How Can Companies Profit While Giving Code Away? 240
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."
Um, okay Sun... (Score:5, Insightful)
Analogy (Score:4, Insightful)
Is this kind of like how Casino's give away complemetary rooms and gifts to their biggest gamblers?
Re:interesting (Score:5, Insightful)
Free software - costing support (Score:4, Insightful)
The software is free but you pay for the CD it's on and tech support.
Simple: nobody reads the license (Score:5, Insightful)
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.
But magazines don't stop working... (Score:3, Insightful)
Sun forgets the smaller apps (Score:3, Insightful)
Re:Simple: nobody reads the license (Score:4, Insightful)
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.
Re:interesting (Score:5, Insightful)
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.
Journalist recommends subscriptions (Score:4, Insightful)
Commercial vs. Consumer Markets (Score:5, Insightful)
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.
This is not an original idea (Score:3, Insightful)
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..
Support And Development (Score:5, Insightful)
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.
Heh (Score:5, Insightful)
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.
Re:Simple: nobody reads the license (Score:1, Insightful)
Newspapers (Score:5, Insightful)
Subscription Model is interesting but... (Score:5, Insightful)
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.
Re:Support And Development (Score:2, Insightful)
Re:Free software - costing support (Score:4, Insightful)
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.
Re:Commercial vs. Consumer Markets (Score:2, Insightful)
Re:Support And Development (Score:2, Insightful)
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.
Re:all software should be free (Score:4, Insightful)
And so on.
Re:interesting (Score:4, Insightful)
Re:Simple: nobody reads the license (Score:4, Insightful)
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.
Not all developers work for software companies (Score:5, Insightful)
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.
Re:Free software - costing support (Score:5, Insightful)
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
So it's both - always improving the quality to cut down on bullshit calls (the 80:20 rule), and also adding features...
Common expression... (Score:5, Insightful)
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 :-)
Re:Free software - costing support (Score:4, Insightful)
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.
If I had to speculate... (Score:3, Insightful)
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:
Re:interesting (Score:4, Insightful)
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:Free software - costing support (Score:3, Insightful)
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 and buy that goddamn support contract, I don't want any excuses any more".
Many of my customers can't stand more than 5 minutes of downtime (during working hours).
Easy answer: (Score:3, Insightful)
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.)
How do you make money giving something away? (Score:4, Insightful)
Some of it makes sense (Score:3, Insightful)
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.
Re:Don't forget nmap (Score:3, Insightful)
-Insecure gives out program to scan networks with multiple methods.
-Hacker types either trying to secure, or breaking security, use the tool
-When tool breaks, they report bugs
-Bigger companies realise that this tool would save X thousand hours of work and debugging
-Big company pays insecure to use said tool in closed project. Insecure gets paid big bucks
-Because Insecure now has income, they can MAINTAIN development on tool, nearly guaranteeing stability
Who wins? If you hate profit, the 'people' have lost. If youre glad to see such a good product stay free, everybody has won.
Re:interesting (Score:3, Insightful)
Go even farther with that thought (Score:3, Insightful)
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) correcting.
DG
Monolopy Capitalism (Score:2, Insightful)