business models for open-source software

{{Short description|Business models that can be compatible with open source software projects}}

Software companies focusing on the development of open-source software (OSS) employ a variety of business models to solve the challenge of making profits from software that is under an open-source license. Each of these business strategies rest on the premise that users of open-source technologies are willing to purchase additional software features under proprietary licenses, or purchase other services or elements of value that complement the open-source software that is core to the business. This additional value can be, but not limited to, enterprise-grade features and up-time guarantees (often via a service-level agreement) to satisfy business or compliance requirements, performance and efficiency gains by features not yet available in the open source version, legal protection (e.g., indemnification from copyright or patent infringement), or professional support/training/consulting that are typical of proprietary software applications.

Historically, these business models started in the late 1990s and early 2000s as "dual-licensing" models (for example MySQL{{Cite web|url=https://www.mysql.com/about/legal/licensing/oem/|title=MySQL :: Commercial License for OEMs, ISVs and VARs|website=www.mysql.com|access-date=2019-09-11}}), and they have matured over time, giving rise to multiple variations as described in the sections below. Pure dual licensing models are not uncommon, as a more nuanced business approach to open source software businesses has developed. Many of these variations are referred to as "open core" model, where the companies develop both open source software elements and other elements of value for a combined product.

A variety of open-source compatible business approaches have gained prominence in recent years, as illustrated and tracked by the Commercial Open Source Software Index (COSSI),{{Cite web|url=https://docs.google.com/spreadsheets/d/17nKMpi_Dh5slCqzLSFBoWMxNvWiwt2R-t4e_l7LPLhU/edit?usp=embed_facebook|title=COSSI: $100M+ Revenue Commercial Open-Source Software Company Index|website=Google Docs|language=en-US|access-date=2019-08-28}} a list of commercial open source companies that have reached at least US$100 million in revenue. Notable examples include open core (sometimes referred to as dual licensing or multi-licensing), software as a service (not charging for the software but for the tooling and platform to consume the software as a service often via subscription), freemium, donation-based funding, crowdfunding, and crowdsourcing.

There are several different types of business models for making profit using OSS or funding the creation and ongoing development and maintenance. The list below shows a series of current existing and legal commercial business models approaches in the context of open-source software and open-source licenses.{{cite book|title=Best Practices for commercial use of open source software|last=Popp|first=Dr. Karl Michael|publisher=Books on Demand|year=2015|isbn=978-3738619096|location=Norderstedt, Germany}} The acceptance of these approaches has been varied; some of these approaches are recommended (like open core and selling services), others are accepted, while still others are considered controversial or even unethical by the open-source community. The underlying objective of these business models is to harness the size and international scope of the open-source community. Depending on the project the funding options and their success differs for a sustainable commercial venture.{{Cite web|last=Augmenta|title=Open Source Monetization: Challenges and Strategies|url=https://www.license-token.com/wiki/open-source-monetization-challenges-and-strategies|access-date=26 March 2025|website=license-Token wiki}} The vast majority of commercial open-source companies experience a conversion ratio (as measured by the percentage of downloaders who buy something) well below 1%, so low-cost and highly-scalable marketing and sales functions are key to these firms' profitability.{{Cite web|last=Riehle|first=Dirk|title=The Single-Vendor Commercial Open Source Business Model|url=https://www.researchgate.net/publication/220385101|access-date=19 September 2021|website=Researchgate}}{{citation needed|date=October 2013}}

Not selling code

= Professional services =

Open-source software can also be commercialized from selling services, such as training, technical support, or consulting, rather than the software itself.{{cite web | url = http://www.linuxinsider.com/story/79341.html | title = FOSS in the Enterprise: To Pay or Not to Pay? | date = 5 November 2013 | first = Jack M. | last = Germain | website = LinuxInsider | publisher = ECT News Network, Inc. | access-date = 18 June 2016}}{{cite web | url = http://www.cio.com/article/2388344/open-source-tools/6-reasons-to-pay-for-open-source-software.html | title = 6 Reasons to Pay for Open Source Software | date = 13 February 2013 | first = Paul | last = Rubens | website = CIO | publisher = CXO Media, Inc. | access-date = 18 June 2016 | quote = Open source software is free to download, modify and use, but that doesn't mean it's not worth paying for sometimes. If you're using open source software in a commercial, enterprise capacity, here are six reasons why you should pay for free software.}}

Another possibility is offering open-source software in source code form only, while providing executable binaries to paying customers only, offering the commercial service of compiling and packaging of the software. Also, providing goods like physical installation media (e.g., DVDs) can be a commercial service.

Open-source companies using this business model successfully are, for instance RedHat,{{cite news|url=https://www.wired.com/2012/03/red-hat/|title=Red Hat Becomes Open Source's First $1 Billion Baby|last=McMillan|first=Robert|date=28 March 2012|access-date=18 June 2016|work=Wired|quote=Other companies have made big money selling Linux — Intel, IBM, Dell, and others have used it as a way to sell hardware and support services — but Red Hat has managed the tricky business of building a software platform that big businesses will pay for.}} IBM, SUSE, Hortonworks (for Apache Hadoop), Chef, and Percona (for open-source database software).

= Branded merchandise =

Some open-source organizations such as the Mozilla Foundation{{cite web | url = http://www.mozillazine.org/articles/article4484.html | title = Mozilla Foundation Open Letter Orders Unofficial Mozilla Merchandise Sellers to Stop, Legal Action Hinted | first = Gervase | last = Markham | date = 16 March 2004 | access-date = 18 June 2016 | website = MozillaZine}} and the Wikimedia Foundation{{cite web | url = https://store.wikimedia.org/ | title = Wikipedia Store | publisher = Wikimedia Foundation | year = 2016 | access-date = 18 June 2016}} sell branded merchandise articles like t-shirts and coffee mugs. This can be also seen as an additional service provided to the user community.

= Software as a service=

Selling subscriptions for online accounts and server access to customers is one way of adding value to open-source software. Another way is combining desktop software with a service, called software plus services. Most open core companies that use this approach also provide the software in a fashion suitable for on-premises, do-it-yourself deployment. To some customers, however, there is significant value in a "plug and play" hosted product. Open source businesses that use this model often cater to small and medium enterprises who do not have the technology resources to run the software. Providing cloud computing services or software as a service (SaaS) without the release of the open-source software is not an open source deployment. With a SaaS approach, businesses no longer need to write new code from scratch, but instead can use the software they need by paying a subscription. Serverless technology allows businesses to completely transfer infrastructure management to the provider, which means that teams can create scalable applications more efficiently, cheaper, easier, and more reliably.{{cite journal |last1=Ballhausen |first1=Miriam |title=OpenSaaS: Using Free and Open Source Software as Software-as-a-Service |journal=International Free and Open Source Software Law Review |date=2014 |volume=6 |pages=61–68 |url=https://www.jolts.world/index.php/jolts/article/view/103 |issn=2666-8106}}

