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Build Open Source, Make Money

Posted by edort on March 23, 2007 at 8:55 AM PDT

It's Day 2 of TheServerSide Java Symposium. I attended two good technical sessions this morning -- one on the Tango project and the other on Project Dynamic Faces. The interoperability marriage of the "House of Microsoft" and the "House of Sun" (wow, I just had a flashback to a great oldies tune called "The House of the Rising Sun") as exemplified by the work in Project Tango is quite interesting. So too is the marriage of Ajax and JSF represented by Project Dynamic Faces. Those two marriages are depthy enough to each warrant their own pithy blogs. But I won't do that here. I encourage you to find out more about the Tango project on the Tango Project page. Or go to Arun Gupta's blog. Arun was the presenter for the Tango session, formally titled "JAX-WS and WSIT Tangoing with .NET." The prime mover in Project Dynamic Faces is Ed Burns -- who gave a talk titled "Enterprise Grade Ajax and JSF." You can find out about Dynamic Faces on the JSF Extensions page. Or see Ed Burns's blog.

What I'd like to talk about here is an excellent (I thought) lunchtime panel discussion that focused on the business side of open source.

O.K. what do you think of when I say "open source"? You might say something like "community" or " collaboration". If you're like me, you'd probably also say "free". So if it's free -- and most open source code is indeed free -- how can you make a business, that is, a money-making business out of it? The answer is through training, consulting, and support services. That's what was stated pretty much across the board by the five panelists in the Open Source panel: Bob McWhirter of JBoss/Red Hat, Neelan Choski or Interface 21, Brian Kim, of Liferay, Joaquin Ruiz of SpikeSource, and John Newton of Alfresco. The discussion was led by Joseph Ottinger,'s Editor-in-Chief.
Kim noted that "there's a definitely an association between open source and community, but when things break down people start looking for professional help, training, and service." So that's where the sweet spot is for these open source companies.

Not every company represented on the panel has the same business model for their open source business or had the same reasons for going to an open source model. Newton said that Alfresco went open source because the company is headquartered in the U.K. and it simply was a lot easier starting a software business in Europe with open source software than with closed source. Kim, by comparison, said that Liferay started out as a project and then became a product. However all these companies share some of the same problems.

Perhaps the biggest problem they face is in the area of licensing. A number of these companies make their open source sofware available through the GNU General Public License (GPL). I'm not very knowledgeable about software licensing so I did a little research and found the following in Wikipedia:

The GNU Lesser General Public License (formerly the GNU Library General Public License) is a free software license published by the Free Software Foundation. It was designed as a compromise between the strong-copyleft GNU General Public License and simple permissive licenses such as the BSD licenses and the MIT License. The GNU Lesser General Public License was written in 1991 (and updated in 1999) by Richard Stallman, with legal advice from Eben Moglen.

Apparently many companies in the open source software business are studying the latest draft of the Lesser General Public License (LGPL) and it's scaring some of them because they think it's not protective enough. Another angle to this mentioned by someone in the audience: some of the prospective clients of design and development shops won't use open source software because they think the licensing is not protective enough of them. There are various nuances to this licensing/protection issue. For instance, Newton said that indemnification is something that's very important to Alfresco. Indemnification protects their customers if someone comes after them for patent infringement.

Documentation also appears to be an issue in this niche. There is a spectrum of approaches that open source businesses take regarding documentation. Some companies such as JBoss don't spend resources on documentation. Their stance is that Open Source is a communal effort and it's up to the community to initiate the documentation and make it available to others. Alfresco makes their documentation available only to people who give them details on how they plan to use the product. Choksi said that Interface21 wants to stimulate the community as much as possible to use their product, so they make all of their documentation available. So too does Liferay. Kim said that "There's a common misconception that Open Source companies are holding documentation hostage. That's not true."Liferay makes all of its documentation available on the Web and turns to the community to add to it. Ruiz added that "It all depends on how you see documentation. Is it core or content? If it's content, you'll want to share it. You'll want to stimulate the community as much as possible to use the product and so you'll make the documentation available. If you see it as core, you won't."

There were a number of other interesting issues discussed during this session, one of them being trademarking. For instance, if a company contributes code to Hibernate, can they sell their training services as "Hibernate training"? McWhirter was clear that the Hibernate project is trademarked. JBoss/Red Hat owns the name "Hibernate".

Perhaps the most interesting question that came up during the session was the one that ended the session: "How much money is being made in the Open Source business?" The panelists responded that there are not a lot of good examples right now to quantify this. JBoss/Red Hat is probably the best example. However McWhirter didn't give any profit figures. Newton did say that Alresco is not profitable right now only because they're expanding their sales and marketing staff. He did say that they have 250 customers after their first year of operation and a profitable OEM business.

The key to profitability in the Open Source business appears to be the same as for the closed source business. Kim phrased it as follows: "Listen to your customers and make sure you give them what they expect."