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How Can Companies Profit While Giving Code Away?

michael posted more than 9 years ago | from the make-it-up-on-volume dept.

Sun Microsystems 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."

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240 comments

Trickle Down Theory... (0)

Anonymous Coward | more than 9 years ago | (#10087995)

It's obviously a trickle-down theory... making easy to customize apps allows workers to gain productivity.

Re:Trickle Down Theory... (2, Funny)

Anonymous Coward | more than 9 years ago | (#10088006)

trickle-down my ass! hey, wait...

Re:Trickle Down Theory... (0)

Anonymous Coward | more than 9 years ago | (#10088022)

We'll have none of your voodoo-economic theories here. Republican!

interesting (2, Interesting)

linuxislandsucks (461335) | more than 9 years ago | (#10088009)

Sun preaches subscription as a opensource model.. when are they going to acknowledge and treat the gpl right in their subscription?

its kind of hypocritical to proclaim opensource when misss treating the Licneses of the code tha tyou use..

Re:interesting (5, Insightful)

kdogg73 (771674) | more than 9 years ago | (#10088044)

The code is free. The support is not.

Re:interesting (5, Insightful)

chris_mahan (256577) | more than 9 years ago | (#10088183)

Then it is a support contract.

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.

Re:interesting (4, Informative)

AKAImBatman (238306) | more than 9 years ago | (#10088431)

When you cancel a software subsciption, you can't use the code anymore.

No, that's not how it works. You subscribe to Sun's software, and you get new releases on a quarterly basis. If you cancel you still keep the software, but you don't get anymore updates.

You're confusing subscription with "maintenance" contracts.

Re:interesting (3, Insightful)

joeljkp (254783) | more than 9 years ago | (#10088470)

Right, look at Transgaming. They charge $5/month for Cedega, but you get the releases forever, even if you cancel your subscription. When you cancel, however, you miss out on support, new releases, voting rights, and the knowledge that you are helping to support its development.

Re:interesting (3, Interesting)

cronot (530669) | more than 9 years ago | (#10088615)

...but you get the releases forever... ...you miss out on support, new releases...

Wtf?

Well, I believe you meant to say the code is free, so you always get the releases that way if you want, but without the subscription you don't get the binary releases.

Anyway, without the subscription, apart from the binary relases, you also don't get stuff that aren't open-sourced, like the safe-disc circunvention, and some DirectX/3D stuff, I believe (not sure about that one though).

Re:interesting (1)

chris_mahan (256577) | more than 9 years ago | (#10088631)

Ok, so in order to get the newest code, you have to keep paying. But if your happy with code you have, you can stop paying. Fair enough..

Except in reality what happens if there's a vulnerability out in the wild. You can't get updates free, or any other way. Like I said, you gotta keep paying, or you can't use the code.

I do agree with you they don't make it easy necessarily.

Re:interesting (0)

Anonymous Coward | more than 9 years ago | (#10088160)

they won't make money unless it is money for nothing = license costs.

you can't make a margin on labour as the expectation - results ratio is too small

the only way to make a labour model profitable is to offshore so expectation (lower wages)is lower compared to activity (billed activity in foregin country)

Thank you to MTV / Friends / Blockbuster du jour / et al for making this possible and increasing expecations..... grrr

Coveted Fifth Post (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#10088015)

Biatch.

first post! (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#10088020)

free is good!

Um, okay Sun... (5, Insightful)

jpmorgan (517966) | more than 9 years ago | (#10088025)

But let's not forget newspapers make their money off the ads.

Re:Um, okay Sun... (4, Funny)

Throtex (708974) | more than 9 years ago | (#10088057)

You might be on to something... // This block of source code was brought to // you by McDonalds! Try our new extra value // meals at just 1 dollar apiece! // // McDonalds... I'm lovin' it!

Re:Um, okay Sun... (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#10088108)

Note to self... use the preview button *grumble*

Bug Me Not (-1)

Anonymous Coward | more than 9 years ago | (#10088145)

There ya go!
That's the fucking way right there. Put text ads right there in the code as comments. That's beautiful.

But as for Sun, all I got to say is three words--

Bug Me Not

Re:Um, okay Sun... (4, Interesting)

fitten (521191) | more than 9 years ago | (#10088188)

Advertising has to be seen/heard to be effective. Comments in the code will not be sufficient. The ads will have to be inherent in the GUI or something... like your background has to be like one of those billboards that changes every few minutes. Maybe some add has to pop up first before any application you activate runs...

