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Sun Microsystems GNU is Not Unix Businesses

How Can Companies Profit While Giving Code Away? 240

Posted by michael
from the make-it-up-on-volume dept.
An anonymous reader writes "In an almost philosophical essay replete with references to everyone from Larry Lessig and Tim Bray to to Professor Yochai Benkler, Sun Micrososystems evangelist Simon Phipps explores the metaphor of subscription (well, of course it's not just a metaphor any more from Sun's point of view) as the way that companies will make money off of deploying open source solutions. His distinction between OS developer and OS deployer is useful, but the crux is his contention that, with a "system" such as Sun has put together like the JDS, 'You don't buy the software from Sun - instead you subscribe to the editorial outlook.' It's an alluring analogy - Sun as the editor-in-chief of a 'publication' (JDS) with readers who may or may not choose to subscribe. Worth reading."
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How Can Companies Profit While Giving Code Away?

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  • interesting (Score:2, Interesting)

    Sun preaches subscription as a opensource model.. when are they going to acknowledge and treat the gpl right in their subscription?

    its kind of hypocritical to proclaim opensource when misss treating the Licneses of the code tha tyou use..
    • Re:interesting (Score:5, Insightful)

      by kdogg73 (771674) on Friday August 27, 2004 @10:20AM (#10088044) Homepage
      The code is free. The support is not.
      • Re:interesting (Score:5, Insightful)

        by chris_mahan (256577) <chris.mahan@gmail.com> on Friday August 27, 2004 @10:34AM (#10088183) Homepage
        Then it is a support contract.

        That's a different thing.

        When you cancel a support contract, you lose the support, but you keep the code and get to use it.

        When you cancel a software subsciption, you can't use the code anymore.

        • Re:interesting (Score:5, Informative)

          by AKAImBatman (238306) <<akaimbatman> <at> <gmail.com>> on Friday August 27, 2004 @11:00AM (#10088431) Homepage Journal
          When you cancel a software subsciption, you can't use the code anymore.

          No, that's not how it works. You subscribe to Sun's software, and you get new releases on a quarterly basis. If you cancel you still keep the software, but you don't get anymore updates.

          You're confusing subscription with "maintenance" contracts.
          • Re:interesting (Score:4, Insightful)

            by joeljkp (254783) <joeljkparker.gmail@com> on Friday August 27, 2004 @11:04AM (#10088470)
            Right, look at Transgaming. They charge $5/month for Cedega, but you get the releases forever, even if you cancel your subscription. When you cancel, however, you miss out on support, new releases, voting rights, and the knowledge that you are helping to support its development.
            • Re:interesting (Score:3, Interesting)

              by cronot (530669)

              ...but you get the releases forever... ...you miss out on support, new releases...

              Wtf?

              Well, I believe you meant to say the code is free, so you always get the releases that way if you want, but without the subscription you don't get the binary releases.

              Anyway, without the subscription, apart from the binary relases, you also don't get stuff that aren't open-sourced, like the safe-disc circunvention, and some DirectX/3D stuff, I believe (not sure about that one though).

          • Ok, so in order to get the newest code, you have to keep paying. But if your happy with code you have, you can stop paying. Fair enough..

            Except in reality what happens if there's a vulnerability out in the wild. You can't get updates free, or any other way. Like I said, you gotta keep paying, or you can't use the code.

            I do agree with you they don't make it easy necessarily.
    • Re:interesting (Score:4, Insightful)

      by Donny Smith (567043) on Friday August 27, 2004 @11:28AM (#10088745)
      >its kind of hypocritical to proclaim opensource when misss treating the Licneses of the code tha tyou use..

      its kind of hypocritical to proclaim people are hypocritical whenever they try to make a living.

      wtf are companies supposed to do? give away everything under GPL and die? give me a break.

      and it is also hypocritical to support GPLization of everything while you work for an entity that either lives off the government budget or makes money selling [whatever product or service].

      on a broader note, i dislike Sun and I also (to some extent) compete with their products/services, but i respect them because i know some things they do are cool.
      many people here (not necessarily author of the parent post) have the lame attitude of being against everything yet bringing nothing or little to the table themselves.
      have you ever heard Red Hat CEO complaining like that about Sun? Or Bill Gates? of course not
      yeah, maybe they'll say some generic stuff for the press - customers, value, choice, blah blah blah - but they're essentially interested in going back to whatever they do and doing it better - they are too busy to bitch endlessly about something like some folks on this site.
      • Re:interesting (Score:3, Insightful)

        by pyros (61399)
        The thing that irritates me is that so many people think GPL implies free binaries and source for everyone direct from the original distributor, it doesn't. It means that whomever the original distributor gives binaries to, the distributor must also give them the source, which they are free to redistribute. Sun can release Solaris under the GPL, and not ever give away a single free binary, and not ever put a single line of source code on a single public web/ftp server. That is the truth of the GPL that so
  • Um, okay Sun... (Score:5, Insightful)

