LWN.net Weekly Edition for March 18, 2004

The GPL and library code

The GNU General Public License (GPL) is an unforgiving beast; if you distribute something derived from GPL-licensed code, the whole derived product must be distributable under the GPL's terms. This provision effectively prevents the use of GPL-licensed in proprietary, closed-source products. That is an inconvenience for proprietary software vendors, but is clearly what the authors of the GPL intended.

In fact, the terms of the GPL work very well for some software vendors as well. Consider this press release from MySQL AB, Sleepycat Software, and Trolltech AS. These companies claim that their 2003 software licensing revenues were up 65% over the previous year. Not bad for companies which make their software available for free.

Each of these companies is a provider of "library" code - tools which can built into an application to give it new capabilities. MySQL and Trolltech make their offerings available under the GPL; Sleepycat has its own license which requires source availability (though in a weaker form than the GPL). In each case, however, there is a twist: for a fee, the company will make the same software available under a license which allows closed-source distribution.

When this model works, it works well. The free software community gets access to high-quality software, and the company gets the benefits of the free development process. At the same time, the company is able to extract money from others who are making money with the code. This model will only work in some situations; the software in question must be attractive as a component of a larger application, and external contributors must be willing to transfer copyrights or otherwise allow their work to be distributed in closed-source form. But, when those conditions apply, the dual-licensing model appears to work well.

There is one interesting problem which occasionally comes up, however; licensing this sort of library code under the GPL can block its use with other software which is available under a free, but GPL-incompatible license. This conflict has been highlighted by the fact that the GPL-incompatible PHP license means that PHP and MySQL 4 cannot be used together (or, more correctly, an application combining the two cannot be redistributed). Since MySQL and PHP are a popular combination, this restriction hurts a lot of people; it also led to a number of distributors sticking with the older MySQL 3 release, which did not have this problem. The GPL-incompatibility of the new XFree86 license is another high-profile example; in that case, the license conflict may be the final straw that signals the end of XFree86 as a viable project.

MySQL AB has now acted to mitigate the problem of free but GPL-incompatible licenses; the company has extended the MySQL client library license with the "MySQL FOSS License Exception." This exception provides a series of licenses which can be applied to parts of derived works involving the MySQL client libraries; it includes the PHP license and several others. With this extension, the PHP license conflict is no more.

The stated intent of the GPL is to ensure that all derived products remain free software. This extension of the license is clearly compatible with that goal; it still does not allow the covered code to be distributed in a non-free manner. If this sort of exception is adopted more widely, it may point toward a need for a new form of the GPL. If the end result is more free software, that would be a good thing.

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SCO Update

Last week, we looked at SCO's stock price as a sort of public referendum on the company's prospects. Shortly thereafter, the SCO Group made it clear that company management, too, is watching the stock price closely, and is not pleased with what it is seeing. Thus, SCO has announced a stock buyback program in the hopes of raising the price somewhat - or, at least, halting its decline.

What the company has announced is that the board of directors has given its OK for management, "at its discretion," to buy up to 1.5 million shares of SCO stock over the next two years. Board chairman Ralph Yarro is quoted as saying:

The interesting thing, of course, is that capital resources is one thing the SCO group lacks. From the latest quarterly report filed with the SEC, we read that "Our cash and equivalents balance decreased from $64,428,000 as of October 31, 2003 to $57,945,000 as of January 31, 2004". $58 million is not a small cash pile, but one should bear in mind that this pile has to sustain the company in litigation for over a year until the IBM case comes to trial. Delays in that trial seem likely; if SCO should somehow win some sort of judgment, an appeal also seems likely. SCO's ability to stay afloat long enough to see its various lawsuits through is doubtful as it is, without spending millions of dollars on stock buybacks.

Company management understands this; that is why the same quarterly report includes this text:

Spending SCO's scarce cash on SCO stock would thus seem an absurd thing to do. So one might well wonder what is really going on. If one were given to wild speculation, one might come up with either of the following scenarios:

• The press release states that the shares will be repurchased "on the open market, in block trades and in privately negotiated transactions, depending on market conditions and other factors." It is not that hard to imagine "privately negotiated transactions" being used to funnel money out of the company and into the pockets of selected shareholders (at "privately negotiated" prices) before the whole thing falls apart.

• The company has no actual intention of buying back shares; it simply issued a PR in the hopes of convincing investors that the price will be going back up soon.

