If it’s free how do you make money?
At a recent social event, I had the opportunity to talk with people about what I do and what open source is when I was confronted (not for the first time, I might add) with the age-old question, “But if open source is ‘free’ how do companies make money with it?”. As a nice coincidence, the answer to this chimes well with a good governance panel I was due to speak at during the 2022 Paris Open Source Experience event.
My immediate thought was to discuss how open source isn’t itself a business model, but then I realised that I should focus on the question itself rather than on the answer.
This common question must be clarified for the notions of why and how. It’s not “How does open source create money?” that companies should be asking, but rather “Why should my business be interested in open source?”. This shift in perspective from financial gain to strategic value is crucial. In other words, how does using open source (whatever ”use” means) create value for my company? The answer to this question provides a much more nuanced answer and gives insight into the metrics that can be used to track progress.
To look at this question of “why”, we need to think not about open source but about the goals that the company is trying to achieve. These might be multiple and range from goals that are more operational to those that are more strategic or even goals that are part of the company’s founding convictions. Let’s list a few examples:
I want to reduce YOY license acquisition and maintenance costs.
I want to work more efficiently with others.
I want to attract, motivate, train and retain great developers.
I want to accelerate market uptake of my product.
I believe in the moral and social value of giving back to humanity.
I need to gain better control of my technology roadmaps and have more supplier options.
Some of these goals concern market generation, some are HR-focused, some concern operational cost savings and some are product or innovation-focused; some might even be considered part of an internal push towards more significant team synergies.
How open source can be used, fostered and managed varies depending on the goals. This perspective is often overlooked in the race to better leverage open source within a company.
As we consider this and dig into the examples above, 2 points become clear:
Open source can play a valuable role in helping to achieve each of these goals … and often several at once.
There is no direct answer to the “How do I make money with something that is free?” question because it has no meaning … without a broader business context.
In summary, determining how best to use and govern open source cannot be a simplistic answer to a simplistic question. Instead, it requires thought about how open source can help a business achieve goals and, in so doing, create value.