Sounds fun and wonderful...

Re:Um, okay Sun... (3, Funny)

ArsonSmith (13997) | more than 9 years ago | (#10088426)

Maybe some add has to pop up first before any application you activate runs...


So IE/Windows has been useing this method then? No wonder M$ makes so much money.

Re:Um, okay Sun... (1)

bfree (113420) | more than 9 years ago | (#10088125)

And they print on paper and lots of other differences. I like the analogy, but personally I like to get news from Debian, sometimes reprinted slightly by Knoppix. Debian write the best pieces but sometimes they need a bit of help with the presentation!

Newspapers (4, Insightful)

Craig Ringer (302899) | more than 9 years ago | (#10088281)

Let's also not forget, as someone who works for a newspaper, that it's not easy to make money in the newspaper business at all. The whole industry seems to be feeling the pinch these days.

Re:Um, okay Sun... (2)

Threni (635302) | more than 9 years ago | (#10088356)

> But let's not forget newspapers make their money off the ads.

An over-simplistic analysis. Apart from free or subscription only papers, they make money from a combination of sales and advertising.

Re:Um, okay Sun... (2, Informative)

Shimmer (3036) | more than 9 years ago | (#10088444)

Traditionally, I believe the revenue generated from newspaper sales merely covers the cost of distribution (paper, trucks, delivery people, etc.). Since distributing bits is very cheap by comparison, one could plausibly conclude that the "subscription" price for software should be very low.

Re:Um, okay Sun... (1)

mystkdragon (739232) | more than 9 years ago | (#10088573)

I've used this type of thing in the past in my code. It is more to get a developer's attention than to advertise, but ultimately it is the same thing.

I use comment blocks into OUT to tell people what might be going on, where it is broken, WHY it is broken, and how to fix it. Usually it is another file (as many developers have code that react to STD* output).

Transition that to advertising. In this case, the OUT wouldn't be a report, it might be an advertisement to a product that resolves some issue (STDERR analysis might be a little encroaching, [see MS Error Reporting]).

Take a look at Adobe Acrobat 6.0 reader. In the upper right hand corner is a clickable 'advertisement' about other Adobe products...much easier to implement in a GUI world, but it can be done in a Text world.

No... (-1, Troll)

Anonymous Coward | more than 9 years ago | (#10088026)

Worth reading.

I disagree. I will never get those minutes back now, thank you for this boring story.

Analogy (3, Insightful)

jetkust (596906) | more than 9 years ago | (#10088031)

'You don't buy the software from Sun - instead you subscribe to the editorial outlook.'

Is this kind of like how Casino's give away complemetary rooms and gifts to their biggest gamblers?

Here at the International Change Bank ... (4, Funny)

craenor (623901) | more than 9 years ago | (#10088038)

People ask how we make a profit, I'll tell you...

Volume

Re:Here at the International Change Bank ... (1, Funny)

Anonymous Coward | more than 9 years ago | (#10088458)

People ask how we make a profit, I'll tell you...

Volume


I've got one of those knobs on my stereo... you're telling me I can use it to make profit?!?!

they'll make money (5, Funny)

Moonlapse (802617) | more than 9 years ago | (#10088041)

Just use the argument for mp3's. When Sun goes on its 'tour', 'arenas' will sellout to see 'live' code

Re:they'll make money (0)

Anonymous Coward | more than 9 years ago | (#10088702)

Don't forget that they can also lots of money by selling items like t-shirts, bumper stickers, ...um... autographed photos, ... and other stuff. After all, it's worked so well with bands that give away their music...

Free software - costing support (3, Insightful)

Turn-X Alphonse (789240) | more than 9 years ago | (#10088064)

Seems we already have a few models of this.

The software is free but you pay for the CD it's on and tech support.

Re:Free software - costing support (2, Interesting)

fitten (521191) | more than 9 years ago | (#10088215)

Paying for the CD is usually just enough to actually cover the cost of the media... a few $$ at most. It's hard to get folks to pay for tech support when it can be had for free everywhere else (newsgroups, web searches, etc.) It isn't like hardware tech support where you provide an actual service like if a HDD fails, someone will be waiting for you at the open of business the next day to replace it for you.

