How much money can you make from open source? – The Open Source Cash Question

One of my favorite topics – how much money can you make with open source? – has come up again, thanks, I think in part at least to a recent 451 report. The report looks very interesting for sure. I haven’t read it, so I can’t really comment on it. But, as usual when you stir the open source cash pot, lots of fun things bubble up.

Here are some.

From Alex Russell:

[Open source is] a great way to distribute software that should already be a commodity at near the cost of reproduction (roughly bupkis) and prevent network effects from ingraining outsized profits to firms whose marginal utility is suspect. If something is still worth paying for, it’s natural to expect that it won’t fare well in the world of free software. Too few people are liable to understand its value to create the virtuous cycle of contribution and use that makes the whole thing work.

From MindTouch CEO Aaron Fulkerson, by way of Marshall:

In the end though, while Mindtouch used to sell only support contracts [for it’s open source software] – now it sells software. “In the end, everyone is selling software,” he told us. “[But] You have to create product pull. Open Source Software is the easiest way to do that. I entered this all ideological 3 years ago swearing that what I’m saying now is bullshit. But it’s true.” Three years ago Fulkerson was hiring a Bono look-alike to draw attention to the company at DEMO, so he’s really tried a wide range of things to create that “product pull.” (((We here, at RedMonk, love a cursing CEO.)))

And related from Matt Asay, via Tarus Balog:

I’ve written before about how a recession would benefit open-source buyers, but it’s also important to recognize how it benefits the vendors. Open-source vendors are demand-driven: the software is made available for download and customers find you. Alfresco routinely closes six-figure deals over the phone/e-mail in a 60- to 90-day sales cycle. Virtually none of our deals require an on-site visit.

This means we can invest more in our products while simultaneously charging less, which is what customers need in a tightening economy. Get more, pay less. That’s the open-source value proposition for this recession-plagued economy.

…

Do yourself and your employees a favor: get profitable. Spend less than you earn (((the open source business model, perhaps? ;>). Grow slowly. That’s the open-source mentality, and it works.

If you’re interested in some related RedMonk work about open source strategies for vendors, check out the going open source series.

Disclosure: MindTouch is a client.