The FSF called the server-side use-case without release of the source-code the "ASP loophole in the GPLv2" and encourage therefore the use of the GNU Affero General Public License which plugged this hole in 2002.{{cite web | url = https://www.gnu.org/licenses/index.html | title = Licenses | at = The GNU Affero General Public License | publisher = Free Software Foundation | website = GNU Project | access-date = 18 June 2016 | quote = We recommend that people consider using the GNU AGPL for any software which will commonly be run over a network.}}{{cite web | url = https://opensource.org/blog/gnu-affero-gpl-version-3-and-the-asp-loophole | title = GNU Affero GPL version 3 and the "ASP loophole" | date = 7 June 2007 | first = Michael | last = Tiemann | publisher = Open Source Initiative | access-date = 18 June 2016}}

= Voluntary donations =

There were experiments by Independent developers to fund development of open-source software donation-driven directly by the users, e.g. with the Illumination Software Creator in 2012.{{cite web|url=http://www.omgubuntu.co.uk/2012/06/help-linux-tycoon-more-go-open-source |publisher=OMGUbuntu |first=Joey-Elijah |last=Sneddon |date=2012-06-01 |access-date=2013-08-08 |title=Will You Help Change The Way Open-Source Apps are Funded? |quote=Lunduke is pledging to open-source and distribute his portfolio of hitherto paid software – which includes the Linux distro management simulator Linux Tycoon - for free, under the GPL, if he can reach a donation-driven funding goal of $4000/m. Reaching this goal, Lunduke says, 'will provide proof for others, who would also like to move their software businesses to be open source, that it is doable.'}} Since 2011, SourceForge allows users to donate to hosted projects that opted to accept donations, which is enabled via PayPal.{{cite web | url = https://sourceforge.net/p/forge/documentation/Donations/?version=1 | date = 4 March 2011 | title = SourceForge.net Donation System | first = Elizabeth | last = Naramore | website = SourceForge | publisher = Slashdot Media | access-date = 16 October 2017 }}

Larger donation campaigns also exist. In 2004 the Mozilla Foundation carried out a fundraising campaign to support the launch of the Firefox 1.0 web browser. It placed a two-page ad in the December 16 edition of The New York Times listing the names of the thousands who had donated.{{cite web|url=https://www-archive.mozilla.org/press/mozilla-2004-12-15.html |title=Mozilla Foundation Places Two-Page Advocacy Ad in The New York Times |access-date=June 15, 2010 |author=Mozilla Foundation |date=December 15, 2004}}{{cite web|url=http://news.cnet.com/New-York-Times-runs-Firefox-ad/2100-1032_3-5493774.html|title=New York Times runs Firefox ad|date=2004-12-16 |access-date=2013-08-12|first=Ingrid |last=Marson |quote=Fans of the Mozilla Foundation's Firefox browser who funded an advertisement in The New York Times will finally get to see their names in print on Thursday.|publisher=cnet.com}}

In May 2019, GitHub, a Git-based software repository hosting, management and collaboration platform owned by Microsoft, launched a Sponsors program that allows people who support certain open source projects hosted on GitHub to donate money to developers who contribute and maintain the project.{{Cite web|url=https://www.zdnet.com/article/github-will-now-let-you-back-your-favourite-open-source-developers/|title=GitHub will now let you back your favourite open source developers|last=Tung|first=Liam|website=ZDNet|language=en|access-date=2019-08-26}}

= Crowdsourcing =

Crowdsourcing is a type of participative online activity in which an individual, an institution, a nonprofit organization, or company proposes to a group of individuals of varying knowledge, heterogeneity, and number, the voluntary undertaking of a task via a flexible open call. The undertaking of the task, of variable complexity and modularity, and in which the crowd should participate, bringing their work, money, knowledge and/or experience, always entails mutual benefit. The user will receive the satisfaction of a given type of need, be it economic, social recognition, self-esteem, or the development of individual skills, while the crowdsourcer will obtain and use to their advantage that which the user has brought to the venture, whose form will depend on the type of activity undertaken. Caveats in pursuing a Crowdsourcing strategy are to induce a substantial market model or incentive, and care has to be taken that the whole thing doesn't end up in an open source anarchy of adware and spyware plagiates, with a lot of broken solutions, started by people who just wanted to try it out, then gave up early, and a few winners. Popular examples for Crowdsourcing are Linux, Google Android, the Pirate Party movement, and Wikipedia.

= Training and certification =

Offering training programs and certification courses related to the open-source software, catering to individuals or organizations, like Red Hat Certification Program or Linux Professional Institute Certification Programs.

Selling users

= Partnership with funding organizations =

Other financial situations include partnerships with other companies. Governments, universities, companies, and non-governmental organizations may develop internally or hire a contractor for custom in-house modifications, then release that code under an open-source license. Some organizations support the development of open-source software by grants or stipends, like Google's Summer of Code initiative founded in 2005.{{cite web|url=https://www.linux.com/news/googles-summer-code-concludes|title=Google's Summer of Code concludes|last=Byfield|first=Bruce|date=21 September 2005|publisher=linux.com|access-date=18 June 2016|quote=DiBona said that the SOC was designed to benefit everyone involved in it. Students had the chance to work on real projects, rather than academic ones, and to get paid while gaining experience and making contacts. FOSS projects benefited from getting new code and having the chance to recruit new developers.}}

= Advertising-supported software =

In order to commercialize FOSS (free and open-source software), many companies (including Google, Mozilla, and Canonical) have moved towards an economic model of advertising-supported software. For instance, the open-source application AdBlock Plus gets paid by Google for letting whitelisted Acceptable Ads bypassing the browser ad remover.{{cite web|url=http://www.neowin.net/news/report-google-paying-adblock-plus-to-not-block-google039s-ads|title=Report: Google paying AdBlock Plus to not block Google's ads |first=John |last=Callaham |date=2013-06-06 |publisher=neowin.com |access-date=2013-08-13 |quote=Google is paying money to Eyeo, the company behind AdBlock Plus, so that its ads get through the browser ad remover.}} As another example is SourceForge, an open-source project service provider, has the revenue model of advertising banner sales on their website. In 2006, SourceForge reported quarterly takings of $6.5 million{{cite web|url=http://www.marketwatch.com/story/sourceforge-quarterly-profit-surges-as-revenue-rises |title=Sourceforge quarterly profit surges as revenue rises|access-date=2013-08-13 |date=2007-05-24 |publisher=marketwatch.com|quote=Software Corp., late Thursday reported third-quarter net earnings of $6.49 million, or 9 cents a share, up from $997,000, or 2 cents a share, during the year-ago period. Pro forma earnings from continuing operations were $2.1 million, or 3 cents a share, compared with $1.2 million, or 2 cents a share, last year. The Fremont, Calif.-based maker of computer servers and storage systems said revenue for the three months ended April 30 rose to $10.3 million from $7.9 million. Analysts, on average, had forecast a per-share profit of 2 cents on revenue of $12 million.|first=Katherine |last=Hunt}} and $23 million in 2009.{{cite web| url=http://ir.corp.sourceforge.com/phoenix.zhtml?c=82629&p=irol-newsArticle&ID=1260642&highlight=| title=SourceForge Reports Second Quarter Fiscal 2009 Financial Results| url-status=dead| archive-url=https://web.archive.org/web/20150603170625/http://ir.corp.sourceforge.com/phoenix.zhtml?c=82629&p=irol-newsArticle&ID=1260642&highlight=| archive-date=2015-06-03}}

Pre-selling code

= Bounty driven development =

The users of a particular software artifact may come together and pool money into an open-source bounty for the implementation of a desired feature or functionality. Offering bounties as funding has existed for some time. For instance, Bountysource was a web platform which has been offering this funding model for open source software since 2003.

