* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

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Moderators:

Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

How to make money with free or open source software

You can make money with free software.

For example, Angry Birds has a free version. They are doing well! How? There's a pay version. Other games are free but have in game purchasing. Then there is the free, or below market price software that comes with a hardware purchase. You get a bunch of software when you buy a Mac, but you're not legally allowed to run it on non-Apple hardware. You also get the right to buy and run for $5 programs like iMovie and GarageBand, which would cost considerably more if you weren't really being sold hardware.

You can also make money with open source software. I have bought compilers where the standard libraries come with the source so you can fix bugs, or improve the implementation. You also have the right to recompile those libraries and distribute them in your own apps. You don't have the right to sell the source code to others though. AT&T used to distribute Unix with the source code to the system. You had the right to modify the operating system if you wanted to using the source code. But you couldn't sell the modified or original source code to others because it was copyrighted. In the past I have sold libraries to other people and companies which are open source. They have the right to examine my source code and modify it for their purposes and use it in products but not to sell or distribute the source. I also have had less expensive licenses that don't come with source code. In those cases, if they want changes they have to pay me by the hour.

It's very easy to make money from free software.

It's very easy to make money from open source software.

Discussions about "free and open source software" usually are not really about either of these things though. They usually deal with cajoling some hapless sucker into working his butt off for free. Open source is redefined to be some weird thing where you give the source away of a bread and butter product that's worth money for free and let other people sell it. That's dumb! Free is redefined to mean the GPL. They will say "not free as in beer, free as in freedom!" But that is BS of course, it's not freedom at all, the GPL is the most restrictive and insane license imaginable. There is nothing less free than the GPL that is in general use for software licensing.

Every discussion on free or open source becomes a bunch of redefined words and bad advice that will do you harm. Don't listen to that.

Free software and open source software are both OK things and can be made to work for you. Just don't listen to the people who claim to redefine those terms to be some stupid thing that is going to destroy your life.
Scott Send private email
Thursday, September 05, 2013
 
 
"You can make money with free software. For example, Angry Birds has a free version. They are doing well! How? There's a pay version."

So, it's not just free at all.  People are paying for it, too.  IOW, if there were no pay version of AB at all, then Roxio wouldn't be making money from free software as you imply. Keep it real, man.
PSB136 Send private email
Thursday, September 05, 2013
 
 
It's like having two tables at a garage sale, one with apples and one with oranges.  The apples are free, but you have to buy the oranges.  Then claiming that the apples are making money.  Okaaaaay.
PSB136 Send private email
Thursday, September 05, 2013
 
 
Yeah. You got to bring in money somehow.

It doesn't have to be ad money, or selling out user privacy either.

Is the case of a lot of this tiny app stuff the free one is free advertising.

There might be 99% free users, doesn't matter as long as you don't have to provide any customer support whatsoever. The key is have as many users as possible and a reasonable finite number of paying ones.

It is in fact free. Just because people buy some other version as well doesn't mean the free version isn't free. It is genuinely free and you're still making money because it is working as advertising for the pay one.
Scott Send private email
Thursday, September 05, 2013
 
 
"The apples are free, but you have to buy the oranges.  Then claiming that the apples are making money.  Okaaaaay."

Wrong. You lie. You don't have to buy the oranges. Also, you arrange it so it costs nothing to have infinite numbers of free apples. That is not true for real apples. Therefore your analogy falls apart a second way and dies.
Scott Send private email
Thursday, September 05, 2013
 
 
If I said:

"You can make money with free software. For example, Angry Birds has a free version. They are doing well! How? There's a pay version and all free users are required to buy the pay version to be allowed to use the free version."

Then your ridiculous apple and oranges claim would have been appropriate.

But notice that I didn't say "all free users are required to buy the pay version to be allowed to use the free version" because that's not how it works. And you know that perfectly well. That makes your posts deceptive lies.
Scott Send private email
Thursday, September 05, 2013
 
 
Scott, usually I like your advice but if you start a business attempting to copy Rovio's model, you've got a problem.

I think it took Rovio 10 years to get that overnight success.
Bring back anon Send private email
Thursday, September 05, 2013
 
 
"you're still making money because it is working as advertising for the pay one" -- So the apples are advertising for the oranges? LOL!
PSB136 Send private email
Thursday, September 05, 2013
 
 
Yes, it's only going to work for certain things. But it does work.