    by jpmorgan (517966) on Friday August 27, 2004 @10:19AM (#10088025) Homepage
    But let's not forget newspapers make their money off the ads.
    • by Throtex (708974) on Friday August 27, 2004 @10:21AM (#10088057)
      You might be on to something... // This block of source code was brought to // you by McDonalds! Try our new extra value // meals at just 1 dollar apiece! // // McDonalds... I'm lovin' it!
    • And they print on paper and lots of other differences. I like the analogy, but personally I like to get news from Debian, sometimes reprinted slightly by Knoppix. Debian write the best pieces but sometimes they need a bit of help with the presentation!
    • Newspapers (Score:5, Insightful)

      by Craig Ringer (302899) on Friday August 27, 2004 @10:43AM (#10088281) Homepage Journal
      Let's also not forget, as someone who works for a newspaper, that it's not easy to make money in the newspaper business at all. The whole industry seems to be feeling the pinch these days.
    • > But let's not forget newspapers make their money off the ads.

      An over-simplistic analysis. Apart from free or subscription only papers, they make money from a combination of sales and advertising.
      • Re:Um, okay Sun... (Score:3, Informative)

        by Shimmer (3036)
        Traditionally, I believe the revenue generated from newspaper sales merely covers the cost of distribution (paper, trucks, delivery people, etc.). Since distributing bits is very cheap by comparison, one could plausibly conclude that the "subscription" price for software should be very low.
  • Analogy (Score:4, Insightful)

    by jetkust (596906) on Friday August 27, 2004 @10:19AM (#10088031)
    'You don't buy the software from Sun - instead you subscribe to the editorial outlook.'

    Is this kind of like how Casino's give away complemetary rooms and gifts to their biggest gamblers?
  • by craenor (623901) on Friday August 27, 2004 @10:20AM (#10088038) Homepage
    People ask how we make a profit, I'll tell you...

    Volume
  • by Moonlapse (802617) on Friday August 27, 2004 @10:20AM (#10088041) Journal
    Just use the argument for mp3's. When Sun goes on its 'tour', 'arenas' will sellout to see 'live' code
  • by Turn-X Alphonse (789240) on Friday August 27, 2004 @10:22AM (#10088064) Journal
    Seems we already have a few models of this.

    The software is free but you pay for the CD it's on and tech support.
    • Paying for the CD is usually just enough to actually cover the cost of the media... a few $$ at most. It's hard to get folks to pay for tech support when it can be had for free everywhere else (newsgroups, web searches, etc.) It isn't like hardware tech support where you provide an actual service like if a HDD fails, someone will be waiting for you at the open of business the next day to replace it for you.
      • by antifoidulus (807088) on Friday August 27, 2004 @10:53AM (#10088363) Homepage Journal
        Paying for the CD is usually just enough to actually cover the cost of the media... a few $$ at most. It's hard to get folks to pay for tech support when it can be had for free everywhere else (newsgroups, web searches, etc.) It isn't like hardware tech support where you provide an actual service like if a HDD fails, someone will be waiting for you at the open of business the next day to replace it for you.
        While that may be true for personal use, business use is a whole other story. Are you going to take a bunch of highly paid engineers and waste their time by having them go onto newsgroups instead of just getting support and getting the solution fast? Are you going to tell angry customers that your system is down, and if they could please wait till you google for the solution?
        Don't think so. While doing that stuff may be fine for you if your linux box goes down, it doesn't work for businesses who need reliable, easy to maintain systems.
        THere will be a market for support(regardless of whehter you paid for the software or not) for the forseeable future.
        • by 16K Ram Pack (690082) <tim.almond @ g mail.com> on Friday August 27, 2004 @11:23AM (#10088692) Homepage
          I wonder if plumbers sit around saying "you know what, I don't know why these loser businesses don't do their own plumbing. It's so easy."

          People often simply don't want people doing things that aren't their job in business. Smart business owners don't want to do things that aren't the focus of their business because it takes their energy away from the things that are their business.

        • While that may be true for personal use, business use is a whole other story. Are you going to take a bunch of highly paid engineers and waste their time by having them go onto newsgroups instead of just getting support and getting the solution fast? Are you going to tell angry customers that your system is down, and if they could please wait till you google for the solution?


          Actually... Google and Google Groups are the very first thing I look at when I run into a snag. Usually someone else has run into
          • > If I can't find the solution within 30 minutes

            30 minutes? No offense, but for many enterprises that's already a disaster.

            Google - I know, I do the same, but it's about responsibility - the grandparent was right.

