Making money from Open Source

Matt Asay outlines two principles of successful open source based on a conversation with the CEO of Funambol:

  1. Don't upsell your community, and
  2. Sell open source to those who don't like/trust open source.

... Look at what MySQL has done with its Enterprise offering, coupled with their Network. MySQL took nothing away from its community, but added to what companies wanted (better support, more QA, etc.). Its development/user community gets the freedom of GPL (v2) so that they don't really have to care that there is a company behind the project. Enterprise customers, for their parts, get the commercial license so that they don't really have to care that there is a community behind the product.

Everyone wins.

This is as close to "The Right Model" as we currently have in open source ...

I fully agree with Matt's opinion of MySQL -- not coincidentally, very similar to the model employed by Red Hat. The difference is that Red Hat takes the risk out of service and support, whereas MySQL's commercial license takes the risk out of integrating MySQL into a commercial software package.

However, I disagree about point one. There are ways to very successfully upsell a community of free users, and they rely upon using a free (non-crippled) product to gain brand recognition.

Case in point: Google.

Google has steadily expanded into user pays services (Google Appliance, Google Apps) which aren't cheap -- but because Google has such a good reputation for high-quality search results and robust web infrastructure, respectively, its non-free options are seriously considered.

Imagine it trying to sell these packages without its free Google products -- sales would be low to non-existent without a big marketing budget. Essentially, the free products act as a testimonial for their non-free offerings.

(Yeah, yeah -- Google isn't an Open Source development company. But this is about convincing people to pay for a product, not about the openness of your code.)