The first scenario looks like a "go directly to jail, do not pass 'Go'" card for the people involved. One never knows, but looting the company in that way looks extreme even for SCO. The second option (issue a PR, do nothing), on the other hand, is something we've seen from this company before. We will find out for sure in future SEC filings, but the odds are that SCO will not be buying back those 1.5 million shares.

Meanwhile, the public confirmation from BayStar that Microsoft did, indeed, direct them toward investing in SCO has had its own effect on how the whole SCO case is seen by the wider public. SCO has, at this point, definitively lost the public relations battle.

Finally, a related development is the announcement of the launch of Open Source Risk Management and its "open source risk protection services." OSRM will sell you an indemnification policy for free software, and will even allow customers to modify that software. The company's offering is based on "sophisticated code-scanning technology and a set of best practice protocols," along with the results of Groklaw's efforts to track down the origins of the code in the Linux kernel. We can only welcome a company which is trying to make free software users sleep better at night, but it should be noted that this sort of insurance policy needs a risk to insure against. As SCO goes down in flames, potential customers might well wonder if they really need this sort of protection. Let's hope that some other hungry, litigious corporation does not answer that question for them.

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MandrakeSoft springs back

When MandrakeSoft filed for the "declaration de cessation des paiements" (similar to Chapter 11 bankruptcy in the U.S.) on January 13, 2003, there was some concern about the future of MandrakeSoft and the Mandrake Linux distribution. A little more than a year later, the company and the distribution seem to be doing well. MandrakeSoft recently filed its "redressement judiciaire" plan to emerge from bankruptcy with the French courts, and its stock has already resumed trading on the Marché Libre. This seemed like a good time to ask MandrakeSoft co-founder Gaël Duval for an update on the company's health and its plans for the future.

The bankruptcy exit plan has not yet been approved, but Duval said that the company expects the plan will be approved before the end of March. The plan calls for MandrakeSoft to repay €4.1 million over 9 years from revenues, rather than borrowing the money to repay the debt. If the plan is approved before April 15, MandrakeSoft also stands to sell an additional 358,000 shares at €2.10 apiece, according to their shareholder newsletter.

What led up to the bankruptcy? Duval said that the main problem was that the company's expenses were too high, as opposed to unsuccessful products. He did single out MandrakeSoft's e-learning venture as an "unprofitable venture." What has the company done to improve its financial picture?

After the layoffs, MandrakeSoft is now down to about 60 employees. There are still quite a few people backing the Mandrake Linux distribution, however. Duval noted that there are about 800 registered contributors for the Mandrake Linux Cooker, about 600 for the Cooker-i18n, and approximately 150 for Cooker-AMD64.

Duval said that the company has focused on products with better revenue potential, with an increased focus on sales directly through MandrakeSoft's online store rather than sales through distributors that take a larger cut of the profits. The company has also looked to the MandrakeClub, which now has nearly 20,000 subscribers. Duval also noted that MandrakeSoft, like other Linux distributors, saw a marked decline in sales of boxed product as high-speed Internet connections became more common.

MandrakeSoft has also been working on "OEM activities," with companies like HP. HP has been offering Mandrake Linux on PCs for some time, and the company recently rolled out new PC models with Mandrake Linux. Duval didn't provide specifics on the deal with HP, but said that it provides a "good income" for the company.

For the first time since its 1998/1999 fiscal year, the company can claim a "good income." MandrakeSoft's revenues have increased by 8.4 percent since the first quarter of the last fiscal year. The total revenues for the first quarter total €1,421,000 , with a net profit of €271,000. MandrakeSoft's results might have looked even better if the dollar had held its value against the Euro. MandrakeSoft reports its financial results in Euros, but most of its income is in dollars. Currently, the dollar is worth about €0.82.

As the company heads toward its exit from bankruptcy, Duval says it they plans to "reinforce" its business offerings. Duval said that the company's Multi-Network Firewall and Corporate Server products are doing well, and that MandrakeSoft is planning to launch a new version of the Corporate Server product soon. The company is also planning to introduce a Corporate Desktop product in the near future.

There may be some growth in the near future as well. Duval noted that MandrakeSoft is planning "a few mergers, small ones to begin". Specific merger targets were not mentioned.

Though there is no shortage of Linux distributions on the market, it's good to see MandrakeSoft making a healthy recovery. The company's return to profitability, without abandoning its commitment to free software, demonstrates that there is indeed money in free software for those who find the right formula.

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