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From Contributors to Customers: How Open Source Projects Turn Into Successful Businesses - page 4

From Open Source Project to Business Model

  • September 26, 2005
  • By Maria Winslow

The type of license you choose for the project affects the business model as well. If you release the project under the GNU Public License (GPL), then you must also release any code based on the project as GPL. This makes it difficult to sell an "enterprise" version. For most GPL-licensed projects, a services business is probably the best fit.

Many open source projects chose the license before the business was formed, so co-planning wasn't possible. At SugarCRM, the company started at the same time as the project, so they had the opportunity to choose a license to match their business model. John Roberts, CEO and co-founder of SugarCRM, explains their choice: "Each license has different implications to how code can be distributed, contributed, and extended upon. Some lean more in favor of supporting a service-based business model, and others support extensions as a revenue source. SugarCRM chose the latter and adopted the Mozilla Public License 1.1 for licensing our open source project."

No open source project can be successful without a thriving contributor community, and successful open source businesses don't forget it.

Balog, lead developer of OpenNMS, understands that the contributors make up a community that needs nurturing. "The myth of open source is that any open source project will suddenly attract thousands of qualified developers who will give up nights and weekends to work for free on your project. This doesn't happen. Make sure that those you do attract, from qualified coders to end users who just like your work, feel appreciated and involved."

In many cases, the core contributors form the company. OpenNMS, Inc., hires contributors for the commercial effort as business increases. At SugarCRM, all of the core developers are also part of the company.

In other cases, contributors come from important customers. Rackspace Managed Hosting was an important early customer for OpenNMS, Inc., and they provided a developer to help achieve a higher level of functionality to meet demand.

SugarCRM understands the complex ecosystem that makes up a complete open source project. According to Roberts, each person who uses the product without paying helps the total package.

"Either they are financially supporting development and enhancements, or they are contributing code, ideas, and product direction, which all take time. The balance is to remember that community comes first--and addressing the needs for the user is the highest priority," he said.

There are more and more companies based on open source software, and many are even receiving venture capital funding. The successful ones will manage several factors successfully. Understanding the market of paying customers is the most critical--providing for their needs should be a priority. Matching the business model with the license is also very important. And finally, businesses based on open source will do well to remember the community of contributors and early users who brought them success in the first place.

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