Re:Free software - costing support (4, Insightful)

antifoidulus (807088) | more than 9 years ago | (#10088363)

Paying for the CD is usually just enough to actually cover the cost of the media... a few $$ at most. It's hard to get folks to pay for tech support when it can be had for free everywhere else (newsgroups, web searches, etc.) It isn't like hardware tech support where you provide an actual service like if a HDD fails, someone will be waiting for you at the open of business the next day to replace it for you.
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:Free software - costing support (1)

laughing rabbit (216615) | more than 9 years ago | (#10088569)

Actually, if you cruise some of the mailing lists you'll find engineers asking their peers if/how/why because the commercial support, after not resolving the problem, threw up their hands and said, "not supported in this version".

Having provided support to end users, we often googled for answers, but as a professional, you'd never say that. "Please hold while I resaerch that issue. I'll be right back."

Re:Free software - costing support (4, Insightful)

16K Ram Pack (690082) | more than 9 years ago | (#10088692)

I wonder if plumbers sit around saying "you know what, I don't know why these loser businesses don't do their own plumbing. It's so easy."

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.

Re:Free software - costing support (3, Interesting)

Anonymous Coward | more than 9 years ago | (#10088295)

I've always wondered about this. If you write good enough software, with simple install, concise manuals, etc., people shouldn't have to call you for tech support; essentially ruining any chances of you giving away the software for free and surviving off support calls. Or are you meaning charge for adding new features that specific customers want?

Re:Free software - costing support (3, Interesting)

Roxton (73137) | more than 9 years ago | (#10088465)

The support model has its applications, but it should be plainly evident that it's not enough for everything. You know you're hitting the corners of a flawed philosophical system when doing something like writing intentionally mediocre documentation can be a (admittedly short-term) profit incentive.

People use BSD-style lincensing to allow people to see and use their code. People use the GPL to allow other people to see and use their code and not let commercial packages make use of them.

"If someone uses my code in a commercial product, then they're making money off my work!"

Well, if you really think about it, since they have access to your unmodified free code, they're only really paying for the extra features offered by the commercial code. What's so bad about that?

Re:Free software - costing support (1)

cdrguru (88047) | more than 9 years ago | (#10088519)

Exactly. Properly-written end-user software doesn't need any support at all. It works, it doesn't do unexpected things and the user interface is clear enough that the user doesn't have to have a 3-inch binder of documents in order to use it.

Contrast this with what I would consider "improperly-written" end-user software where it does not function as it is supposed to, it does unexpected things and you absolutely do need a huge amount of documentation to figure out what it did when you thought you knew how to use it.

Most of the open-source "solutions" I have seen aren't quite as bad as completely falling into the 2nd category, but the first is a lofty goal that might one day happen. Writing software with the goal that people will pay for necessary support dooms the software to requiring that support. And, in my opinion, this makes it third-rate or worse.

Re:Free software - costing support (4, Insightful)

Donny Smith (567043) | more than 9 years ago | (#10088568)

>essentially ruining any chances of you giving away the software for free and surviving off support calls.

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 :-). Hence "luser".

So it's both - always improving the quality to cut down on bullshit calls (the 80:20 rule), and also adding features...

How Can Companies Profit While Giving Code Away? (4, Informative)

Anonymous Writer (746272) | more than 9 years ago | (#10088087)

Advertising. Giving code away would give software the attributes of free-to-air broadcast media. And given that software usually needs regular updates for bug fixes, downloading would be more than just a one-time affair. Free-to-air broadcast media revenue comes from advertising. And although general advertising doesn't guarantee the audience will have any interest, the type of software being downloaded will give a better idea of what kinds of ads would interest their downloading demographic.

Re:How Can Companies Profit While Giving Code Away (1)

fitten (521191) | more than 9 years ago | (#10088275)

The only time you could enforce it (which would be what the advertisers who pay you to show their adverts will require) is during the download time. Giving the source away means that folks will disable any pop-ups or the like pretty fast. With no guarantee to advertisers that anyone will see the add except for those updates, which you will probably have to force just so folks will see the advertisements, won't entice advertisers to give you much money to advertise for them.

Advertisers pay for exposure... the more exposure, the more money they pay. If you can't guarantee them any exposure, they won't pay.

Re:How Can Companies Profit While Giving Code Away (1)

Anonymous Writer (746272) | more than 9 years ago | (#10088595)

Advertisers pay for exposure... the more exposure, the more money they pay. If you can't guarantee them any exposure, they won't pay.

