Open-Source Software Business Models


Instead of prevaricating around the existing business models that are prevalent and practiced at large, when it come to open-source software, I intend to explore another dimension of it. Conventional approaches leave the open-source business model struggling to monetize or be a “pseudo-open source” company with monetizing methods that prevent real access in practicality.

A company relying on donations or subsidiary forms of income such as training, may not be able to sustain long term, as it may spend the corpus to keep it running to exhaustion, in most cases funding arriving a little too late. Most open-source companies that survive today, are with the backing of heavily funded supporters.

Alluding to the model I perceive, a crazy sounding one perhaps, is the model of profit sharing post the first year or post the pertinent time frame. An open-source software provider may allow free usage but will have rights to a part of the profit, however small, after a certain indicator of performance has been met. This allows the user to make a positive balance before being burdened with the cost of the open-source product. The performance indicator could be defined specifically for the type of business and the type of software, it could perhaps be a monthly turnover or daily traffic etc.
The ability to have direct monetary return on a product is most important to motivate its improvement and more importantly sustain it. The model proposed can simply be executed by means of a contingent contract. The challenges however would be effective disbursal of the open software, not having it available openly but only through request, and then prevention of unauthorised replication. A possible solution could be, to have a global list of applicable parameters which demonstrate the liability of a company after using the open-source software and making a certain revenue out of it.

Such an approach is sustainable at both ends, if the product is used and the company fails to make a profit on it, they are not liable to pay. Such freedom from liability will motivate higher number of businesses to try and proceed with the open-source offering as a base, therefore a higher volume of businesses will be created.
Other aspects of this model remain open and will be disclosed during the discourse