Another bounty source is companies or foundations that set up bounty programs for implemented features or bugfixes in open-source software relevant to them. For instance, Mozilla has been paying and funding freelance open-source programmers for security bug hunting and fixing since 2004.{{citation|title=Mozilla to pay bounty on bugs|url=http://www.securityfocus.com/news/9255|author=Leyden, John|publisher=The Register |date=2004-08-03 |access-date=2013-08-10}}{{cite web |url=http://news.cnet.com/2100-7350_3-5802411.html |title=Offering a bounty for security bugs |last=Evers |first=Joris |date=July 25, 2005 |website=CNET |publisher=CBS Interactive |access-date=12 August 2007}}{{cite web |url=https://blog.mozilla.org/press/2004/08/mozilla-foundation-announces-security-bug-bounty-program/ |title=Mozilla Foundation Announces Security Bug Bounty Program |author= |date=August 2, 2004 |website=Mozilla Foundation |location=Mountain View, California |access-date=2013-08-10}}

= Pre-order/crowdfunding/reverse-bounty model =

A newer funding opportunity for open-source software projects is crowdfunding, which shares similarities with the pre-order or Praenumeration business model, as well as the reverse bounty model, typically organized over web platforms like Kickstarter,{{cite web|url=http://www.networkworld.com/community/blog/open-source-gets-its-own-crowd-funding-site-bounties-included |title=Open source gets its own crowd-funding site, with bounties included - Bountysource is the crowd-funding site the open source community has been waiting for. |first=Bryan |last=Lunduke |date=2013-08-07 |access-date=2013-08-10 |quote=Many open source projects (from phones to programming tools) have taken to crowd-funding sites (such as Kickstarter and indiegogo) in order to raise the cash needed for large-scale development. And, in some cases, this has worked out quite well.|publisher=networkworld.com}} Indiegogo, or Bountysource{{cite web|url=https://finance.yahoo.com/news/bountysource-raises-1-1-million-130000440.html|title=Bountysource Raises $1.1 Million for the First Crowdfunding Platform for Open-Source Software Projects|date=16 July 2013|website=Yahoo Finance|publisher=Marketwired|access-date=18 June 2016}} (see also comparison of crowd funding services). One example is the successfully funded Indiegogo campaign in 2013 by Australian programmer Timothy Arceri, who offered to implement an OpenGL 4.3 extension for the Mesa library in two weeks for $2,500.{{cite web|url=http://www.indiegogo.com/projects/help-improve-opengl-support-for-the-linux-graphics-drivers|title=Help improve OpenGL support for the Linux Graphics Drivers |first=Timothy |last=Arceri |date=2013-07-26 |access-date=2013-08-11 |publisher=Indiegogo |quote=Helping fund the time for me to become a Mesa contributor and document the experience to make it easier for others to understand where to start with the Mesa codebase. Many people have brought up the idea of crowd sourcing open source driver development. This is a small scale experiment to see if it could actually work.}} Arceri delivered the OpenGL extension code which was promptly merged upstream, and he later continued his efforts on Mesa with successive crowdfunding campaigns.{{cite web | url = https://www.phoronix.com/scan.php?page=news_item&px=MTUxMTQ | title = Crowd-Funding Is Back For Another Mesa Extension | first = Michael | last = Larabel | author-link = Michael Larabel | website = Phoronix | date= 12 November 2013 }} Later, he found work as an employee in this domain with Collabora and in 2017 with Valve.{{cite web | url = https://www.phoronix.com/scan.php?page=news_item&px=Arceri-Joined-Valve | title = Valve Has Another Linux Graphics Driver Developer Working On Open-Source AMD | website = Phoronix | first = Michael | last = Larabel | author-link = Michael Larabel | date = 14 February 2017 }} Another example is the June 2013 crowdfunding on Kickstarter{{cite web |url=http://www.kickstarter.com/projects/568375735/cataclysm-dark-days-ahead-dedicated-developer/ |title=Cataclysm: Dark Days Ahead - Dedicated Developer |work=Kickstarter|date=22 June 2013}}{{cite web|url=http://indiestatik.com/2013/06/22/cataclysm-dda-kickstarter/ |title=Multipocalyptic Roguelike Cataclysm: Dark Days Ahead Turns To Kickstarter |archive-url=https://web.archive.org/web/20140401001904/http://indiestatik.com/2013/06/22/cataclysm-dda-kickstarter/ |archive-date=2014-04-01}} of the open source video game Cataclysm: Dark Days Ahead which raised the payment of a full-time developer for 3.5 months. Patreon funding has also become an effective option, as the service gives the option to pay out each month to creators, many of whom intend to develop free and open-source software.{{cite web|url=https://www.patreon.com/onpon4|title=Julie Marchant is creating libre video games|first=Julie|last=Marchant|website=Patreon}}

Selling licensing deals

= Dual-licensing or Open Core =

In a dual licensing model, the vendor develops software and offers it under an open-source license but also under separate proprietary license terms. The proprietary version can be licensed to finance the continued development of the free open-source version.{{cite book | first = Jean | last = Solatan | title = Advances in software economics: A reader on business models and Partner Ecosystems in the software industry | year = 2011 | publisher = BOD | location = Norderstedt, Germany | isbn = 978-3-8448-0405-8}} Customers may prefer a no-cost and open-source edition for testing, evaluation, proof of concept development, and small scale deployment. If the customer wishes to deploy the software at scale, or in proprietary distributed products, the customer then negotiates for a commercial license to an enterprise edition. Further, customers will learn of open-source software in a company's portfolio and offerings but generate business in other proprietary products and solutions, including commercial technical support contracts and services. A popular example is Oracle's MySQL database which is dual-licensed under a commercial proprietary license and also under the GPLv2.{{cite web | url = http://www.mysql.com/about/legal/licensing/oem/#5 | title = Commercial License for OEMs, ISVs and VARs | at = Q4: What is Oracle's dual license model for MySQL software? | website = MySQL.com | publisher = Oracle | date = July 2010 | access-date = 18 June 2016 | quote = Oracle makes its MySQL database server and MySQL Client Libraries available under both the GPL and a commercial license. As a result, developers who use or distribute open source applications under the GPL can use the GPL-licensed MySQL software, and OEMs, ISVs and VARs that do not want to combine or distribute the MySQL software with their own commercial software under a GPL license can purchase a commercial license.}} Another example is the Sleepycat License. Flask developer Armin Ronacher stated that the AGPLv3 was a "terrible success" as "vehicle for dual commercial licensing" and noted that MongoDB, RethinkDB, OpenERP, SugarCRM as well as WURFL utilizing the license for this purpose.{{cite web | url = http://lucumr.pocoo.org/2013/7/23/licensing/ | title = Licensing in a Post Copyright World | date = 23 July 2013 | first = Armin | last = Ronacher | at = What Changed in 2007 | website = Armin Ronacher's Thoughts and Writings | access-date = 18 June 2016 | quote = The AGPLv3 was a terrible success, especially among the startup community that found the perfect base license to make dual licensing with a commercial license feasible. MongoDB, RethinkDB, OpenERP, SugarCRM as well as WURFL all now utilize the AGPLv3 as a vehicle for dual commercial licensing. The AGPLv3 makes that generally easy to accomplish as the original copyright author has the rights to make a commercial license possible but nobody who receives the sourcecode itself through the APLv3 inherits that right. I am not sure if that was the intended use of the license, but that's at least what it's definitely being used for now.}}