People say it's impossible to make money on free software.

Google software is free. Your privacy is being sold to finance it, but you're also being served ads which are relevant and you often are looking for doing searches anyway. That's one model of free.

Another is free lite editions.

These have all been discussed here.

And now in-app purchases,  a relatively newer approach.

My intention here is to discuss that the giving away your sourcecode to anyone that wants to compete with you while living as a homeless person off handouts like Richard Stallman does is not the only way to do free. But free advocates often try to push the word free to refer to really terrible models that have no chance of working.
Scott Send private email
Thursday, September 05, 2013
 
 
PSB136, you're a moron and a troll.
Scott Send private email
Thursday, September 05, 2013
 
 
Actually, I immediately take back my last comment.  I *can* see that working now that I've stopped and thought about it... "Free apples!  Yum!  Oh, and I'll buy one of them oranges while I'm here."  Sorry for laughing at you.  (Seriously).
PSB136 Send private email
Thursday, September 05, 2013
 
 
Damn, you replied while I was typing my apology.
PSB136 Send private email
Thursday, September 05, 2013
 
 
Ok fine, if this is a misunderstanding then you're not a moron and a troll - I take that back. Sorry.
Scott Send private email
Thursday, September 05, 2013
 
 
It *was* a misunderstanding.  I never considered the aspect of free used for advertising the paid.  I was fixated on a "free makes money alone" concept.  I wanted my apology to immediately follow my post, but you got in first.  :(  This forum needs an edit function.  Also, I admit I'm a bit hot-headed, too.  I need to calm down before posting.
PSB136 Send private email
Thursday, September 05, 2013
 
 
It's cool bro.
(secret hand shake)

To deconstruct... My title was carefully constructed this time - notice I say free OR open source software, and not free AND open source software. I then cover the cases of free and then open source, but totally separately with no overlap. If you got an itch to do free AND open source, that is a lot more problematic. So this was a play on the "free and open source" meme, but switching 'and' to 'or'.

Then there is also make money "with", but not "by". It can't be just free or just open source there's got to be more to it. You can't just give everything away and hope for donations, that has a really strong empirical history of not working.
Scott Send private email
Thursday, September 05, 2013
 
 
Scott, I'm afraid it's you that's redefining words here.  The phrase "Open Source" has a strict definition, available here: http://opensource.org/osd-annotated

The software that you're talking about, where the source is available but you're not allowed to resell it, is by definition not "Open Source".

I'm not disagreeing with your arguments, but you can't use the phrase "Open Source" to mean "Software for which the user can obtain the source code".  I'm not aware of a similarly-snappy phrase that describes such software, which is a shame.

(The people who coined the phrase "Open Source" even intended to trademark the phrase to prevent people from misusing it, but it was deemed too general to trademark.  Nevertheless, it has a strict definition.)
Richie Hindle Send private email
Friday, September 06, 2013
 
 
The people you claim invented open source came along late in the game and make a play for it. It's a bullshit claim.

I can claim I invented the term "enemy combatant" and it means anyone over 16 who I have murdered with a missile strike, and no other factor. That doesn't mean my claim is true. It would be a lie, and would be cynical propaganda. And of course it is a tactic the US has used - redefine 'enemy combatant' to be people they kill, and then declare that civilian deaths are very low. Likewise with open source.
Scott Send private email
Friday, September 06, 2013
 
 
Another recent tech word that  cynical agendaists are trying to appropriate for their own personal use is "App". Apple likes that Apple starts with "App" and tries to claim it only refers to things they sell. But App has been used as short for Application for decades.
Scott Send private email
Friday, September 06, 2013
 
 
Another good example is "free software". Everybody knows what free software means. It's software you don't have to pay for, and free software has been around for a long long time.

Very late in the game some deceptive lunatics came along and appropriated that term as well, claiming it only applied to software with absurdly restrictive licensing conditions, and then, in a gambit straight out of George Orwell, claiming that they meant free as in "freedom". Freedom. For the least freedom oriented licensing ever seriously used. Amazing. And as cynical as it gets.

These guys that redefine and appropriate terms for their own manipulative agendas are real assholes. Dismiss everything they say for they are liars and are manipulating people for their own selfish desires. They are bad people.
Scott Send private email
Friday, September 06, 2013
 
 
What would you think of the following?

