trolltech(you haven’t heard of it) has been
growing consistently over the last 10 years using a dual-licensed
policy for its Qt GUI development framework.
….the support model
where you get software for peanuts but the company charges for support
just like Red Hat. It discontinued support for all its Red Hat Linux
products and decided to concentrate on the enterprise space(Red Hat
Linux Enterprise) giving Red Hat a 40 pc yearly increase in revenue
till date.Others like IBM, simply use free software to supply services
to enterprise customers.Google is providing services and software for
free and making money and lots of it.
In a nutshell if you want to profit from free software, you might
need to be more business-savvy than you would in other businesses.But
once you gain momentum….Bill Gates and Microsoft could well be history.
Recommended reading: The Cathedral and the Bazaar by Eric S. Raymond