Dual license products are generally sold as a "community version" and an "enterprise version." In a pure dual licensing model, as was common before 2010, these versions are identical but available under a choice of licensing terms. Added proprietary software may help customers analyze data, or more efficiently deploy the software on their infrastructure or platform. Examples include the IBM proprietary Linux software, where IBM contributes to the Linux open-source ecosystem, but it builds and delivers (to IBM's paying customers) database software, middleware, and other software that runs on top of the open-source core. Other examples of proprietary products built on open-source software include Red Hat Enterprise Linux and Cloudera's Apache Hadoop-based software.

= Selling certificates and use of trademark =

Another financing approach is innovated by Moodle, an open source learning management system and community platform.{{cite web | url = https://opensource.com/education/14/10/open-access-learning-moodle | title = Moodle will always be an open source project | date = 6 October 2014 | first = Samantha | last = Gartner | website = opensource.com | access-date = 18 June 2016}}{{cite web | url = http://oss-watch.ac.uk/resources/cs-moodle | title = Moodle: a case study in sustainability | date = 22 January 2014 | publication-date = 5 June 2007 | first = Martin | last = Dougiamas | website = OSS Watch | publisher = University of Oxford | access-date = 18 June 2016}} The business model revolves around a network of commercial partners{{cite web | url = http://moodle.com/partners/about/ | archive-url = https://web.archive.org/web/20140722023159/http://moodle.com/partners/about/ | url-status = dead | archive-date = 22 July 2014 | title = How do the Moodle Partners work? | year = 2012 | website = Moodle | access-date = 18 June 2016}} who are certified and therefore authorised to use the Moodle name and logo,{{cite web | url = https://moodle.com/trademarks/ | title = The Moodle Trademark | year = 2016 | website = Moodle | access-date = 18 June 2016}} and in turn provide a proportion of revenue to the Moodle Trust, which funds core development.{{cite web | url = http://www.insidehighered.com/news/2012/03/27/blackboard-buys-moodlerooms-creates-open-source-division | title = Blackboard's Open-Source Pivot | website = Inside Higher Ed | date = 27 March 2012 | first = Steve | last = Kolowich | access-date = 18 June 2016}}

= Re-licensing under a proprietary license =

If a software product uses only own software and open-source software under a permissive free software licence, a company can re-license the resulting software product under a proprietary license and sell the product without the source code or software freedoms.{{cite web|url=http://www.freebsd.org/doc/en_US.ISO8859-1/articles/bsdl-gpl/article.html |title=Why you should use a BSD style license for your Open Source Project - GPL Advantages and Disadvantages|quote=In contrast to the GPL, which is designed to prevent the proprietary commercialization of Open Source code, the BSD license places minimal restrictions on future behavior. This allows BSD code to remain Open Source or become integrated into commercial solutions, as a project's or company's needs change. In other words, the BSD license does not become a legal time-bomb at any point in the development process. In addition, since the BSD license does not come with the legal complexity of the GPL or LGPL licenses, it allows developers and companies to spend their time creating and promoting good code rather than worrying if that code violates licensing. |publisher=FreeBSD |first=Bruce|last=Montague |date=2013-11-13 |access-date=2015-11-28}} For instance, Apple Inc. is an avid user of this approach by using source code and software from open-source projects. For example, the BSD Unix operating system kernel (under the BSD license) was used in Apple's Mac PCs that were sold as proprietary products.{{cite web|url=http://radar.oreilly.com/2011/08/how-free-software-contributed.html|title=How Free Software Contributed to the Success of Steve Jobs and Apple|first=Andy|last=Oram |date=2011-08-26|publisher=radar.oreilly.com |access-date=2013-08-10 |quote=the BSD license allowed Apple to keep its changes proprietary}} Another variant is to re-license the software under a license that allows modification, but restricts commercial use.{{cite web|url=https://faircode.io/|title=Fair-code|first1=Jan|last1=Oberhauser|first2=Kenneth|last2=Malac|access-date=2025-03-27}}{{cite web|url=https://license-token.com/|title=Open Compensation Token License Homepage|publisher=iunera.com|access-date=2025-03-27}}

Selling proprietary additives

= Selling optional proprietary extensions =

Some companies sell proprietary but optional extensions, modules, plugins or add-ons to an open-source software product. This approach is a variant of the freemium business model. The proprietary software may be intended to let customers get more value out of their data, infrastructure, or platform, e.g., operate their infrastructure/platform more effectively and efficiently, manage it better, or secure it better. Examples include the IBM proprietary Linux software, where IBM contributes to the Linux open-source ecosystem, but it builds and delivers (to IBM's paying customers) database software, middleware, and other software that runs on top of the open-source core. Other examples of proprietary products built on open-source software include Red Hat Enterprise Linux and Cloudera's Apache Hadoop-based software. Some companies appear to re-invest a portion of their financial profits from the sale of proprietary software back into the open source infrastructure.

The approach can be problematic with many open source licenses ("not license conform") if not carried out with sufficient care. For instance, mixing proprietary code and open-source licensed code in statically linked libraries{{cite web|url=http://blog.linuxgamepublishing.com/2009/02/08/our-new-way-to-meet-the-lgpl/|archive-url=https://web.archive.org/web/20090220234542/http://blog.linuxgamepublishing.com/2009/02/08/our-new-way-to-meet-the-lgpl/|archive-date=2009-02-20 |title=Our new way to meet the LGPL |date=2009-02-08|access-date=2011-03-09 |first=Eskild |last=Hustvedt |quote=You can use a special keyword $ORIGIN to say 'relative to the actual location of the executable'. Suddenly we found we could use -rpath $ORIGIN/lib and it worked. The game was loading the correct libraries, and so was stable and portable, but was also now completely in the spirit of the LGPL as well as the letter!}} or compiling all source code together in a software product might violate open-source licenses, while keeping them separated by interfaces and dynamic-link libraries would adhere to license conform.