Dear Bob,

Please cease and desist from using the term "quality reliable software" on your web site. Quality Reliable Software is a registered trademark of the Software Standards Board,  an non-profit educational initiative founded and managed by the Gates Foundation. The SSB is the only legal entity permitted to determine what software is Quality and what software is Reliable. For example, one of the criteria is that it be tested to work safely in the most recent release of Windows.

Best,

Microsoft Lawyers
Scott Send private email
Friday, September 06, 2013
 
 
I never made any claims about people "inventing" open source.  A group of people gave the phrase "Open Source" a strict definition, for two reasons, both of which I suspect you would agree with:

1. To prevent the likes of Microsoft from embracing/extending/extinguishing, or otherwise distorting or diluting the basic idea of source code sharing.

2. To distance themselves from the "free software" movement, which I think you've already expressed a dislike for.  :-)

Whether you like it or not, the phrase "Open Source" has a strict definition, and using it to mean something else is only going to muddy the waters.  This happened fifteen years ago, and it's not going to go away.
Richie Hindle Send private email
Friday, September 06, 2013
 
 
You can keep repeating their bullshit, but it doesn't make it any less of a lie no matter how many times you repeat it.

"both of which I suspect you would agree with"
"which I think you've already expressed a dislike for"

Do not put words in my mouth, this sort of "push" debate I have no patience for. Take your agenda and sod off.
Scott Send private email
Friday, September 06, 2013
 
 
I agree with Scott on the "app" dilemma.  "App" has always meant an "application" for a computer, not a little program on a little phone.  People who think otherwise are just young-uns who didn't grow up with it, and think they invented it.  Actually, Steve Jobs damn well knew it but let it happen... he sold out his own past for the App Store's benefit.  Money talks.
PSB136 Send private email
Friday, September 06, 2013
 
 
@Scott

"""Free is redefined to mean the GPL. They will say "not free as in beer, free as in freedom!" But that is BS of course, it's not freedom at all, the GPL is the most restrictive and insane license imaginable."""

The FSF does not redefine 'Free' to mean only GPL. They have a long list of other Free Software Licenses on their web site:

 https://www.gnu.org/licenses/license-list.html#GPLCompatibleLicenses

RE:  "How to make money with free or open source software" - one way that was not mentioned was selling license exceptions. Since the GPL v3 is very restrictive - a programmer can use it to make her software free and then sell license exceptions to corporate clients.

Another way is using GPL for consultingware. For example - I worked with group of consultants in the past that had a software library released under GPL that they used as key selling point when getting consulting contracts.

As a software user I strongly prefer BSD/MIT/Apache licensed software however GPL is good for letting developers build some "software equity" on the side while they are still working full time or contracting. Later on they can switch to different license or build some proprietary programs on top of that free software.

I am talking about B2B software here. The dynamics in the B2C space are very different.
Eugene D. Send private email
Saturday, September 07, 2013
 
 
For what it is worth, Angry birds could be given away for free without a pay version and the guys would still be rolling in cash.  There ad revenue is out of sight and about half of their money come from licensing.  But I think you have to consider them sort of the exception. Planning on making money from your game from licensing the characters is not a very high percentage play.  Think about how many movies try to do it and how many end up a ton of unwanted crap.

Open source(however you define it) works great when your not selling software.  Sell those support contracts, hardware, or customization services where the software is just part of the package.
Foobar Send private email
Saturday, September 07, 2013
 
 
I am late to this party but I agree with Scott. People are making money with even GPL. Check out wordpress or woocommerce extensions. They are all GPL but some cost money to buy and they do sell. Where would you rather get the updates and fixes from ? The original developer or from the accidental hacker/pirate ? I am NOT an open source fanatic. But I did some research into this recently. In practice you can make money even if you distribute the code. You do need to build a reputation and provide updates. the updates is crucial.
Frequent updates provides an element of service similar to hosting  etc. In theory it shouldn't work at least that is what I thought. In practice it does. Also people are somewhat lazy or just not into development. Sure they could get around all of this. But if your distribution is convenient, saves time and gives them a peace of mind then they don't. At least enough so that some people are making a  very good living doing this. Can many do this? No. Probably not. But then not many people succeed with closed source either. Maybe even a smaller percentage of success there.
codingreal Send private email
Wednesday, September 11, 2013
 
 

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