            Say something goes wrong, you spend an hour on Google (no luck) and have no support contract with the vendor - soon after that you'll start getting calls from your boss, and your boss will start getting calls from his boss.
            In the end, the big boss will say "screw everything, here's the budget
        • Are you going to take a bunch of highly paid engineers and waste their time by having them go onto newsgroups instead of just getting support and getting the solution fast?

          yes.

          I can get PHP answers faster using google than calling tech support at Zend.

          it helps quite a bit to have competent highly paid engineers that can actually use a search engine.

          In fact that is one of the tests that the department head now uses. all new hires have to find a nanswer to a technical question using the internet... Com
    • by Anonymous Coward
      I've always wondered about this. If you write good enough software, with simple install, concise manuals, etc., people shouldn't have to call you for tech support; essentially ruining any chances of you giving away the software for free and surviving off support calls. Or are you meaning charge for adding new features that specific customers want?
      • The support model has its applications, but it should be plainly evident that it's not enough for everything. You know you're hitting the corners of a flawed philosophical system when doing something like writing intentionally mediocre documentation can be a (admittedly short-term) profit incentive.

        People use BSD-style lincensing to allow people to see and use their code. People use the GPL to allow other people to see and use their code and not let commercial packages make use of them.

        "If someone uses
      • Exactly. Properly-written end-user software doesn't need any support at all. It works, it doesn't do unexpected things and the user interface is clear enough that the user doesn't have to have a 3-inch binder of documents in order to use it.

        Contrast this with what I would consider "improperly-written" end-user software where it does not function as it is supposed to, it does unexpected things and you absolutely do need a huge amount of documentation to figure out what it did when you thought you knew how

      • by Donny Smith (567043) on Friday August 27, 2004 @11:12AM (#10088568)
        >essentially ruining any chances of you giving away the software for free and surviving off support calls.

        Hah, let me tell you, no matter how good your software or documentation is, users will ALWAYS find ways to fuck it up.
        It has nothing to do with the software - while shitty app will get more support requests, the perfect app will still get many more than a few.

        Sometimes it's just a matter of user misreading (correct) documentation and then bothering you to "fix" the application :-). Hence "luser".

        So it's both - always improving the quality to cut down on bullshit calls (the 80:20 rule), and also adding features...

  • by Anonymous Writer (746272) on Friday August 27, 2004 @10:24AM (#10088087)
    Advertising. Giving code away would give software the attributes of free-to-air broadcast media. And given that software usually needs regular updates for bug fixes, downloading would be more than just a one-time affair. Free-to-air broadcast media revenue comes from advertising. And although general advertising doesn't guarantee the audience will have any interest, the type of software being downloaded will give a better idea of what kinds of ads would interest their downloading demographic.
    • I dont think that is the only way. There was an article a while back on the different business models around OS and there were some good examples that were not advertising.

      One way, which my company is doing it is by giving away source code of components that plug in to our services system. What you are really buying from us is infrastructure, management, and time.

      We are expecting that many people will build their own systems but that is OK, we dont need to be a monopoly, we just have to offer value to c
  • by FooBarWidget (556006) on Friday August 27, 2004 @10:24AM (#10088088)
    It's very simple: nobody reads the license. I made some money by selling an open source app (of which I am the maintainer). I also sell it, and include the source code. Yes I'm actually able to sell it, even though it can be downloaded for free.

    The fact is, nobody reads the license. I include the source and the GPL. The GPL only gives the user more freedom. But nobody reads the GPL! Most don't even know they're allowed to distribute it, or even resell it.
    • by Raffaello (230287) on Friday August 27, 2004 @10:32AM (#10088166)
      This model only works if there is no competition in your tiny market niche. In a small enough market niche, there may be none, and you may continue to charge a premium for GPL software.

      However, once the market is large enough, competitors will move in to do exactly what you are doing - charging for GPL software. The price competition will drive the price down to just a hair above the cost of efficient CD duplication and distribution (or on-line distribution if that's the route your competitors take).

      You can't charge a premium for free software in a large market. Price competition will guarantee that.
      • by Confused (34234) on Friday August 27, 2004 @11:05AM (#10088473) Homepage
        The model works always, as long as you provide a useful service to the customer at a price he's willing to afford.

        Most customers aren't interested in the details of software development, they just want a product that meets their need and someone they can complain to, if they're in trouble. More prudent customers want also some kind of safety net, that they aren't left alone if the provider decides to move on to other things (like bankruptcy).

        The code itself is of no real use to most customers and handing it to the customer is most ot the time no risk at all.If the customer can do something useful with it, he would have written the thing himself in the first place.

        Secret magical algorithms that need to be protected by trade secrets are more of a myth than reality. Most code ist shockingly simple and boring, where the biggest effort goes in to producing the required amount of obvious functions and ironing out the bugs.