The type of software being downloaded can help tailor advertising for the downloading demographic. People downloading software for servers may be interested in server hardware or accessories like a UPS or rackmount keyboard or display. People downloading website development software like PHP may be interested in credit card transaction processing services. With that kind of a setup, people may actually want to see the advertising, compared to television, where the advertising is too broad.

And with the click-through nature of internet advertising, advertisers can pay per click-though viewing and purchases, rather than paying a flat rate. You don't have to guarantee anything, because if they don't get anyone through click-through browsing, then they don't have to pay anything, as opposed to the television/radio model where they pay first.

Re:How Can Companies Profit While Giving Code Away (2, Informative)

jrexilius (520067) | more than 9 years ago | (#10088397)

I dont think that is the only way. There was an article a while back on the different business models around OS and there were some good examples that were not advertising.

One way, which my company is doing it is by giving away source code of components that plug in to our services system. What you are really buying from us is infrastructure, management, and time.

We are expecting that many people will build their own systems but that is OK, we dont need to be a monopoly, we just have to offer value to customers such that the say its worth the money.

Re:How Can Companies Profit While Giving Code Away (1)

Anonymous Writer (746272) | more than 9 years ago | (#10088637)

There was an article a while back on the different business models around OS and there were some good examples that were not advertising.

That sounds interesting. Got a link to the article?

Simple: nobody reads the license (4, Insightful)

FooBarWidget (556006) | more than 9 years ago | (#10088088)

It's very simple: nobody reads the license. I made some money by selling an open source app (of which I am the maintainer). I also sell it, and include the source code. Yes I'm actually able to sell it, even though it can be downloaded for free.

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.

Re:Simple: nobody reads the license (3, Insightful)

Raffaello (230287) | more than 9 years ago | (#10088166)

This model only works if there is no competition in your tiny market niche. In a small enough market niche, there may be none, and you may continue to charge a premium for GPL software.

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:Simple: nobody reads the license (3, Insightful)

Confused (34234) | more than 9 years ago | (#10088473)

The model works always, as long as you provide a useful service to the customer at a price he's willing to afford.

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.

Re:Simple: nobody reads the license (1)

cuzality (696718) | more than 9 years ago | (#10088199)

nobody reads the license

Sure, right now everybody clicks "I agree" at the license agreement assuming that it's the standard commercial license, but this ignorance won't last much longer, especially as exposure to the FOSS movement becomes more widespread.

Re:Simple: nobody reads the license (1)

FooBarWidget (556006) | more than 9 years ago | (#10088256)

I don't see exposure to the FOSS movement getting more widespread any time soon, on the Windows market. After all these years, the concept of being allowed to read, modify and sell the source code is still alien to most Windows users. As long as the Windows world is filled with commercial software, and people are still using Windows, it won't happen any time soon.

Re:Simple: nobody reads the license (1)

fitten (521191) | more than 9 years ago | (#10088307)

After all these years, the concept of being allowed to read, modify and sell the source code is still alien to most Windows users.

Not only that, most Windows users aren't computer technical folks. These "features" are non-features to them and offer little/no incentive to use the software for those reasons. They don't care or want to be able to read, modify, or sell the source code. They just want their program to work. The only real "feature" that attracts these users to F/OSS is the price tag, which is to say they can download it for free (as in beer - no cost). The other "features" you mention (allowed to read/modify/sell the source) are simply noise to them. They could care less.

Re:Simple: nobody reads the license (1, Insightful)

Anonymous Coward | more than 9 years ago | (#10088240)

Did you make enough off it to support yourself and family, exclusive of any other income?

When I quit my job (2, Funny)

Craig Ringer (302899) | more than 9 years ago | (#10088299)

"When I quit my job because my boss is an asshole, I called the maker of this software I know they pirated. The guy who answered the phone laughed so hard it sounded like he was going to die, then hung up. What the hell?"

*grin*

Good Essay, but (2, Interesting)

AbbyNormal (216235) | more than 9 years ago | (#10088103)

what makes the community do what they do? (what my boss always asks, even though he loves OS products).

That's how a "subscription" company makes money, but how is the community sustained through governance? I realize these are rather wide open questions, but encouraging discussion enlightens us all.

all software should be free (0, Troll)

Anonymous Coward | more than 9 years ago | (#10088117)

and get people to pay for hardware and services

use your expertise to help get the software customised - and no you won't get priced out of the market by "small developers" because there will be no monolithic company behind the software, only small developers. The GPL is anti-corporation, pro small-business.

