Combining free and proprietary software

I was reading Martin Fowler’s unscientific agglomeration of opinion on version control tools yesterday when I came up with an idea about finding a compromise between open and closed source tools. Thinking about it, I realize that I’ve come close to getting this idea a number of times before, but never really quite reached the tipping point. Anyways, if you’re in a hurry, the basic idea is this: make developer tools (compilers, IDEs, version control tools etc.) completely free and open source. Also make underlying architecture free and open source as well (like the Linux kernel or Ruby on Rails). But you also want to make some money from software, right? To do that, anything that is not developer focused stays closed source and is charged for.

What led me to flesh out this idea was Martin Fowler’s observation that the three most popular version control systems: Subversion, Git and Mercurial are all completely open source. With just a little bit of thought, I realized that there’s a company that does exactly what I propose: Apple. Apple’s dev tools like XCode and the Objective-C compilers and libraries are open source are free for everyone to download and use. The core of OS X is the open source Darwin kernel. But layered on top of this is a closed and really high quality system of interfaces and applications that make for a very appealing user experience.

First let me say that what I’m about to say isn’t a commentary on the pay-for-support model that Red Hat and Canonical use. I think that’s a perfectly legitimate model that has it’s advantages for consumers, companies and open source hackers. But I want to propose an alternative that focuses on making money from selling the software itself.

Opening Doors

Why does this make sense? Leaving aside any moral imperatives, one of the biggest reasons for open source is that you can tinker and fix things that are broken. If you see something that is not right, you can easily pop open the hood and dig around in the internals. Now, the only way that you’ll know if something is broken is if you either use it yourself or have someone tell you that it’s broken. However, in my experience it’s much easier to fix something when you see it broken for yourself. It also gives you a better idea of what the fix should be like. It’s also more likely that you’ll change a program for the better if you’re using it day in and day out. Eating your own dog food has its advantages. If you’re a programmer, you’re most likely to find bugs and missing features in tools that you use every day. So it makes sense for you as a developer to use open source tools so that there’s an easy way for you to fix or change things that in turn will help your own developer experience.

If you’re a corporation (or organization) like Apple or Microsoft then it makes sense to open source your developer tools as well. For a corporation, the benefit to open sourcing a product is that you get feedback both in terms of ideas, comments and bug reports and also in terms of real working code. What you end up with is a positive feedback loop: you make tools and release them to developers for free who then help you make even better tools. I love the lesson that 37signals has taught the world in terms of tools and basic infrastructure: Ruby on Rails is part of their basic infrastructure, but they’ve decided to open source. As DHH claims, it’s hard to make money off of basic infrastructure (unless maybe if you’re Microsoft with a huge already installed base). Better to release it into the world and benefit from the improvements that other people make to it.

Making Money

So that’s all nice and dandy for developers, but what about the poor corporation that wants to make a decent buck? The basic idea is that the number of people who aren’t developers far outweighs the number of people who are. Also the number of people who just want something that works far outweighs the number of people who want something that they can tinker with ad infinitum. Even most of us hacker types occasionally break down and just want something that we can shut off our brains and use (for me it’s Excel in my engineering labs and Photoshop for image manipulation). People will pay for convenience, quality and polish. That should be the motivating factor behind businesses who want to sell software.

To make money from selling software you first need to hire good developers and give them good tools that they customize to their needs. Fortunately, you already have great free dev tools. Now pay these people well and give them a concrete goal so that they put real polish into the products, especially in the areas that open source hackers might tend to neglect. Since you’re going to be charging money, you can afford to put some money into hiring professional designers and UI experts and make sure that your app really looks good as well as works good (something that is still sorely lacking in a lot of open source software). Of course you need other people on team too: at least a fair number of testers who are the same people who will be using your for-pay product day in, day out. You end up with a product that has been crafted by motivated developers using great tools with feedback from your target user base. Admittedly you can still end up with a crappy product that no one wants to pay for, but that doesn’t mean the idea itself doesn’t work.

Though I have no real experience making products like that, the cases in front of us are pretty clear to see. Apple and Adobe both make lots of money selling high quality consumer software and I personally consider Microsoft Office to still be a better user experience that (especially with the ribbon interface).

One of the questions I haven’t fully resolved is whether your for-pay app should be open sourced. I am tempted to say no because I can’t think of a business model where you can open source your product (code and design elements) and still expect people to pay a decent price for it. If someone with more experience than me can come up with a working model, do let me know. However, one compromise that might be fair is to open up your app a few years later once your company has a newer product. Under this model, Apple would open source all their code prior to OS X. I’m less familiar with Adobe, but I think prior to the Creative Studio editions would be a good time point. Microsoft might consider releasing the pre-NT Windows code and maybe Office prior to 2000 or 2003. That way, your business still makes money today while making a community contribution in the future. It also helps users who can get their hands on a copy of a program if they need to open a file from 10 years ago that the current version no longer supports. It frees up the company to go ahead while worrying a little less about backward compatibility. It also keeps companies on their toes because they know that any market advantage they have will be effectively erased in a few years.

The Plan Isn’t Perfect

No plan survives contact with the enemy

— General Field Marshall Helmuth von Moltke

And this plan will definitely have to be modified if and when a company adopts it. One immediate problem I can see is that inevitably there will be calls to open source all the company’s product. I don’t have a suitable response to that apart from saying that would probably cause the business plan to collapse. Also if your product’s core algorithms don’t vary much from one generation to the next, open sourcing older versions might be equivalent to shooting yourself in the foot (though if you’re expecting a handful of algorithms to bankroll your company till the heat death of the Universe, you’re probably doing it wrong).

Again, I don’t have any real world business experience (though I would like to, someday). I also don’t know any company that has a policy like this at its core. If you’re interested in starting a company like this (or know of one already), do drop me a line. I’d really like to play a part in making a world where people can get paid for writing their code and then releasing it for other people to use and improve. A business that makes money but still open sources its code (even if its a few years late) would be a great step in that direction.

One thought on “Combining free and proprietary software

  1. I totally have a blog post in the hopper which contradicts this argument, but…

    the exchane of money for software is one that’s based on a convenient fiction: that software is scarce and one can “run out of” software. Open Source tares this fiction to shreads.

    But the truth of the matter is that, software *does* have value apart from its (fictitious) scarcity. Software makes it easier to do things. And what’s more, particularly in enterprise environments, when you buy software what you’re really buying is support and warranty. And regardless of if you have the source or not, that support and warranty is still valuable. This is the RedHat model, at it seems to work, more or less.

    And while we’re on the topic of “value,” in the same vein, it’s true that having access to the source code, and having the freedom to modify and redistribute it has *value* on it’s own. Value not tied to scarcity, but value none the less.

    In point of fact

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