The Business Lessons Behind Commercial Open Source

As the world of commercial open source software has grown, numerous business models have taken shape surrounding free products. Just consider Red Hat's business model, which consists of selling support and services for open source software. That model is being imitated by countless commercial open source companies. But does making money from free software have implications that extend beyond just the open source arena. Glyn Moody creates an interesting case for that argument.

According to Moody:

"Few would deny the importance of the first two aspects of free software – as an ideology and as a methodology – but the future impact of its business model is probably under-appreciated.  And yet in its own way, that aspect is just as revolutionary as the other two."

He goes on to note that the success of business models surrounding free software "is in many respects a forerunner of coming shifts in many other industries:"

"As people come to expect digital music to be priced much closer to zero than is currently the case, the recorded music industry is faced with precisely the problem that [Richard] Stallman and his successors grappled with: how to make money from something that is freely available, or nearly."

Indeed, commercial open source software-based business models may foreshadow what will happen to the music and movie industries, among others, over the long haul. When digital media becomes freely available, easily copied, and easily shared on a global network, that's a challenge to existing business models.

I'm in agreement with Moody that, so far, the music industry's response to all this is misguided, consisting primarily of wrongheaded legal efforts and Digital Rights Management (DRM) strategies. Moody argues that the key is to find ways to make money from free goods, and that's exactly what pioneers in commercial open source software have done. It would behoove the big record labels and movie studios to take a lesson from those pioneers.

 Image courtesy of Talent on Flickr.