And have a commodity hardware market with open drivers, so the distinguishing point is quality and price of hardware. No special software packs, no tie ins, no incompatabilities.

IBM benefits from helping linux because they sell hardware and they sell services. But sooner or later they will be squeezed out too, because corporations can't move fast enough.

This is a good thing. It returns us to what capitalism is all about, hardware trading on equitable terms (no lock-ins) and service trading without mega corps. It is pure capitalism.

The future just happened, although there are a few people who don't know that yet.

Re:all software should be free (0)

Anonymous Coward | more than 9 years ago | (#10088241)

Mod parent up, people should go see "The Corporation" to get a nice backgrounder on it. The corporation as a legal entity is very much an unnatural addition to an ideal capitalist system. We see everyday here people who claim to be capitalists working in corporations to stifle innovation; RIAA + MPAA stopping technologies by funding INDUCE, Microsoft using market share to it's advantage, Darl McBride using intellectual property over innovation - to a lesser extent even Apple using DRM.

N.B. The wonderful thing about "The corporation" is that it illustrates how these people aren't "evil" but operate within structures that make them do what they do. In other words, it is not anti-capitalist. The corporation as an entity becomes something which subverts social value in the film. I would go further and say that it subverts pure capitalism to the whims of non-entitys that are simply too large.

This is why Microsoft should have been busted up into smaller companies (and legally they could have, but they didn't). That would have been good capitalism, what isn't good capitalism is when industry has too close ties with government (INDUCE) - that road leads to facism.

That's one definition of facism, where the corporations/capitalists have more power than the citizens. So there is a form of facism haunting many western democracies, particularily America.

Re:all software should be free (3, Insightful)

Evil Adrian (253301) | more than 9 years ago | (#10088411)

You know, all of your bitching about the stifling of innovation would be a lot more effective if you had some actual fact to stand on. New technologies are constantly being introduced to the market. How fast is your computer now? How fast was it 5 years ago? How much more economical are cars than they were 5 years ago?

And so on.

Re:all software should be free (0)

Anonymous Coward | more than 9 years ago | (#10088270)

No offense. I guess you're trying to express something heartfelt, but Capitalism is all about corporations. The equity markets are the pillar of Capitalism and were before any of us were born. That is the definition of Capitalism. The scenario you're describing where small business are championed and publicly held corporations bite the dust is not called Capitalism. It might hurt your feelings, but it's a fact.

Re:all software should be free (-1)

Anonymous Coward | more than 9 years ago | (#10088319)

umm are you a troll?

Corporations are a relatively new aspect of trade between people. Private ownership of the means of production (aka capitalism) does not mean that a legal entity should be able to own things and fuck us all over, that was invented later.

define: capitalism [google.com]

Re:all software should be free (1)

j3110 (193209) | more than 9 years ago | (#10088348)

Corperations, as we know them today, were tacked onto capitalism. There's just too many rights for a company. Lobeying is nothing more than buying votes. If employees could afford to do so, they could afford lower wages. Because of the falure of corperations to work properly, we had unions crop up to be the other great evil. So because of lobeying and stupid special interests, we now have a special interest government where the government represents a million special interest groups instead of the population as a whole.

Capitalism and polotics got too mixed up.

Crazy Idea (1)

Drasil (580067) | more than 9 years ago | (#10088118)

The reproduction of hardware costs a lot, while the reproduction of software costs very little. People often make a success of things that ignore reality, but they rarely do so with things that are directly opposed to reality.

Re:Crazy Idea (0)

Anonymous Coward | more than 9 years ago | (#10088164)

Reproduction of hardware costs very little at the right scale. Note the price of a wristwatch, calculator, etc is lower than the price of a CD or MP3.

But magazines don't stop working... (3, Insightful)

questro (802656) | more than 9 years ago | (#10088132)

Lot's of people talk about the subscription model and it's benefits. Often compared to a magazine subscription. The difference is that back issues of magazines still continue to work, unlike some subscriptions of software that have time-bomb unlock codes. I think the subscription model is a bad idea for consumers.

Re:But magazines don't stop working... (4, Interesting)

alex_tibbles (754541) | more than 9 years ago | (#10088289)

It's more about newspapers: yesterday's news is not news. The assumtion is that old news is worthless; therefore, old newspapers are worthless.
Old newspapers are nearly worthless. It is worth having an archive, but only a few of them, so old newspapers are worth very much less than their cover price.
So... by anology, old software must be worthless. Hmm. 'Old' webservers are useless ('cos they will get r00ted in no time). But old, offline typesetting software? Pfft. 'Old' here really means 'unmaintained'. I think that an analogy with rusty machinery is a better one for unmaintained open source software:
at any point you can take it to a mechanic to get an estimate on repairs;
old models continue to be useful, in certain applications, as long as they are adequately maintained.

