GUADEC: New funding models for open source software

Money and free software have never been an easy fit. As Adam Dingle of Yorba explained at GUADEC 2012, the overwhelming majority of companies that produce free software underwrite its development with other income: services, contract work, support plans, and the like. But that dichotomy puzzled Dingle when viewed in light of the recent explosion of successful crowd-sourced funding stories on sites like Kickstarter. His talk asked why the Kickstarter approach is not working for open source — and what could be done about it.

Dingle founded Yorba in 2009, and his first hire was developer Jim Nelson. Nelson joined Dingle on stage to describe the project's background. Yorba is a small non-profit company best known for its GNOME applications, such as the photo organizer Shotwell and the email client Geary. But the group's non-profit status does not mean it is uninterested in paying developers; rather, it is attempting to fund development of its open source applications without subsidizing them with other work. So far, that dream has not been realized. Yorba does break even, but only by taking on contract work. It has a number of GTK+ projects it would like to pursue, but has had to put on hold simply for lack of time. The company is not looking for "Facebook money", Nelson said, just competitive salaries for its employees. "I think everyone in this room has had that dream at one point", he said, "to be able to be secure enough to write the apps they want to write".

Web donations don't work

But, asked Dingle, why is that so difficult? The issue is not unique to Yorba, he said, but a classic problem. Yorba has a donations page on its Web site, and it knows it has millions of users, but they do not translate into funding. "If every one of our users gave us one dollar once in their lifetime, we'd be fine". Dingle confessed that he had only rarely donated money on similar donation pages at other open source project sites, and a show of hands revealed that around half the GUADEC audience had done so at least once. On the other hand, Dingle said, he has given more money (and on more occasions) to Wikipedia — primarily "because Jimmy Wales asked me to, again and again" in Wikipedia fund-raising drives.

Clearly the Web donation page approach works for Wikipedia, which raised more than US $20 million last year, he said, but on the free desktop it is a lot more difficult. Part of the reason is exposure of users to the campaign. Wikipedia promotes its fundraising drives on the site. Projects, however, do not want to put advertisements in their applications, but only a tiny fraction of an application's users ever see the project's site, because they install and update the application through their distribution's package management system instead.

There are other difficulties with the donation model, Dingle said. Donation pages are difficult to use because making online payments is not simple, usually requiring a third-party service like Paypal that adds complexity. The offline alternatives (like mailing in a check) can be worse. In either case, it is far harder than clicking the "buy" button in Apple's self-contained iOS application marketplace. Static "donate" buttons also make it difficult to see how one's individual contribution affects the software itself.

A few people have tried to streamline the online donation process, he said, including Flattr. But although Flattr is helpful, Dingle said, "I don't know of any open source project sustaining itself via Flattr — or via donations, period." Even as open source has continued its struggle with funding, he said, a couple of radical new funding methods have exploded on the Internet in other fields. They are not really being used for open source, he said, but perhaps they could be.

Pay as you like

The first new development in funding is the "pay what you want, including zero" approach, which Dingle described as post-funding. This is the approach taken by the Humble Bundle video game sales. The first major use of this model was in 2007, he said, when the band Radiohead released its album In Rainbows online, and allowed customers to pay any price they chose for it — including free.

The Humble Bundle approach is a little different, he explained. There is no "free" option, and Humble Bundle employs other tactics to try and increase the purchase price (such as promising to release games as open source if a target is hit, and providing add-ons if a buyer beats the current average price). But Humble Bundle is instructive for open source projects, because it demonstrates that Linux users are willing to pay for games (which has long been a point of debate in some circles).

The question for open source projects is how to harness this approach and apply it successfully to software development. Dingle identified a few key factors that distinguish the post-funding model from traditional donations. First, there is always a limited time window in which to make the purchase. Second, the post-funding drive works for a completed project, and one that cannot be downloaded outside the drive. In other words, you must pay something to get the work at all.

Both factors could prove difficult for ongoing software projects to emulate. The Ardour audio workstation tries something akin to post-funding on its site, he said; it suggests a $45 donation to download the application. But Ardour is also built for Mac OS X, where users often download applications from the Web; Linux applications still face the challenge of requesting donations through a package manager. Dingle suggested that GUI package managers could support donations from within the application, but there are social and logistical problems. First, there is no automatic way to send donated funds to the application in question, so it would entail a lot of manual oversight. Second, there will always be people in the community who argue that "we should never ever suggest paying money for free software". In closing, he observed that there was a proposal to add a donation mechanism to Ubuntu's Software Center, but that it seems to have no momentum at the present.