= Selling required proprietary parts of a software product =

A variant of the approach above is the keeping of required data content (for instance a video game's audio, graphic, and other art assets) of a software product proprietary while making the software's source code open-source. While this approach is completely legitimate and compatible with most open-source licenses, customers have to buy the content to have a complete and working software product.{{cite web|url=https://github.com/TTimo/doom3.gpl|quote=Doom 3 GPL source release [...] This source release does not contain any game data, the game data is still covered by the original EULA and must be obeyed as usual.|title= TTimo/doom3.gpl |publisher=GitHub |access-date=2013-08-10 |date=2012-04-07}} Restrictive licenses can then be applied on the content, which prevents the redistribution or re-selling of the complete software product. Examples for open-source developed software are Kot-in-Action Creative Artel video game Steel Storm, engine GPLv2 licensed while the artwork is CC BY-NC-SA 3.0 licensed,{{cite web|url=http://www.steel-storm.com/ss_license.html|title=STEEL STORM EPISODE 1 LIMITED USER SOFTWARE LICENSE AGREEMENT |quote=For the purpose of this Agreement, the Art Assets include pk3 archive inside of 'steelstorm/gamedata/' folder that contain two-dimensional and three-dimensional works of graphic art, photographs, prints and art reproductions, maps, charts, diagrams, models, and technical drawings, sound effects and musical arrangements, documentation and tutorial videos, and are licensed under Attribution-NonCommercial-ShareAlike 3.0 Unported license. The Engine, which includes Windows, Linux and Mac binaries, and the Engine's source code, are licensed under GNU GPL v2 license.|publisher=steel-storm.com |access-date=2013-08-10}} and Frogatto & Friends with an own developed open-source engine{{cite web |url=https://github.com/anura-engine/anura/blob/trunk/LICENSE |date=2015-04-26 |access-date=2015-10-10 |title=LICENCE |website=anura-engine - GitHub |first=Kristina|last=Simpson}} and commercialization via the copyrighted game assets{{cite web | url = https://github.com/frogatto/frogatto/blob/master/LICENSE |title = License | quote = CC-BY 3.0 LICENSE [...] assets under copyright | website = GitHub | author = frogatto|date = 15 April 2020 }} for iPhone, BlackBerry and MacOS.{{cite web | url = http://freegamer.blogspot.de/2011/04/humble-indie-bundles-source-releases.html | title = Humble Indie Bundle's Source Releases | first = Iwan | last = Gabovitch | quote = Another game which is commercial (on iDevices) and has FOSS code and closed art [...] is Frogatto. | date = 22 April 2011}}

Other examples are Arx Fatalis (by Arkane Studios){{cite web|url=http://bethblog.com/index.php/2011/01/14/arx-fatalis-source-code-patch-released/ |title=Arx Fatalis source code, patch released! |author=Nick|date=2011-01-14 |access-date=2011-08-10 |publisher=bethblog.com}} and Catacomb 3-D (by Flat Rock Software){{cite web | url = https://www.phoronix.com/scan.php?page=news_item&px=MTcxMjM | title = id Software's Softdisk Open-Sources Some Really Old Games | first = Michael | last = Larabel | date = 6 June 2014 | access-date = 6 June 2014 | publisher = Phoronix }} with source code opened to the public delayed after release, while copyrighted assets and binaries are still sold on gog.com as digital distribution.{{cite press release | url = http://www.develop-online.net/press-releases/straight-out-of-the-dungeon-arx-fatalis-invades-gog-com/0129540 | title = Straight out of the Dungeon, Arx Fatalis invades GOG.com | first = Tom | last = Ohle | location = Warsaw, Poland | date = 4 December 2008 | website = Develop-Online.net }}

Richard Stallman stated that freedom for works for art or entertainment are not required.{{cite web|url=http://stallman.org/articles/online-education.html|title= On-line education is using a flawed Creative Commons license |first=Richard |last=Stallman |publisher=stallman.org |quote=In my view, nonfree licenses that permit sharing are ok for works of art/entertainment, or that present some party's viewpoint (such as this article itself). Those works aren't meant for doing a practical job, so the argument about the users' control does not apply. Thus, I do not object if they are published with the CC BY-NC-ND license, which allows only noncommercial redistribution of exact copies. |access-date=2013-08-10|year=2012}}

The similar product bundling of an open-source software product with hardware which prevents users from running modified versions of the software is called tivoization and is legal with most open-source licenses except GPLv3, which explicitly prohibits this use-case.{{Cite web|url=https://fsfe.org/activities/activities.html|title=Activities - FSFE|website=FSFE - Free Software Foundation Europe}}

= Selling proprietary update systems =

Another variant of the approach above, mainly use for data-intensive, data-centric software programs, is the keeping of all versions of the software under a free and open-source software license, but refraining from providing update scripts from a n to an n+1 version. Users can still deploy and run the open source software. However, any update to the next version requires either exporting the data, reinstalling the new version, then reimporting the data to the new version, or subscribing to the proprietary update system, or studying the two versions and recreating the scripts from scratch.

This practice does not conform with the free software principles as espoused by the FSF. Richard Stallman condemns this practice and names it "diachronically trapped software".{{Cite web|url=https://www.gnu.org/philosophy/when-free-depends-on-nonfree.en.html|title=gnu.org|website=www.gnu.org|language=en|access-date=2017-11-10}}

= Selling without proprietary license =

All of the above methods follows from the traditional approach in the selling software, where Software is licensed for installation and execution on a user- or customer-supplied infrastructure. In the classic software product business, revenues typically originate from selling software upgrades to the customer. However, it's also practicing selling exactly the same programs or add-ons but without proprietary licensing. For example, applications like ardour,{{cite web |title=ardour |url=https://ardour.org/download.html}} radium{{cite web |title=radium |url=http://users.notam02.no/~kjetism/radium/download.php}} or fritzing{{cite web |title=fritzing |url=https://fritzing.org/download/}} it's completely free software on GPL license but there is a fee to get the official binary, often bundled with tech support or the privileges of attracting developers' attention to adding new functionalities to the program. It is also practiced to sell both source code and binaries, as Red Hat did.{{cite web |last1=McGrath |first1=Mike |title=Furthering the evolution of CentOS Stream |url=https://www.redhat.com/en/blog/furthering-evolution-centos-stream |website=redhat.com |access-date=21 June 2023}}

This practice does conform with the free software principles as espoused by the FSF.{{cite web |title=Frequently Asked Questions about the GNU Licenses |url=https://www.gnu.org/licenses/gpl-faq.en.html#DoesTheGPLAllowMoney}}

Other common business models

= Obfuscation of source code =

An approach to allow commercialization under some open-source licenses while still protecting crucial business secrets, intellectual property and technical know-how is obfuscation of source code. This approach was used in several cases, for instance by Nvidia in their open-source graphic card device drivers.{{cite web | url = https://www.phoronix.com/scan.php?page=article&item=nvidia_kills_nv&num=1 | title = NVIDIA Drops Their Open-Source Driver, Refers Users To VESA Driver | website = Phoronix | quote = The xf86-video-nv driver has been around that provides very basic 2D acceleration and a crippled set of features besides that (no proper RandR 1.2/1.3, KMS, power management, etc.) while the code has also been obfuscated to try to protect their intellectual property. | first = Michael | last = Larabel | author-link = Michael Larabel | date = 26 March 2010 }} This practice is used to get the open-source-friendly propaganda without bearing the inconveniences. There has been debate in the free-software/open-source community on whether it is illegal to skirt copyleft software licenses by releasing source code in obfuscated form, such as in cases in which the author is less willing to make the source code available. The general consensus was that while unethical, it was not considered a violation.{{citation needed|date=June 2022}}

