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Open Source for Capitalists, Part 1 - Free prize inside

Posted by turbogeek on August 10, 2005 at 12:46 AM PDT

How do you make money from open source software?

I got the idea for today's blog from my friend Larry Snyder at Recursion Software. The question sounds ancient to me for some reason. It seems like a riddle passed down through the generations, perhaps with roots in mysticism or in ancient scrolls of the Tao or Zen. I can imagine Aristotle pondering on the subject. Perhaps I can at least guide the way. It's not as hard as it seems to answer, just hard to grasp for companies focused on profit margins. Making money from open source is like one hand clapping.

I'll break this up into a bunch of blogs. Here is the tentative list of subjects.

• Free Prize Inside

• Examples are Free, Right?

• Building Bigger Mousetraps

• Donations To A Worthy Cause

• Working In The Commons

Free Prize Inside

Seth Godin, who wrote "Free Prize Inside" and other Marketing books, might say that if you are a software company, the free side is the prize. If you are thinking about the cool toy in the cereal box, you understand what Seth is thinking. As a child, I remember a horrid cereal called Ruskets. It was like a brick of cardboard that you put in milk. Invented by by someone who was a 7th Day Adventists as I recall (vegetarians before it was fashionable). It is amazing how good these wheat cardboard-like bricks tasted with milk when there is a prize inside every box. The funny thing was, this was the whole marketing campaign at the time with "Free Prize in Every Bx" emblazoned on the side.

Think crackerjacks but leave out anything that tastes good. So the only thing left that is of value is the prize. I would eat as much as I could stuff myself with. Why? To get the next box and the next free prize.

Back to crackerjacks, they still sell while Ruskets are a memory. Why? Because there is value in the taste 'and' you get a free prize. So take something good and make it better by adding something special. You could add a software game or a personal organizer or additional tools. All of these can come from open source with only sweat equity to package them up with your product.

Look for example at adding a utility. Imagine your core database product is ten thousand dollars. Since it supports JDBC, why not include a lot of free tools from the open source world. That's a good prize and can make you look good by just including a few binary releases of free stuff. People love free stuff - even if it was free to the person giving it out.

Remember, it is not always about your product, but the experience of the product. Eating Ruskets alone is awful. Eating Ruskets with a FREE toy is an enjoyable breakfast. A database is nice, but a database with a FREE management tool is better.

I am leaning toward sending along a cool game. Engineers need to play, right? You can even get creative and somehow use the product to make the game work. To top it off, you release the game into open source. Now you have an example that uses your product, you have an open source project with your company name on it, and you have that free prize in every box.

Please pass the milk! I have a lot of cereal to eat.

Do you know some cool free prizes in open source that can be included with commercial software? Let me know!

For reference, here is a nice article: What Business Can Learn From Open Source.

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