Re:But magazines don't stop working... (5, Funny)

dave420 (699308) | more than 9 years ago | (#10088435)

The magazines do stop working. My stack of PC World mags from 1993 aren't as up-to-date as a similar publication I could buy today. Magazines are one big time-bomb, because they can never be updated, only replaced.

Shit, but ask me about 386 notebooks, and I'm all yours.

Service/Support/Implementation/Customization (0)

Anonymous Coward | more than 9 years ago | (#10088143)

At least in the case of complicated software like ERP, you can make as or more in the support services area as the customer ever paid for initial software.

Sun forgets the smaller apps (3, Insightful)

draggin_fly (807754) | more than 9 years ago | (#10088163)

The win-win philosophy underlying the Sun statements is good; that is, it's true that Sun can make money by operating as 'editor in chief' of a suite of freeware applications. However, I don't buy into the statement that open source doesn't mainly benefit from having many hands involved. Making the best people the 'committers' of projects is important but nowhere in the article does anyone mention how much good software is created and maintained by people not previously recognized as 'best' for the job. The process doesn't work the way the Sun statement implies.

Re:Suhttp://slashdot.orgn forgets the smaller apps (2, Interesting)

chris_mahan (256577) | more than 9 years ago | (#10088413)

>>Sun can make money by operating as 'editor in chief' of a suite of freeware applications.

Of course, when a group of university students in Sweden or Germany or (God Forbid!) China decide that they want to work together and editor-in-chief Sun's freeware applications, for free just 'cuz, and make some great admin tools, then Sun is going to have a cattle drive (instead of just a cow).

> The process doesn't work the way the Sun statement implies.

Exactly. If I were Sun, I would give money to fledging open-source projects. It's amazing how much goodwill a $500 paypal donation will generate on a one-man project.

For example. Python operated "under the radar" for many years. Now, there's street recognition (not much, but some) but it's now too late for outside parties to influence or even buy Python.

Likewise there are many projects out there that could become just revolutionary yet are completely ignored by Sun and the like. The people in these projects toil in darkness, stressing about money and relationships, gritting their teeth as their pre-alpha api takes shape on their sub-par hardware. If a company or three came and said: We believe in what you are doing, and here's a $1,000, keep up the good work and post progress to your blog, we'll check it out regularly; then said developer would remember said company as an early benefactor and would just have a warm feeling for them for years to come.

BTW, Johnathan Schwartz' weblog is interesting, except maybe a little paternalistic.

Service Providers (2, Interesting)

gtrubetskoy (734033) | more than 9 years ago | (#10088173)

Service Providers (hosting, ASP, ISP, VoIP, etc.) can make money by charging for their services while giving code away. An open source service provider will attract more customers because they are not dealing with a black box (a white box?), they will provide better services because bugs will be fixed faster, they will have more loyal customers, especially those that are actively involved with the product; And if other companies use their code and compete, better service as opposed to more obscurity will result.

Re:Service Providers (1)

jrexilius (520067) | more than 9 years ago | (#10088546)

That is exactly what we are doing. Our expectation is that people will get value from us building, managing, and maintaining the infrastructure to support the service, spending the time to write the software and integrate it all, and make it easy for them to use. Since our costs are low using OS we charge less and we think its a valuable trade.

We hope anyways as we just got started.

The one thing I struggle with when dealing with other CEO's and business types is their mentality of a business has to have lock-in and has to strive for monopoly. I think by giving away my code that people who have more time then money can serve themselves and those who have money and less time will see value. When someone else moves into the market I am then competing on value, relationships, and my ability to innovate. This is how other business compete. Why the software industry has developed this idea that lock-in, IP, and monopoly is the only way to be successful is what I struggle with. Who knows, maybe I am missing something.

Sun's not the only one (2, Informative)

smartin (942) | more than 9 years ago | (#10088185)

If i understand them correctly i believe that Gentoo and Lin(spire|dows) are pushing the same sort of model.