        The best testament to this are the myriads of programs, doing more or less the same things. Sometime a company comes up with a good set of functions at a reasonable price, which makes developing these functions in-house very unattractive. If combined with good marketing/sales, these products may become nearly a monopole like MS-Office.

        People pay for convenience and products are just vehicles to achieve that. And most people people don't care about number of wheels on the vehicle, as long as it transports them well enough.
        • The model works always, as long as you provide a useful service to the customer at a price he's willing to afford.

          Sorry but Raffaello's point, "This model only works if there is no competition in your tiny market niche", is correct. I can take you GPL'd code and offer to maintain and support it for less. And I should always be able to undercut you. I only need to cover my support costs while you need to cover both support and the initial development. Thank you for researching the market, establishing
    • "When I quit my job because my boss is an asshole, I called the maker of this software I know they pirated. The guy who answered the phone laughed so hard it sounded like he was going to die, then hung up. What the hell?"

      *grin*
      1. The fact is, nobody reads the license. I include the source and the GPL. The GPL only gives the user more freedom. But nobody reads the GPL! Most don't even know they're allowed to distribute it, or even resell it.

      Yeah, isn't it great!

  • Good Essay, but (Score:3, Interesting)

    by AbbyNormal (216235) on Friday August 27, 2004 @10:25AM (#10088103) Homepage
    what makes the community do what they do? (what my boss always asks, even though he loves OS products).

    That's how a "subscription" company makes money, but how is the community sustained through governance? I realize these are rather wide open questions, but encouraging discussion enlightens us all.
    • Easy answer: (Score:3, Insightful)

      by schon (31600)
      what makes the community do what they do?

      Because that's how they get the tools they want.

      The company I work for provides specialized web services (intranet sites, etc.) The software we use is GPL'ed. Both my employer and I have contributed code to this software.

      It costs nothing to contribute (we would have written the code anyway), and we get back *way* more than we put into it. That's why we do what we do - because we get something back (better software.)
  • Simple! (Score:4, Funny)

    by ivarneli (4238) on Friday August 27, 2004 @10:27AM (#10088128) Journal
    Simple, just follow step number 2:

    ???

    After that, profit is inevitable!
  • by questro (802656) on Friday August 27, 2004 @10:28AM (#10088132)
    Lot's of people talk about the subscription model and it's benefits. Often compared to a magazine subscription. The difference is that back issues of magazines still continue to work, unlike some subscriptions of software that have time-bomb unlock codes. I think the subscription model is a bad idea for consumers.
    • by alex_tibbles (754541) on Friday August 27, 2004 @10:45AM (#10088289) Journal
      It's more about newspapers: yesterday's news is not news. The assumtion is that old news is worthless; therefore, old newspapers are worthless.
      Old newspapers are nearly worthless. It is worth having an archive, but only a few of them, so old newspapers are worth very much less than their cover price.
      So... by anology, old software must be worthless. Hmm. 'Old' webservers are useless ('cos they will get r00ted in no time). But old, offline typesetting software? Pfft. 'Old' here really means 'unmaintained'. I think that an analogy with rusty machinery is a better one for unmaintained open source software:
      at any point you can take it to a mechanic to get an estimate on repairs;
      old models continue to be useful, in certain applications, as long as they are adequately maintained.
    • by dave420 (699308) on Friday August 27, 2004 @11:01AM (#10088435)
      The magazines do stop working. My stack of PC World mags from 1993 aren't as up-to-date as a similar publication I could buy today. Magazines are one big time-bomb, because they can never be updated, only replaced.

      Shit, but ask me about 386 notebooks, and I'm all yours.

    • The difference is that back issues of magazines still continue to work, unlike some subscriptions of software that have time-bomb unlock codes.

      With free software, you're free to remove the time-bomb code, so this argument doesn't apply.

  • by draggin_fly (807754) on Friday August 27, 2004 @10:31AM (#10088163)
    The win-win philosophy underlying the Sun statements is good; that is, it's true that Sun can make money by operating as 'editor in chief' of a suite of freeware applications. However, I don't buy into the statement that open source doesn't mainly benefit from having many hands involved. Making the best people the 'committers' of projects is important but nowhere in the article does anyone mention how much good software is created and maintained by people not previously recognized as 'best' for the job. The process doesn't work the way the Sun statement implies.
    • >>Sun can make money by operating as 'editor in chief' of a suite of freeware applications.

      Of course, when a group of university students in Sweden or Germany or (God Forbid!) China decide that they want to work together and editor-in-chief Sun's freeware applications, for free just 'cuz, and make some great admin tools, then Sun is going to have a cattle drive (instead of just a cow).