The Free Software Foundation is against this practice.{{cite web | quote = Obfuscated "source code" is not real source code and does not count as source code. | url = https://www.gnu.org/philosophy/free-sw.html | title = What is free software? | website = Free Software Foundation }} The GNU General Public License since version 2 has defined "source code" as "the preferred form of the work for making modifications to it." This is intended to prevent the release of obfuscated source code.{{cite web|url=https://lwn.net/Articles/431651/|title=Reasoning behind the "preferred form" language in the GPL|date=2011-03-07|access-date=2013-08-19|publisher=lwn.net}}

= Delayed open-sourcing =

Some companies provide the latest version available only to paying customers. A vendor forks a non-copyleft software project then adds closed-source additions to it and sells the resulting software. After a fixed time period the patches are released back upstream under the same license as the rest of the codebase. This business model is called version lagging or time delaying.{{cite AV media | first = Mike | last = Olson | url = http://ecorner.stanford.edu/videos/3223/Opportunities-Abound-in-the-Big-Data-Space-Entire-Talk | title = Opportunities Abound in the Big Data Space | location = Stanford University | website = Stanford eCorner | date = 13 November 2013 }}{{cite web | url = https://www.phoronix.com/scan.php?page=article&item=sprewell_licensing&num=1 | website = Phoronix | title = Towards A Real Business Model For Open-Source Software | author = Sprewell | date = 29 April 2010 }}

For instance, 2016 the MariaDB Corporation created for business compatible "delayed open-sourcing" the source-available Business source license (BSL) which automatically relicenses after three years to the FOSS GPL.{{cite news | url = https://www.theregister.co.uk/2016/08/24/monty_interview/ | title= MySQL daddy Widenius: Open-source religion won't feed MariaDB | work = The Register | date = 24 August 2016 | first = Alexander J | last = Martin }}{{cite web | url = https://www.infoworld.com/article/3109213/open-source-tools/open-source-uproar-as-mariadb-goes-commercial.html | title = Uproar: MariaDB Corp. veers away from open source | website = InfoWorld | first = Simon | last = Phipps | author-link = Simon Phipps (programmer) | date = 19 August 2016 }} This approach guarantees licensees that they have source code access (e.g. for code audits), are not locked into a closed platform, or suffer from planned obsolescence, while for the software developer a time-limited exclusive commercialization is possible. In 2017 followed version 1.1, revised with feedback also from Bruce Perens.[https://perens.com/2017/02/14/bsl-1-1/ sl-1-1] on perens.com (2017-02-14)[https://mariadb.com/resources/blog/releasing-bsl-11 releasing-bsl-11] on mariadb.com by Kaj Arnö (2017)

However, this approach works only with own software or permissive licensed code parts, as there is no copyleft FOSS license available which allows the time delayed opening of the source code after distributing or selling of a software product.

= Open sourcing on end-of-life=

{{see also|List of commercial software with available source code|List of commercial video games with available source code}}

An extreme variant of "delayed open-sourcing" is a business practice popularized by id Software{{cite web | url = http://www.h-online.com/open/news/item/id-Software-releases-Doom-3-source-code-1383572.html | archive-url = https://web.archive.org/web/20131208041324/http://www.h-online.com/open/news/item/id-Software-releases-Doom-3-source-code-1383572.html | archive-date = 8 December 2013 | title = id Software releases Doom 3 source code | website = The H Open | date = 23 November 2011 | url-status = live}}{{cite web | url = http://www.pocketgamer.co.uk/r/iPhone/Wolfenstein+3D+Classic/news.asp?c=12324 | title = id Software makes iPhone Wolfenstein open source | first = Spanner | last = Spencer | date = 24 March 2009 | website = PocketGamer.co.uk}} and 3D Realms,{{cite web | url = http://legacy.3drealms.com/news/2005/04/shadow_warrior_12.html | title = Shadow Warrior Source Code Released | publisher = 3D Realms | date = 1 April 2005 | first = Joe | last = Siegler }}{{cite web | url = http://legacy.3drealms.com/games.html | title = Games | quote = Selected games have had their source code released by us. These games are: Duke Nukem 3D, Shadow Warrior, Rise of the Triad, Word Whiz, Beyond the Titanic, Supernova, & Kroz. You can obtain these from our downloads page. | publisher = 3D Realms }} which released several software products under a free software license after a long proprietary commercialization time period and the return of investment was achieved. The motivation of companies following this practice of releasing the source code when a software reaches the commercial end-of-life, is to prevent that their software becomes unsupported Abandonware or even get lost due to digital obsolescence.{{cite web|url=https://www.gamedeveloper.com/business/where-games-go-to-sleep-the-game-preservation-crisis-part-1 |title=Where Games Go To Sleep: The Game Preservation Crisis, Part 1 |first=John |last=Andersen |quote=The existence of decaying technology, disorganization, and poor storage could in theory put a video game to sleep permanently – never to be played again. Troubling admissions have surfaced over the years concerning video game preservation. When questions concerning re-releases of certain game titles are brought up during interviews with developers, for example, these developers would reveal issues of game production material being lost or destroyed. Certain game titles could not see a re-release due to various issues. One story began to circulate of source code being lost altogether for a well-known RPG, preventing its re-release on a new console. |publisher=Gamasutra |access-date=2013-01-10 |date=2011-01-27}} This gives the user communities the chance to continue development and support of the software product themselves as an open-source software project.{{cite web |url=http://timreview.ca/article/294 |title=Opening the Source of Art |date=2009-10-01 |first=John |last=Bell |quote=[...]that no further patches to the title would be forthcoming. The community was predictably upset. Instead of giving up on the game, users decided that if Activision wasn't going to fix the bugs, they would. They wanted to save the game by getting Activision to open the source so it could be kept alive beyond the point where Activision lost interest. With some help from members of the development team that were active on fan forums, they were eventually able to convince Activision to release Call to Power II's source code in October of 2003. |publisher=Technology Innovation Management Review |access-date=2013-08-09 |url-status=dead |archive-url=https://web.archive.org/web/20140330084636/http://timreview.ca/article/294 |archive-date=2014-03-30 }} Many examples from the video game domain are in the list of commercial video games with later released source code.

