Commercial open source's awkward teen years

At this week's Oscon conference, someone asked me what the secret to commercializing open-source software is, as if a secret cabal has been jealously guarding some arcane knowledge.

My response? "There is no secret: we simply don't know how to do it very well yet."

One thing, however, is clear: while the Web promises a brave new world of technical and financial prosperity, getting there from here is still very much in doubt. If we think of companies like Google as Software 2.0 and old-school vendors like IBM as Software 1.0, this leaves open-source vendors like Pentaho, MySQL, Zenoss, SugarCRM, etc. as very much Software 1.5 companies.

Or as tech journalist Glyn Moody suggests, we are in a "transitional phase, neither fish nor fowl."

I couldn't agree more.

To borrow Moody's nomenclature, much of the friction between free-software purists and open-source pragmatists stems from the malaise inherent in such an in-between state. The free-software advocates want out of the 1.0 world as soon as possible, but the vast majority of customers aren't ready to dive into Software 2.0, which leaves vendors uneasily borrowing from 1.0 business models while stretching toward 2.0 Web-based delivery mechanisms.

It's an ugly compromise at times, but it's unclear how to navigate it more cleanly than the industry already is.

Those of us working for Software 1.5 companies earnestly wish the future were already here. But after years of trying to abandon any remnants of proprietary software, it has become clear to many of us that the market--while ready to adopt open source on a grand scale--has yet to figure out how to pay for it.

I'd love nothing more than to give 100 percent of my software away for free and then charge for the service of maintaining it over the Web, or selling ads alongside content, or whatever. But the cold reality is that few enterprises actually want this, as measured by dollars they're spending. Not yet, anyway.

We are an industry in transition. Our business models have yet to catch up our delivery models. Until they do, expect a fair amount of conflict between a company's best intentions and the exigency-driven compromise.

Follow me on Twitter @mjasay.

[techfront]

Matt, good post. This is where the Zen in Zenoss comes into play. The open source industry is in a very natural in-between state. Anytime there is a separation from the status quo whether it be an individual, company or industry, the time between that separation and eventual transformation can be very difficult and painful and why cling or retreat entirely to old ways. However, transformation to a more enlightened state is where the software industry is headed and it won't happen overnight, it never does. One day, we'll look back on the old model in a bit of disbelief. Like you, I hope soon.

[jeffromiller]

This really is a good post and I think it hits the nail on the head for just more than the software business. Newspapers and musicians and hollywood movie companies are all in this same transition, are they not? Struggling with giving away product/content for free while at the same time figuring out how they can make money doing so.

I think at the end of the day the "market" has spoken. People are beginning to EXPECT things for free - software, music, movies, news, etc. Specifically, I think that people expect the content to be free, but they are willing to pay for the services or convenience or value-add; and each industry needs to figure out where that piece of the pie is that they can monetize. For music, maybe it's give songs away for free, but charge for "Exclusive" content or backstage passes or fan clubs, etc. (ala Trent Reznor). For newspapers, maybe it's give the news away for free, but charge for online communities, social functions sponsored by the "paper", etc. For software, maybe it's give the core software capabilities away for free and charge for fancy add-ons or traditional services (as has been discussed here many times).

I think it's more than an "industry in transition" - we are a CULTURE in transition. This hit home for me when my 12-year old niece says to me when we were listening to her iPod the other day, "ALBUMS! I don't buy albums! I just download the songs I like." The companies and products and artists, etc. that can figure out how to give something away to this new culture for free, while monetizing whatever value-add makes sense for their industry/product will be the ones to watch.

JM

[Matt Asay]

Good catch: this same phenomenon *absolutely* affects these other digital businesses, as well. We're all in this together.

[brettgnyc]

Dear Matt,

Good article. Just curious: have you seen any statistics/projections on the market value of the commercial open source market? If you have and can point me to a reference, I would greatly appreciate it.

Thanks,

Brett