The open source download canard
I'm not sure why we continue to persist in talking about downloads, but I'm with Stephe on this one: downloads are not the best measure of success in open source. In fact, they're often not even a remote predictor of success (i.e., sales). Having them, as Stephen O' Grady notes, is much better than not having them, but it would be erroneous in the extreme to assume a company with 100,000 downloads per month necessarily has a bigger market opportunity than a company with 20,000 downloads per month.
The 451 Group's Matt Aslett points out that marketing automation software like Loopfuse can help to supercharge an open-source company's conversion rate. Same number of leads in, many more conversions (sales) out. I agree with that. Aslett writes:
Of course, the statistic [in Loopfuse's results] that will have jumped out for many people is the drop from a 40X increase in qualified leads to an 8X increase in engagements. The theory that leads are not enough in open source software has also been well documented. The ability to turn those qualified leads into paying customers remains a missing piece of the commercial open source puzzle.
As I've written before, it's not how many downloads an open-source company has, but what it does with them. JBoss' downloads largely flattened out over time, but it's revenue against that "fixed" number of monthly downloads exploded. Why?
Because JBoss discovered added value that it could sell to these downloading prospects, and because it became a much safer bet as a company. Hence, it became easier to give money to.
Downloads are useful in and of themselves because they allow an open-source company to permeate a prospect for very little cost. But turning those downloads into dollars is not a given. It's hard work. Tools like Loopfuse make that work easier and more productive, but you have to use them intelligently (which is why one of Alfresco's first hires was the man who built JBoss' marketing infrastructure).
If you're in open source and you want to make money, you need product differentiation (in the way of value-added services of some kind) and you need marketing automation. Period. No leeway on the two. They're required.
So, if you're an open-source company and you're patting yourself on the back for your download count, don't. Downloads are nice because ubiquity/abundance is nice. But if you're not selling real value into that abundance and if you're not finding those downloaders efficiently then you will fail.
The key is not to find the one customer in 1,000 who is willing to pay for something they can otherwise get for free. The key is to create value and processes that turn this into a one in 10 relationship of download to sale, or better. Open source is not a volume business. It's an online business that requires online intelligence.
This is why Alfresco can make considerably more money on 30,000 downloads per month than other open-source companies have with significantly more downloads at a similar period in their corporate existences. We've learned from JBoss, Red Hat, and MySQL. They paved the way. What are you doing to follow their lead?
Disclosure: I am an employee of Alfresco and an advisor to Loopfuse.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
Matt
Open Source Project vs Open Source Company
I think the project lives and dies by numbers of developers, forum activity, lines of code, bug fixes and "downloads", but a company as it should if a revenue/profit machine..
$0.02
We're doing more in sales than most proprietary startups do...ever. We're not alone in this. It turns out that it makes a lot of sense to give away the product, though there must be differentiation (as Savio would rightly remind us). I think you may find it harder to do with Apache-licensed code than with GPL or other licenses, but it's very, very doable.
As for buraddo, you're right. I was referring to open source companies. A good distinction. Thanks for catching that.
- by gianugo January 26, 2008 6:21 AM PST
- Matt, let me put it this way: if you were a farmer, would you consider a deal that promises you a 40X increase in amount of seeds and 8X increase in crop? I think that you will at least do your math and factor in cost of buying, plowing and harvesting a lot more land, to understand whether you're actually getting more value. Much like seeds, leads need caring to grow into customers, and that costs money.
- Like this Reply to this comment
-
(5 Comments)I think that the point is moot anyway. First of all, you can't say much about factors until you know the initial numbers. Did the company move from 1 to 40 lead, or was it from 2000 to 80000? The latter is significant, the former is just noise. Then again, what is a "qualified lead" anyways? Someone who had to fill a form on your website to download stuff? Or someone who e-mailed you to understand if your solution fits their need, find out prices and requesting to be put in touch with someone from sales? Once again, the latter matters, the former is rubbish. We're back to definitions...