Crowdfunding

The other new funding method to make a splash in recent years is crowdfunding, in which donations are pledged before work begins, which Dingle called a pre-funding model in contrast with the post-funding model. Kickstarter is the darling of the crowdfunding world, he said, although there are other players. On Kickstarter, anyone can propose a project, but Kickstarter selectively vets the proposals before accepting them. Once accepted, each campaign has a fixed time limit, a target price, and the money is rewarded in an all-or-nothing fashion at the end of the campaign. Kickstarter also requires projects to offer "rewards" for each funding level, he observed, although there are no real criteria in place governing them. He mentioned the OpenTripPlanner project, which offered a free copy of the application to the lowest tier of donors — even though the application is open source.

Kickstarter has other peculiarities worth watching out for, he said. Projects that are selected for heavy promotion by the Kickstarter team tend to get drastically better results, and the dollar amounts pledged are still rising. He pointed out that nine of the top ten highest-funded projects on Kickstarter's history have been in the first half of 2012. But Kickstarter also cannot force a project to complete the work it has pledged to do. The money is awarded in a lump sum, and completion of the project is based on trust.

Despite a handful of standouts (such as Diaspora), Dingle said that Kickstarter has not been a great match for open source projects, for several reasons. First, the site is slanted towards art and design projects; all non-game software projects get dumped in the general "technology" category, where they compete for attention "with all the helicopters, robots, and other things." More importantly, Kickstarter is geared toward getting a new project off the ground, not for developing the next version of an existing project that has existed for years. Finally, Kickstarter's selective acceptance means it is difficult to make the cut, requiring slick sales pitches, and facing increasing competition.

Others have attempted to build a "Kickstarter for software" before, Dingle said, including Fundry and CofundOS. Neither has achieved much success; Fundry is defunct, and CofundOS currently has five projects tagged with "GTK" — all from 2007. He then listed several reasons why Kickstarter has proven successful while the software-centric sites have not. First, the artistic and non-software projects are "cooler", so they attract more users and build a larger community around the site. Second, Kickstarter's time-limited and all-or-nothing funding creates a sense of excitement around each campaign, while the software sites function more like standing bounties. Third, the software funding sites always included complicated weighted-voting schemes through which the donors determined whether or not a feature had been completed enough to collect the pledged money. That made the process slower and more difficult to understand.

Moving forward

Dingle cautioned that "I don't have an easy answer", but concluded his talk suggesting that maybe it was time for a new crowdfunding site for software that built on the lessons from Kickstarter's success and the other sites' failures. Yorba has been discussing the idea, he said. Ideally it would be simple and good-looking like Kickstarter, but scoped only for software (and perhaps just for open source software). Launching it would probably require "bootstrapping" the site with several high-profile projects.

On the other hand, he said, such a site would need to take a different approach in some ways to fit open source projects' needs. One interesting idea would be allow projects to maintain an indefinite presence on the site, but still run separate, time-limited campaigns for specific development cycles. Or perhaps projects could run campaigns to back specific features, where each development cycle's campaign would determine what gets worked on for that cycle. Whether such a campaign would let donors back specific features, or let developers set "goal" features at different levels is an open question. It is also unclear how to support libraries on such a site: it is hard enough to fund applications, he said, much less supporting libraries that the users might not even realize are there.

Several in the audience had questions in the waning minutes of the session. One asked how a software crowdfunding site could generate the same excitement over novel and crazy projects, which are a big part of Kickstarter's draw. Dingle responded that the site would have to emphasize features. Another audience member observed that Kickstarter projects maintain a lot of buzz through ongoing interaction with the project teams, and asked how a software crowdsourcing site could do the same. Dingle agreed, noting that he had donated to a game project and received a near constant stream of updates and feedback, something that is hard for a small software shop to do, since writing updates means temporarily stopping work on the code. On that question, Nelson also weighed in, saying

Of course, none of Dingle and Nelson's observations about crowdfunding and pay-as-you-like finances are limited to the GNOME project itself. All open source software faces the same challenges when it comes to raising the money to keep developers at the keyboard. In recent years, Linux distributors have underwritten the development of desktop software through the sale of enterprise services and support contracts of various forms. Users have grown accustomed to that situation, and there is certainly nothing wrong with it, but Dingle and his colleagues at Yorba have shown that no one needs to accept that as the only viable funding model.