Popular non-game software examples are the Netscape Communicator which was open-sourced in 1998{{cite web|url=http://wp.netscape.com/newsref/pr/newsrelease558.html |archive-url=https://web.archive.org/web/20070401072854/http://wp.netscape.com/newsref/pr/newsrelease558.html |archive-date=2007-04-01 |date=1998-01-22 |access-date=2013-08-08 |publisher=Netscape Communications Corporation |title=NETSCAPE ANNOUNCES PLANS TO MAKE NEXT-GENERATION COMMUNICATOR SOURCE CODE AVAILABLE FREE ON THE NET |quote=BOLD MOVE TO HARNESS CREATIVE POWER OF THOUSANDS OF INTERNET DEVELOPERS; COMPANY MAKES NETSCAPE NAVIGATOR AND COMMUNICATOR 4.0 IMMEDIATELY FREE FOR ALL USERS, SEEDING MARKET FOR ENTERPRISE AND NETCENTER BUSINESSES}}{{cite web |url=http://www.prnewswire.com/news-releases/netscape-celebrates-first-anniversary-of-open-source-software-release-to-mozillaorg-73806207.html |title= MOUNTAIN VIEW, Calif., April 1 /PRNewswire/ -- Netscape Communications and open source developers are celebrating the first anniversary, March 31, 1999, of the release of Netscape's browser source code to mozilla.org |access-date=2013-01-10 |date=1999-03-31 |quote=[...] The organization that manages open source developers working on the next generation of Netscape's browser and communication software. This event marked a historical milestone for the Internet as Netscape became the first major commercial software company to open its source code, a trend that has since been followed by several other corporations. Since the code was first published on the Internet, thousands of individuals and organizations have downloaded it and made hundreds of contributions to the software. Mozilla.org is now celebrating this one-year anniversary with a party Thursday night in San Francisco.|publisher=Netscape Communications}} and Sun Microsystems's office suite, StarOffice, which was released in October 2000 at its commercial end of life.{{cite web |url=http://www.linuxtoday.com/developer/2000101300221NWDTSW |title=StarOffice Code Released in Largest Open Source Project |date=2000-10-13 |first=Brian |last=Proffitt |quote=Sun's joint effort with CollabNet kicked into high gear on the OpenOffice Web site at 5 a.m. PST this morning with the release of much of the source code for the upcoming 6.0 version of StarOffice. According to Sun, this release of 9 million lines of code under GPL is the beginning of the largest open source software project ever. |access-date=2013-01-10 |publisher=linuxtoday.com |url-status=dead |archive-url=https://web.archive.org/web/20131016014106/http://www.linuxtoday.com/developer/2000101300221NWDTSW |archive-date=2013-10-16 }} Both releases made foundational contributions to now prominent open-source projects, namely Mozilla Firefox and OpenOffice.org/LibreOffice.

Funding

Unlike proprietary off-the-shelf software that come with restrictive licenses, open-source software is distributed freely, through the web and in physical media. Because creators cannot require each user to pay a license fee to fund development this way, a number of alternative development funding models have emerged.

An example of those funding models is when bespoke software is developed as a consulting project for one or more customers who request it. These customers pay developers to have this software developed according to their own needs and they could also closely direct the developers' work. If both parties agree, the resulting software could then be publicly released with an open-source license in order to allow subsequent adoption by other parties. That agreement could reduce the costs paid by the clients while the original developers (or independent consultants) can then charge for training, installation, technical support, or further customization if and when more interested customers would choose to use it after the initial release.

There also exist stipends to support the development of open source software, such as Google's Summer of Code and Outreachy.{{Cite web|url=https://www.outreachy.org/|title=Outreachy {{!}} Internships Supporting Diversity in Tech|website=www.outreachy.org|access-date=2019-11-28}}

Another approach to funding is to provide the software freely, but sell licenses to proprietary add-ons such as data libraries. For instance, an open-source CAD program may require parts libraries which are sold on a subscription or flat-fee basis. Open-source software can also promote the sale of specialized hardware that it interoperates with, some example cases being the Asterisk telephony software developed by PC-telephony hardware manufacturer Digium and the Robot Operating System (ROS) robotics platform by Willow Garage and Stanford AI Labs. Many open source software projects have begun as research projects within universities, as personal projects of students or professors, or as tools to aid scientific research. The influence of universities and research institutions on open-source shows in the number of projects named after their host institutions, such as BSD Unix, CMU Common Lisp, or the NCSA HTTPd which evolved into Apache.

Companies may employ developers to work on open-source projects that are useful to the company's infrastructure: in this case, it is developed not as a product to be sold but as a sort of shared public utility. A local bug-fix or solution to a software problem, written by a developer either at a company's request or to make his/her own job easier, can be released as an open-source contribution without costing the company anything.{{cite journal|last=Holtgrewe|first=Ursula|date=March 2004|title=Articulating the Speed(s) of the Internet: The Case of Open Source/Free Software|url=http://www.ssoar.info/ssoar/handle/document/12259|journal=Time & Society|volume=13|pages=129–146|doi=10.1177/0961463X04040750|s2cid=61327593}} A larger project such as the Linux kernel may have contributors from dozens of companies which use and depend upon it, as well as hobbyist and research developers.

A new funding approach for open-source projects is crowdfunding, organized over web platforms like Kickstarter, Indiegogo, or Bountysource. Liberapay is a crowdfunding platform, primarily for open-source projects, that is itself open-source.{{Cite web|url=https://www.nextinpact.com/news/104027-apres-an-dactivite-liberapay-veut-etre-alternative-libre-pour-dons-recurrents.htm|title=Après un an d'activité, Liberapay veut être l'alternative libre pour les dons récurrents|date=2017-04-13|language=fr|trans-title=A year after its launch, Liberapay wants to be the open source alternative for recurrent donations|archive-url=https://web.archive.org/web/20170916020622/https://www.nextinpact.com/news/104027-apres-an-dactivite-liberapay-veut-etre-alternative-libre-pour-dons-recurrents.htm|archive-date=2017-09-16}}

Challenges

Open-source software can be sold and used in general commercially. Also, commercial open-source applications have been a part of the software industry for some time.{{cite book|url=https://books.google.com/books?id=i1VGDLCMyKAC|title=Profit from Software Ecosystems: Business Models, Ecosystems and Partnerships in the Software Industry|last1=Popp|first1=Dr. Karl Michael|last2=Meyer|first2=Ralf|publisher=Books on Demand|year=2010|isbn=9783839169834|location=Norderstedt, Germany}}{{cite web|url=http://timreview.ca/article/229|title=F/LOSS is Commercial Software|last=Wheeler|first=David A.|date=February 2009|website=Technology Innovation Management Review|publisher=Talent First Network|access-date=18 June 2016}} While commercialization or funding of open-source software projects is possible, it is considered challenging.{{cite AV media|url=https://www.youtube.com/watch?v=radmjL5OIaA&t=0h53m46s|title=Richard Stallman (S20E10)|date=11 March 2012|last=Stallman|first=Richard|type=Podcast|publisher=Jupiter Broadcasting|series=The Linux Action Show|time=0:53:46|access-date=18 June 2016|quote=I'm not going to claim that I got a way to make it easier to raise money to pay people who write free software. We all know, that to some extent there are ways to do that, but we all know that they are limited, they are not as broad as we would like.}}

Since several open-source licenses stipulate that authors of derivative works must distribute them under an open-source (copyleft) license, ISVs and VARs have to develop new legal and technical mechanisms to foster their commercial goals, as many traditional mechanisms are not directly applicable anymore.

Traditional business wisdom suggests that a company's methods, assets, and intellectual properties should remain concealed from market competitors (trade secret) as long as possible to maximize the profitable commercialization time of a new product.{{Cite journal|last=Donovan|first=S.|date=6 August 2002|title=Patent, copyright and trade secret protection for software|journal=IEEE Potentials|publication-date=1994|volume=13|issue=3|page=20|doi=10.1109/45.310923|s2cid=19873766|issn=0278-6648|quote=Essentially there are only three ways to protect computer software under the law: patent it, register a copyright for it, or keep it as a trade secret.}} Open-source software development minimizes the effectiveness of this tactic; development of the product is usually performed in view of the public, allowing competing projects or clones to incorporate new features or improvements as soon as the public code repository is updated, as permitted by most open-source licenses. Also in the computer hardware domain, a hardware producer who provides free and open software drivers reveals the knowledge about hardware implementation details to competitors, who might use this knowledge to catch up.