      > The process doesn't work the way the Sun statement implies.

      Exactly. If I were Sun, I would give money to fledg
  • Service Providers (Score:3, Interesting)

    by gtrubetskoy (734033) * on Friday August 27, 2004 @10:33AM (#10088173)
    Service Providers (hosting, ASP, ISP, VoIP, etc.) can make money by charging for their services while giving code away. An open source service provider will attract more customers because they are not dealing with a black box (a white box?), they will provide better services because bugs will be fixed faster, they will have more loyal customers, especially those that are actively involved with the product; And if other companies use their code and compete, better service as opposed to more obscurity will result.
    • That is exactly what we are doing. Our expectation is that people will get value from us building, managing, and maintaining the infrastructure to support the service, spending the time to write the software and integrate it all, and make it easy for them to use. Since our costs are low using OS we charge less and we think its a valuable trade.

      We hope anyways as we just got started.

      The one thing I struggle with when dealing with other CEO's and business types is their mentality of a business has to have
  • by smartin (942) on Friday August 27, 2004 @10:34AM (#10088185)
    If i understand them correctly i believe that Gentoo and Lin(spire|dows) are pushing the same sort of model.
  • Vast wasteland (Score:5, Interesting)

    by nelsonal (549144) on Friday August 27, 2004 @10:34AM (#10088187) Journal
    There is so much good open source software out there (my most recent find was a sweet little bookkeeping package called Lazy8 ledger) that gets very little promotion. I'd guess that there are many, many useful packages and programs that if I knew about I'd use. So I can see significant value in "editing" open source into useful groups. Also, I've long thought that it would be nice to see a "starter's" edition of Linux that reduced the choices of packages available to the "best" pieces of software. Nothing against vi and EMACS ed and the others, but does a first time user really need to choose between 12 or more text editors (or two desktop environments or three office suites, etc). I realize there are tremendous advantages to having diverse software offerings, but it's not as useful for the first time user.
  • by alex_tibbles (754541) on Friday August 27, 2004 @10:34AM (#10088190) Journal
    ... perhaps because that is the business model he knows best?
  • by G4from128k (686170) on Friday August 27, 2004 @10:35AM (#10088202)
    This model is very compelling for the commercial market -- companies know that they will both want customization and will need support for their software. They are willing to pay for expert assistance and 7x24 access to services. Enterprise software and support can sell for hundreds or thousands of dollars per seat - providing plenty of revenues to offset the labor costs of support can customization.

    But the consumer market is very different. The consumer market has very low retail prices that can't support the high cost of labor - a $49.95 price point product can go from profit to loss on a single tech support call. This consumer market consists of two segments -- geeks who don't need support and the clueless who needs lots of expensive support. Currently, proprietary software makers can earn a profit, in aggregate, because they capture money from both the geek and clueless segments. They may lose money on the clueless, but that make up for it on the geeks who don't need support.

    In a FOSS environment, the geeks can go for the free downloads and do-it-themselves when it comes to deployment, customization, and support of FOSS. Geeks have little reason to pay for FOSS-related services. This leaves only the labor-intensive clueless expecting to get a year of support for their $49.95. But because they are clueless, they will use more that $49.95 of support labor (even if that labor is in India).

    The trick with these services models is finding people that are both willing to pay for service but that don't actually need to use the service that much. Its a very good model for corporate IT, but I don't see how the numbers can work on the consumer side. Perhaps someone in tech support has numbers for the statistical distribution of the percentages of people that use X-minutes of support.
    • The better you build it the less support you would have to have, if you want a user to edit some esoteric config file, then fine you will need a lot of support. If you design your apps with the end user in mind before you write code, then your support costs will be far less if you do a good job
  • by for_usenet (550217) on Friday August 27, 2004 @10:36AM (#10088208)

    IBM has realized this, and is building up their services business around this model, and it would be great if companies like Sun join the fray, to keep the competition there.

    I also liked the portion of the essay where he talks about being able to pull together all of the components yourself, and support it yourself, or to pay someone else to support it for you. The first part of that is why I used OSS, and the 2nd part is what is currently lacking to make OSS more generally accepted. While there are people that will need support, there are some of us that just want the choice, freedom and flexibility, and OSS seems to be the best way to provide both right now.

  • by Anonymous Coward on Friday August 27, 2004 @10:38AM (#10088233)
    This is not an original idea - even in the software world.

    Microsoft for many years has already sold countless subscriptions to their MSDN.

    Of course the OS is, itself, a subscription with 'issues' every 2-3 years..

    95, 98, 2000, etc..