Vast wasteland (5, Interesting)

nelsonal (549144) | more than 9 years ago | (#10088187)

There is so much good open source software out there (my most recent find was a sweet little bookkeeping package called Lazy8 ledger) that gets very little promotion. I'd guess that there are many, many useful packages and programs that if I knew about I'd use. So I can see significant value in "editing" open source into useful groups. Also, I've long thought that it would be nice to see a "starter's" edition of Linux that reduced the choices of packages available to the "best" pieces of software. Nothing against vi and EMACS ed and the others, but does a first time user really need to choose between 12 or more text editors (or two desktop environments or three office suites, etc). I realize there are tremendous advantages to having diverse software offerings, but it's not as useful for the first time user.

Commercial vs. Consumer Markets (5, Insightful)

G4from128k (686170) | more than 9 years ago | (#10088202)

This model is very compelling for the commercial market -- companies know that they will both want customization and will need support for their software. They are willing to pay for expert assistance and 7x24 access to services. Enterprise software and support can sell for hundreds or thousands of dollars per seat - providing plenty of revenues to offset the labor costs of support can customization.

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.

Re:Commercial vs. Consumer Markets (2, Insightful)

HappyPerson (525201) | more than 9 years ago | (#10088364)

The better you build it the less support you would have to have, if you want a user to edit some esoteric config file, then fine you will need a lot of support. If you design your apps with the end user in mind before you write code, then your support costs will be far less if you do a good job

support is the name of the game (4, Interesting)

for_usenet (550217) | more than 9 years ago | (#10088208)

IBM has realized this, and is building up their services business around this model, and it would be great if companies like Sun join the fray, to keep the competition there.

I also liked the portion of the essay where he talks about being able to pull together all of the components yourself, and support it yourself, or to pay someone else to support it for you. The first part of that is why I used OSS, and the 2nd part is what is currently lacking to make OSS more generally accepted. While there are people that will need support, there are some of us that just want the choice, freedom and flexibility, and OSS seems to be the best way to provide both right now.

This is not an original idea (3, Insightful)

Anonymous Coward | more than 9 years ago | (#10088233)

This is not an original idea - even in the software world.

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 (5, Insightful)

oliverthered (187439) | more than 9 years ago | (#10088236)

How to make money on 'free' software.
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.

Re:Support And Development (2, Insightful)

BobTheAtheist (805111) | more than 9 years ago | (#10088311)

What if you write a good quality app that has lots of built in help? Or do you strip out the help to get more support contracts?

Re:Support And Development (2, Insightful)

fitten (521191) | more than 9 years ago | (#10088379)

(You want me to tell you how to use the software, then pay me).

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:Support And Development (1)

gnuLNX (410742) | more than 9 years ago | (#10088511)

Campany A many want soultion B, but they are not gonna pay you to solve it say that their competitor (company C) can use it for free....this isn't star teck people. It is not human nature to live were everyone is equal.

Heh (4, Insightful)

Otter (3800) | more than 9 years ago | (#10088238)

This is certainly an elegant way of saying "Hey, it may not be good for us but it's sure as hell bad for Microsoft!"

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.

Subscription Model is interesting but... (5, Insightful)

Arkus (15103) | more than 9 years ago | (#10088303)

If you take a look at what Sun is currently charging for the Java Desktop, it just doesn't make financial sense at the current price point. I for one don't expect to see companies switching to a subscription model that charges $100 per system per year (granted the current pricing until December 2, 2004 is $50 [sun.com] ). To be competitive and offer the business community a truly compelling reason to switch to the Java Desktop, the price is going to need to come down just a bit more.
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.

We all do this (1, Interesting)

Anonymous Coward | more than 9 years ago | (#10088368)

None of the information I provide for my employer is secret. It's all out there buried like a needle in a haystack. My employer is always welcome to fire me but somebody has to find the needle and the haystack is very big. If you're not as big as IBM, paying somebody to provide you with the good stuff on a silver platter is way more profitable than trying to dig out the stuff yourself.

Demand for Support Built In (5, Interesting)

sugarmotor (621907) | more than 9 years ago | (#10088390)

The article doesn't cover the incentive for the developers to produce software that requires support. There might be a lot of little tasks which the software can perform but only with hand-holding by the support staff. E.g., a window may pop-up saying "There is a way to do this - contact support to find out how!".

The emphasis here is on incentive.

Just something to ponder. Stephan

Add-ons, support, customization (1)

otisg (92803) | more than 9 years ago | (#10088432)

Not the whole package needs to be given away for free. Companies can give away the core, and charge for useful add-ons. This way they will gain the market share, and still manage to profit from customers who want and need more.