Therefore, there is considerable debate about whether vendors can make a sustainable business from an open-source strategy. In terms of a traditional software company, this is probably the wrong question to ask. Looking at the landscape of open source applications, many of the larger ones are sponsored (and largely written) by system companies such as IBM who may not have an objective of software license revenues. Other software companies, such as Oracle and Google, have sponsored or delivered significant open-source code bases. These firms' motivation tends to be more strategic, in the sense that they are trying to change the rules of a marketplace and reduce the influence of vendors such as Microsoft. Smaller vendors doing open-source work may be less concerned with immediate revenue growth than developing a large and loyal community, which may be the basis of a corporate valuation at merger time.

FOSS and economy

According to Yochai Benkler, the Berkman Professor for Entrepreneurial Legal Studies at Harvard Law School, free software is the most visible part of a new economy of commons-based peer production of information, knowledge, and culture. As examples, he cites a variety of FOSS projects, including both free software and open source.{{cite journal|last=Benkler|first=Yochai|title=Freedom in the Commons: Towards a Political Economy of Information|journal=Duke Law Journal|date=April 2003|volume=52|issue=6|url=http://www.law.duke.edu/shell/cite.pl?52+Duke+L.+J.+1245+pdf|access-date=2013-09-16|archive-url=https://web.archive.org/web/20110306041013/https://www.law.duke.edu/shell/cite.pl?52+Duke+L.+J.+1245+pdf|archive-date=2011-03-06|url-status=dead}}

This new economy is already under development. In order to commercialize FOSS, many companies, Google being the most successful, are moving towards an economic model of advertising-supported software. In such a model, the only way to increase revenue is to make the advertising more valuable. Facebook has recently come under fire for using novel user tracking methods to accomplish this.{{cite news|url=https://www.washingtonpost.com/business/economy/facebook-tracking-prompts-calls-for-ftc-investigation/2011/09/29/gIQAVdsP8K_story.html |newspaper=The Washington Post|access-date=23 October 2011|first1=Dina|last1=ElBoghdady |first2=Hayley |last2=Tsukayama |title=Facebook tracking prompts calls for FTC investigation |date=2011-09-30}}

This new economy is not without alternatives. Apple's App Stores have proven very popular with both users and developers. The Free Software Foundation considers Apple's App Stores to be incompatible with its GPL and complained that Apple was infringing on the GPL with its iTunes terms of use.{{cite news | url = https://arstechnica.com/gadgets/2011/01/vlc-for-ios-vanishes-2-months-after-eruption-of-gpl-dispute/ | title = VLC for iOS vanishes 2 months after eruption of GPL dispute | work = Ars Technica | first = Jacqui | last = Cheng | date = 10 January 2011 }} Rather than change those terms to comply with the GPL, Apple removed the GPL-licensed products from its App Stores.{{cite web |last=Vaughan-Nichols |first=Steven |title=No GPL Apps for Apple's App Store |website=ZDNet |url=http://www.zdnet.com/blog/open-source/no-gpl-apps-for-apples-app-store/8046|archive-url=https://web.archive.org/web/20110109000122/http://www.zdnet.com/blog/open-source/no-gpl-apps-for-apples-app-store/8046|url-status=dead|archive-date=January 9, 2011|access-date=23 October 2011}} The authors of VLC, one of the GPL-licensed programs at the center of those complaints, recently began the process to switch from the GPL to the LGPL and MPL.{{cite web|title=Changing the VLC engine license to LGPL|url=http://www.videolan.org/press/lgpl.html |access-date=23 October 2011}}{{cite news | url = https://arstechnica.com/gadgets/2013/07/vlc-media-player-returns-to-the-ios-app-store-after-30-month-hiatus/ | title = VLC media player returns to the iOS App Store after 30-month hiatus | date = 18 July 2013 | first = Casey | last = Johnston | work = Ars Technica | access-date = 10 October 2013 }}

Examples

{{Main|List of commercial open-source applications and services}}

Much of the Internet runs on open-source software tools and utilities such as Linux, Apache, MySQL, and PHP, known as the LAMP stack for web servers.{{Citation needed|date=December 2014}} Using open source appeals to software developers for three main reasons: low or no cost, access to source code they can tailor themselves, and a shared community that ensures a generally robust code base, with quick fixes for new issues.

Despite doing much business in proprietary software, some companies like Oracle Corporation and IBM participated in developing free and open-source software to deter from monopolies and take a portion of market share for themselves. See Commercial open-source applications for the list of current commercial open-source offerings. Netscape's actions were an example of this, and thus Mozilla Firefox has become more popular, getting market share from Internet Explorer.

Active Agenda is offered for free, but requires all extensions to be shared back with the world community. The project sells a "Non-Reciprocal Private License" to anyone interested in keeping module extensions private.
Adobe Systems offers Flex for free, while selling the Flash Builder IDE.
Apple Inc. offers Darwin for free, while selling Mac OS X.
Asterisk, digital electronics hardware controlled by open-source software
Codeweavers sells CrossOver commercially, deriving it from the free Wine project they also back.
Canonical Ltd. offers Ubuntu for free, while they sell commercial technical support contracts.
Cloudera's Apache Hadoop-based software.
Francisco Burzi offers PHP-Nuke for free, but the latest version is offered commercially.
IBM proprietary Linux software, where IBM delivers database software, middleware and other software.
Ingres is offered for free, but services and support are offered as a subscription. The Ingres Icebreaker Appliance is also offered as a commercial database appliance.
id Software releases their legacy game engines under the GPL, while retaining proprietary ownership on their latest incarnation.
Mozilla Foundation have a partnership with Google and other companies which provides revenue for inclusion of search engines in Mozilla Firefox.
MySQL is offered for free, but with the enterprise version includes support and additional features.
SUSE offers openSUSE for free through the openSUSE Project, while selling SUSE Linux Enterprise (SLE).
OpenSearchServer offers its community edition on SourceForge and an enterprise edition with professional services to enterprises with a paid license
Oracle - VirtualBox is free and open to anyone, but the VirtualBox extension pack can only be used for free at home, thus requiring payment from business users
OWASP Foundation is a professional community of open-source developers focused on raising visibility for software security.
Red Hat sells support subscriptions for Red Hat Enterprise Linux (RHEL) which is an enterprise distribution periodically forked from the community-developed Fedora.
Sourcefire offers Snort for free, while selling Sourcefire 3D.
Sun Microsystems (acquired by Oracle in 2010) once offered OpenOffice.org for free, while selling StarOffice
Untangle provides its Lite Package for free, while selling its Standard and Premium Packages by subscription
Zend Technologies offers Zend Server CE and Laminas for free, but sells Zend Server with support and additional features.