  • by oliverthered (187439) <olivertheredNO@SPAMhotmail.com> on Friday August 27, 2004 @10:38AM (#10088236) Journal
    How to make money on 'free' software.
    Charge for support.
    (You want me to tell you how to use the software, then pay me).
    Charge to become a member of the stearing group. (you want development to go this way then pay me).
    Charge for features, and non critical bug fixes. (you want that, then pay me)

    I think support should be by Open FAQ's, you have to pay to get someone to look at your problem, but as soon as the solutions posted everyone can view it.

    • What if you write a good quality app that has lots of built in help? Or do you strip out the help to get more support contracts?
      • Well, I havn't seen many good apps that get to version 1 and then stagnate.

        Maybe someone would pay you to do some more development because they like the
        app?

        And unless the help is blinding, your always going to need support, 'I tried to install it on my pokamon but it didn't work'.
    • (You want me to tell you how to use the software, then pay me).

      This only works if you are the only player in that niche for the software. As soon as someone gets fed up with your cryptic, practically unusable software (after all, you'll have to purposefully make your app hard to use to get folks to pay for this kind of support) and writes their own with good help and easy to use, you're out of business.
      • Help is never perfect or complete and there are always going to be support calls, just charge for the extra support.

        Maybe they want translations, maybe they want more detail in and area.

        Now at the moment options for that kind of support are limited, your stuck with what the project provides, but if you could put a bounty on support, or pay someone to gaurentee that they will support you.

        What if someone wants a how to on using xyz with abc, now I could write that, or the how to on using xyz with 123 that
  • Heh (Score:5, Insightful)

    by Otter (3800) on Friday August 27, 2004 @10:38AM (#10088238) Journal
    This is certainly an elegant way of saying "Hey, it may not be good for us but it's sure as hell bad for Microsoft!"

    Really, they're coming around to Apples's position -- given a situation where the open-source world has a lot and one's company has a little, throwing in with the crowd is a sound strategy. When the company has a lot and open-source has a little, best to keep what you have.

    Meanwhile, I'd never heard of Benkler until this week, when he wrote an inane essay in Science about how research should be "open-source". If you took the most witless comments here about how if a distributed group can write software, then, logically any subject about which one knows nothing can obviously be done efficiently by a distributed group -- that's basically what it was.

  • by Arkus (15103) on Friday August 27, 2004 @10:46AM (#10088303)
    If you take a look at what Sun is currently charging for the Java Desktop, it just doesn't make financial sense at the current price point. I for one don't expect to see companies switching to a subscription model that charges $100 per system per year (granted the current pricing until December 2, 2004 is $50 [sun.com]). To be competitive and offer the business community a truly compelling reason to switch to the Java Desktop, the price is going to need to come down just a bit more.
    What might be a motivating factor for a company to purchase a product using the subscription model, support perhaps? Well they do give you 60 days of support but the remaining 305 days of the year support will cost extra.
  • by sugarmotor (621907) on Friday August 27, 2004 @10:56AM (#10088390) Homepage
    The article doesn't cover the incentive for the developers to produce software that requires support. There might be a lot of little tasks which the software can perform but only with hand-holding by the support staff. E.g., a window may pop-up saying "There is a way to do this - contact support to find out how!".

    The emphasis here is on incentive.

    Just something to ponder. Stephan

  • Not the whole package needs to be given away for free. Companies can give away the core, and charge for useful add-ons. This way they will gain the market share, and still manage to profit from customers who want and need more.

    Companies can also place their products in a way that allows them to provide per-customer consulting, customization, system integration, etc. The company's employees should be THE experts for doing this, so they could easily have the advantage over 'generic' consulting companies.
  • I still get an uneasy feeling from parts of this essay. The link between community governance and control of the commit authority is played up a little too much for my comfort. Open source has a fallback mechanism for users/customers who are unhappy: the code fork. This is one way in which the analogy with newspapers is a bit week. A newspaper is ephemeral, the stories change every day. A "fork" doesn't make sense. Sure you can make your own by going to base news sources, but you can't re-use
  • by blackketter (72157) * on Friday August 27, 2004 @11:07AM (#10088500)
    Our company [slimdevices.com], profits selling hardware, while most of our engineering effort goes towards our open source software, SlimServer. The open source part of our business has helped us build an great community of users. Some of our users don't buy the hardware but contribute nonetheless, making our hardware, Squeezebox, more useful and valuable to the folks who do buy. It's a business model that's working for us right now.
  • by abiggerhammer (753022) on Friday August 27, 2004 @11:10AM (#10088549)
    The article restricts itself to how companies whose primary focus is software development can profit while giving code away. This is just about the only note that ever gets sung in the open-source/profitability debate, and I'm getting awfully tired of it.