Companies can also place their products in a way that allows them to provide per-customer consulting, customization, system integration, etc. The company's employees should be THE experts for doing this, so they could easily have the advantage over 'generic' consulting companies.

Those are just some of the ideas.

Weak analogy, does Sun really get it? (2, Informative)

buck68 (40037) | more than 9 years ago | (#10088467)

I still get an uneasy feeling from parts of this essay. The link between community governance and control of the commit authority is played up a little too much for my comfort. Open source has a fallback mechanism for users/customers who are unhappy: the code fork. This is one way in which the analogy with newspapers is a bit week. A newspaper is ephemeral, the stories change every day. A "fork" doesn't make sense. Sure you can make your own by going to base news sources, but you can't re-use the mechanical bits that make up the NYTimes layout or the website. If you tried to my a MYTimes that re-cycled the NYTimes content directly, you would certainly be violating their terms of use and copyright.

This article gives me the impression that Sun is still clinging to control of the commit mechanism as a way to exercise ultimate authority over the community. In contrast, if you read interviews with Linus Torvalds, he is usually very careful to express how limited his control is, downplaying the fact that he holds the ulimate "commit" keys, and emphasizing that his true power comes from the amount of respect he has earned (and is able to sustain) from his fellow kernel developers.

Same Idea as Free Content (1, Interesting)

alarocca (683961) | more than 9 years ago | (#10088476)

the whole idea is that you give something away... but not EVERYTHING... or.. at least you eventually charge for something. for example, people spend countless hours creating animations and videos for the internet, only to give it away for free...just to generate hype. is this any different? speaking of that, what you really should be doing-- rather than thinking about or discussing this topic-- is riding bmx bicycles. Videos and Pictures of people riding BMX bicycles [zensky.com] [bmx.zensky.com] have fun and don't eat poop.

Don't forget about hardware. (5, Interesting)

blackketter (72157) | more than 9 years ago | (#10088500)

Our company [slimdevices.com] , profits selling hardware, while most of our engineering effort goes towards our open source software, SlimServer. The open source part of our business has helped us build an great community of users. Some of our users don't buy the hardware but contribute nonetheless, making our hardware, Squeezebox, more useful and valuable to the folks who do buy. It's a business model that's working for us right now.

Not all developers work for software companies (4, Insightful)

abiggerhammer (753022) | more than 9 years ago | (#10088549)

The article restricts itself to how companies whose primary focus is software development can profit while giving code away. This is just about the only note that ever gets sung in the open-source/profitability debate, and I'm getting awfully tired of it.

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.

Common expression... (4, Insightful)

pjrc (134994) | more than 9 years ago | (#10088598)

The expression "make money off of" seems to have gained a lot of popular usage in recent years. Maybe it's just a harmless common phrase, but every time I see it, I get this dot-com era feeling.

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 :-)

The Free Software Problem: Possible Solution (1)

Louis Savain (65843) | more than 9 years ago | (#10088616)

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.

This is not the way free/open source software should be approached, IMO. Nobody is going to make much money by trying to sell something that users can get for free. You can sell a service based on the software but that's about it.

The way to approach free software is for the big users of software (i.e., corporations) to form software development consortiums whose sole reason for being is to develop open software for its members. The cost of development should be shared among the members of the consortium. Of course, if you're not a paying member, you don't get the timely updates and you don't get the informed support. You have to wait until they make it out to general public. Just an idea.

Cooperation is always better than competition. Let us be humane toward members of our own species for a change.

Pennies worth (4, Informative)

iamacat (583406) | more than 9 years ago | (#10088656)

Yes, I would pay for a free software subscription. I even occasionally click on google ads while searching to buy a particular item. But it would be a long time before I spend $299 that I might pay for a complex app that really meets my needs. Yes you can make money from side business if software itself is free, but probably not enough to cover writting software in the first place. Perhaps enough to cover distribution and minor bug fixes.

Of course support can be expensive, but that's only for corporate customers, and even then many free apps can be "supported" by googling for info. What kind of questions about Firefox are worth $100 a pop?

Let's just accept that most free software is written as a hobby, as an academic project or for personal use. Linus didn't set out to make great riches, and as far as I know he didn't. If you are trying to make money off either free [sun.com] or pay [sco.com] software that other people are willing to write and maintain as a hobby, well you should have known better.
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