Why Making Money from Free Software Matters (The H)
Why Making Money from Free Software Matters (The H)
Posted Apr 27, 2010 11:26 UTC (Tue) by dskoll (subscriber, #1630)In reply to: Why Making Money from Free Software Matters (The H) by niner
Parent article: Why Making Money from Free Software Matters (The H)
The company I work for makes quite decent money developing free software. How? By using it!
We do that too. It would be foolhardy not to. However, I still contend that it's far easier to make a lot more money with proprietary software than with free software. The reason is that with free software, about the only sources of revenue are consulting, customization, support, and maintenance. All of those are labour-intensive and relatively low-margin activities.
In my case, I probably would have accepted a year's salary (let's say $100K) to write and GPL my commercial product. But by taking it proprietary, we've made 50x that amount in sales, because each additional sale, once the software is written, is essentially free. It's this huge leverage of effort that makes the proprietary business model so attractive. And given human nature and economics, I don't see that ever happening with free software.
Posted Apr 27, 2010 11:35 UTC (Tue)
by davidw (guest, #947)
[Link] (7 responses)
If N people need something, you can sell it as a proprietary solution fairly cheaply, because you can divide the costs up N ways. If on the other hand, the product is to be open source, you probably won't be able to recoup your costs, as the developer, from more than one of the potential clients (assuming you're not making some really difficult to use/set up consultingware system), so you'll have to ask that one guy to foot the bill for the development of the whole thing. Ouch! That's a lot of money: he'd do better off to go to the proprietary vendor who is selling for less because he hopes to recoup the costs from N-1 other customers.
Sure, that's all simplified, and it is blatantly obvious that open source software has an important role to play, and is not just some blip on the radar screen, but my point stands that it's way simpler (although neither *simple* nor *easy*) to do something proprietary if you want to create some new software and get paid for it.
Posted Apr 27, 2010 11:42 UTC (Tue)
by tzafrir (subscriber, #11501)
[Link] (6 responses)
If you want to make users keep buying new versions, you compete not only with all others in the market (proprietary and free alike) but also with previous versions of your software, that might be "good enough". So is it sustainable?
Posted Apr 27, 2010 11:54 UTC (Tue)
by dskoll (subscriber, #1630)
[Link] (3 responses)
So is it sustainable? Darn right it is. People are much more willing to pay for support and upgrades of proprietary software than free software. Also, with proprietary software, the software author is the only one who can provide updates and upgrades; he/she doesn't have to compete with others who could equally support or upgrade the software.
Posted Apr 27, 2010 12:36 UTC (Tue)
by Zack (guest, #37335)
[Link] (2 responses)
>Darn right it is.
I'm not so sure about that. It seems that mainstream popular software reaches a point where there is really nothing substantial left to add. From that point onward it needs to be sold on the merits of insubstantial changes, market lock-in and other consumer-unfriendly practices.
So, yes, it is "sustainable" for a single person as he can join early, cash out at the right time, and retire or alternatively hop from company to company. But from a long-term perspective, popular proprietary software is a downwards spiral for (the smaller) IT related businesses in general as well as the consumer; generating profit by not actually producing anything anymore at the expense of innovation and by scorching the earth for potential competitors.
Posted Apr 27, 2010 16:01 UTC (Tue)
by bronson (subscriber, #4806)
[Link] (1 responses)
http://www.informationweek.com/news/hardware/desktop/show...
The fact is, proprietary software has sustained a huge number of companies large and small for decades, and shows little sign of faltering (yes, there are signs on the horizon that service-based or appstore-based sales will take over, but the numbers don't show that yet).
Proprietary software is a proven, long-term, sustainable business model and doesn't require the shenanigans that you describe to maintain. Just because some companies have treated their customers badly doesn't mean that you can claim that it's all fiction.
Posted Apr 27, 2010 20:01 UTC (Tue)
by Zack (guest, #37335)
[Link]
I'm not sure whether you are missing my point or whether I am missing yours.
Microsoft's sales might be soaring, but that has very little bearing on what I wrote. Microsoft is not as much of a software house as it is a marketing and lobbying company. Whether the latter activities are more commercially successful than the former is not that relevant to the question of whether it is detrimental to the larger system.
On the other hand, they do have products that can serve to illustrate my point.
There is very little to functionally add to present day word processors
>Proprietary software is a proven, long-term, sustainable business model and doesn't require the shenanigans that you describe to maintain.
So, actually, some of the most prominent examples of long-term sustainable business models apply exactly the sort of shenanigans I described to maintain.
Proprietary software is not only detrimental because it doesn't allow sharing with the proverbial neighbour, it also is detrimental because it is damaging to the entire industry in the long term.
Posted Apr 27, 2010 12:47 UTC (Tue)
by paulj (subscriber, #341)
[Link] (1 responses)
"How much money have you personally given to software organisations in the last x years? How much of that to proprietary software vendors? How much to free software vendors and organisations?"
Amongst people I know I get the anecdotal feeling people spend *way* more on things like Apple OS-X and even Windows than they ever spend on RedHat/Novell/Canonical support contracts, or LWN, FSF, etc.. donations. It'd be really interesting if LWN and /. would conduct such a poll.
Posted Apr 27, 2010 14:32 UTC (Tue)
by dskoll (subscriber, #1630)
[Link]
Here's my data point: I have spent about $1500 on free software. All of that was via voluntary donations to free software projects; I have never purchased a support contract. I've donated a few hundred bucks to the FSF, and we've had a corporate LWN subscription for a few years. I have spent about $50 on proprietary software; that was back in 1981 when I purchased the EDTASM assembler for my Coco. Since then, I've spent nothing on proprietary software other than the very-hard-to-avoid (Coco ROM BASIC, BIOSes in my PCs, Nintendo games for my kids, etc.)
You may find this surprising given my other postings, but it's perfectly rational. It makes perfect economic sense for me not to pay for software, just as it makes perfect economic sense for me to run a company that sells proprietary software. It makes no economic sense for me to donate money to free software projects. That was done out of a sense of moral or ethical duty, just as giving to any other charity would be. I suspect I'm an outlier in your poll. :)
Why Making Money from Free Software Matters (The H)
Why Making Money from Free Software Matters (The H)
Why Making Money from Free Software Matters (The H)
Why Making Money from Free Software Matters (The H)
This usually means that any extra programming effort is rendered obsolete and only an ever diminishing fraction of the engineering force is needed for fixes and trivial maintenance. But to keep this profit generating machine going, a lot of marketing and strong-arming is needed, necessitating the replacement of developers with salesmen and lawyers, leading to a company where only paperwork and hot air is produced, but no actual innovation takes place anymore.
Why Making Money from Free Software Matters (The H)
Why Making Money from Free Software Matters (The H)
so the easiest way for a Microsoft to maintain the dominant position of their word processor is by skewing standards and introducing incompatibilities with their own and their competitors products and market it aggressively through network effects.
Why Making Money from Free Software Matters (The H)
Why Making Money from Free Software Matters (The H)