    Software companies are not the only companies which write software. I defy anyone to show me a company with over 50 employees which doesn't use some kind of home-brewed software somewhere in its operations (and, yes, I mean other than HTML content). This is especially the case in scientific research, where if the budget's tight and a needed tool is either nonexistent or too expensive, the answer is "Write your own." I work for the bioinformatics department of a biotech firm [idtdna.com], where I am paid to write free software.

    Up until recently, that's been free as in beer; we have a suite of DNA development apps that we provide as web services, so our clients are doing their research with our cycles instead of shelling out $4000 a seat for a closed-source solution. Lately, however, I've been working on a tool (for site-directed mutagenesis, if anyone really cares) which will be both integrated into the web toolkit and released as a stand-alone GPLed app. The legal department's behind it. I am stoked beyond comprehension.

    But does this work? Oh hell yeah, if you go by the bottom line and by the number of calls my boss gets every week from bioinfo startups trying to convince him to provide 45-day free-trial downloads of their software on our site. (Use our bandwidth to promote your closed-source code? I don't think so, bitch.) Obviously, people could visit the site (the tool suite doesn't require registration or anything like that), design a primer, then order it from one of our competitors, and I'm sure some people do; but why bother when there's a convenient, unobtrusive "Order now" button just below your results? I'm sure we could sell our software, but in the long run, the customer goodwill we build up (along with the increased orders) by providing this for free is more important to the CEO than whatever short-term quick bucks we could squeeze out by hawking SciTools. In the end, providing free software is the game-winning solution.

    I'm sure this can't be the only example of a situation where this tactic works, though I haven't given a lot of thought to where else it would be appropriate. Hmm, maybe I should post this as an Ask Slashdot.

    • Not only "not all developers work for software companies" - the MAJORITY of developers don't work for software companies.

      The VAST VAST majority of software is written by in-house (or contracted) IT staff supporting some other sort of business - banking, manufacturing, transportation etc etc etc. The people writing software for direct sale are far and away the minority.

      With the possible exception of games, the whole concept of "software for sale" is an abberation that FOSS is (slowly but inexorably) correc
  • by pjrc (134994) <paul@pjrc.com> on Friday August 27, 2004 @11:15AM (#10088598) Homepage Journal
    The expression "make money off of" seems to have gained a lot of popular usage in recent years. Maybe it's just a harmless common phrase, but every time I see it, I get this dot-com era feeling.

    Lacking in this common phrase is a sense that money is being earned. Lacking is a sense of exchange of some tangible goods or valuable service in exchange for the money. Often even an expectation of work performed for or responsibility to customers is absent. Money will simple be made "off of" something... usually intangible intellectual property.

    So, dear reader (if you've endured my little rant so far), please keep an eye out for this phrase. Is it usually used in a context devoid of striving to satisfy customers? Or am I just reading to much into it? If so, I'm sure you'll reply to let me know :-)

  • Sun Micrososystems evangelist Simon Phipps explores the metaphor of subscription (well, of course it's not just a metaphor any more from Sun's point of view) as the way that companies will make money off of deploying open source solutions.

    This is not the way free/open source software should be approached, IMO. Nobody is going to make much money by trying to sell something that users can get for free. You can sell a service based on the software but that's about it.

    The way to approach free software is for
  • Pennies worth (Score:5, Informative)

    by iamacat (583406) on Friday August 27, 2004 @11:19AM (#10088656)
    Yes, I would pay for a free software subscription. I even occasionally click on google ads while searching to buy a particular item. But it would be a long time before I spend $299 that I might pay for a complex app that really meets my needs. Yes you can make money from side business if software itself is free, but probably not enough to cover writting software in the first place. Perhaps enough to cover distribution and minor bug fixes.

    Of course support can be expensive, but that's only for corporate customers, and even then many free apps can be "supported" by googling for info. What kind of questions about Firefox are worth $100 a pop?

    Let's just accept that most free software is written as a hobby, as an academic project or for personal use. Linus didn't set out to make great riches, and as far as I know he didn't. If you are trying to make money off either free [sun.com] or pay [sco.com] software that other people are willing to write and maintain as a hobby, well you should have known better.
  • by scottking (674292) on Friday August 27, 2004 @11:24AM (#10088712) Homepage

    Does this essay seem like probing to anyone else?

    By that I mean, it's like the essay was written to see exactly how much we're willing to spend on software. Further it seems to want us to answer in what method we prefer the pricing to be structured.

    Anyway, for my two cents on profiting while giving the code away:

    • Training for End Users of Your Product
    • Rapid Customization Services
    • Recommended Hardware Partners (i.e., use an OEM as your "preferred" vendor, and charge/commission them for the privilege)
    • Tiered Support Subscriptions, right up to placement of an expert(s) in your clients organization
    • Roll Out Services (better known as installation services. Places like Lowes and Home Depot make great money and increase customer satisfaction a lot with these services)
  • by bokmann (323771) on Friday August 27, 2004 @11:33AM (#10088787) Homepage
    I wrote something similar yesterday...

    Sometime in the 1940's Nestle approached Mrs. Ruth Wakefield, the inventor of the chocolate chip cookie, and purchased her recipe. After purchasing it, they gave it away by printing it on every bag of chocolate chips.

    Why would they do this? They PAID for that recipe! Why would they turn it around and GIVE it away?

    Nestle was not in the business of selling cookbooks, and they were not a restraunt. They are (among other things) in the business of selling chocolate.

    By giving away that recipe, they gave everyone a reason to buy chocolate chips. They couldn't patent the recipe (recipes aren't patentable), but they DID trademark the name "Nestle Tollhouse Cookies". Today, that is a brand that makes a considerable amount of money selling chocolate chips, selling prefab cookie dough, and selling cookies in shopping malls.

    Why would someone pay a dollar for a cookie at a store in the mall whenthey could make that same cookie for 20 cents? Convenience.

    So, people make money off of open source by providing the goods necessary to USE the open source, by providing services around the open source product, AND by turning it into a recognizable BRAND (ala Red Hat).

    This is not a new business model - it is actually very old. People just think of it as new because of the huge impact it has had in recent history in a new market.
    • Why would someone pay a dollar for a cookie at a store in the mall whenthey could make that same cookie for 20 cents? Convenience.

      Or, if they are like me, due to an absolute lack of talent for cooking. But don't forget the price. It's all about the price ratio. If a ready-made cookie cost $100, I'd be willing to learn how to cook one. Experts say that Gimp does not do everything Adobe Photoshop does. But at the price they charge for a copy, I'm willing to do without some features and use Gimp.

  • by suso (153703) on Friday August 27, 2004 @11:40AM (#10088857) Homepage Journal
    For some reason, this article made me think of the pie selling contest in Revenge of the Nerds. Where they put a special surprise underneath the pie.
  • This is that easy:

    1. Write code that nobody will be able to run/fix/maintain on their own, provide very little documentation (ever heard of development and program management specs?)
    2. Give the code away for free
    3. Profit from the support contracts your customers will inevitably need

  • by revision1_1 (69575) on Friday August 27, 2004 @12:33PM (#10089477) Homepage
    Same way Gillette and Shick do. Give away the razor and sell people the blades. In software, sell the support (or the updates, or whatever).
  • by HangingChad (677530) on Friday August 27, 2004 @12:51PM (#10089647) Homepage
    Companies all paying for the exact same software that does the exact same thing is economic insanity.

    Say 100 companies all chip in a percentage of what they would've paid on license fees to improving OpenOffice with features they want. Yes, it costs them some money and yes, some other companies will get the benefit of those improvements for free. But they still save a ton of $$ and don't have to keep paying and paying and paying like you do with Microcrapware.

  • by karlandtanya (601084) on Friday August 27, 2004 @04:03PM (#10091306)
    Since it doesn't actually exist.
  • How to profit (Score:4, Interesting)

    by Cyno (85911) on Friday August 27, 2004 @04:16PM (#10091399) Journal
    To make a profit you have to make an income greater than your expenses. Your total gross earnings must exceed your costs.

    There are many ways to make money as a GPL using company. You can:

    a) Sell the software in a box on a store shelf.
    b) Sell the software on CD from an online order form.
    c) Sell the software or ask for donations online via PayPal, Visa/MC, etc.
    d) Offer commercial customization options online so anyone who uses your software can purchase enhancements.
    e) Offer support services so anyone who uses your software can get support.
    f) Sell documentation.
    g) Sell certification.
    h) Sell training.
    i) Sell merchandise using the software and your accomplishments as advertisement. A simple contribute/donation option and a url link are much more pleasant than a full screen flashing advertisement from the perspective of the customer.
    j) Sell systems designed to run your software.
    k) Sell yourselves, offer money in exchange for your time on interviews, presentations, implementation/contracting, analysis/design, review/benchmarking with news and mass media, etc.
    l) Ask for donation (politely) from other F/OSS organizations if they are using your software.
    m) Be evil and try to make your customers pay by only offering the software for sale on your website, for very high prices, with marketting fluff and very little internal information so your customers can't tell what you do (if anything) to your software behind the scenes, then only give your source code modifications to the people who ask for it and only if it is required because you borrowed your source code from someone else because you were too [slow|stupid|lazy|greedy|cheap] to do it yourself, but unfortunately (for you) they were smart enough to release it with a GPL style license. So now you claim they don't exist and threaten to sue everyone who uses any copies of this software that you didn't authorize, build up your army of lawyers and plan to take over the world.

There's no such thing as a free lunch. -- Milton Friendman

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