Open Source

The business case for free software

Developers enjoy the freedom and collaborative opportunities that the GPL and similar licenses lend their work. But is free software practical for business? Often, yes. See how the GPL could give your company a competitive edge.


By George Hammerbeck

A license that requires software to be freely distributed, modified, and copied seems to go against all business sense. After all, Bill Gates didn’t become one of the richest people in the world by giving software away.

Yet businesses such as Red Hat, MySQL, Netscape, and IBM show that free software can be the basis for a successful business model, according to Bradley Kuhn, vice president for the Free Software Foundation, the nonprofit organization that created the GNU General Public License (GPL).

MySQL, for instance, releases its software under the GNU GPL, and that’s proven to be very profitable, according to Marten Mickos, CEO of MySQL.

“For us, it works just great. First, it has helped us get MySQL to be used in millions of places around the world,” he said. “Second, it has enabled our most devoted users to send back contributions to us.”

MySQL is used by more than 2 million companies and individuals worldwide, with a customer list that includes Yahoo Finance, MP3.com, Motorola, NASA, and Texas Instruments. Not bad for a product that went against the established convention of how to build a software company.

In this article, we'll look at the business case for GPL and discuss how you can decide whether this license will work for you.

Making money by giving software away
The Free Software Foundation was founded by Richard Stallman on the idea that free software was essential if the software market was to remain a free market.

“This is a concept that’s important to businesses,” Kuhn said. “Most businesses are very much in with the idea of having a free market and having access to a free market of goods and services.”

Practically speaking, this philosophy translates into a business model based on service, support, and customization, rather than the selling of licenses for a one-size-fits-all product. And since this model is what most IT companies actually rely on, there’s a strong business case to be made for using the GPL on software developed in-house, Kuhn contended.

“Most software companies make their money in the same way that free software companies do. They make it through service, support, various other custom work, and that sort of thing,” Kuhn said. “With free software, everyone who wants to start a business has equal access to the technology and is able to innovate around it.”

That’s exactly what MySQL did. When the company started, all it had was a product. By using the GPL and distributing its product for free, it was able to quickly build a user base, which, in turn, helped improve the product.

“If you try to market something as proprietary software, frequently, you can’t get anybody to get interested in it,” Kuhn said. “Most proprietary software never gets off the ground.”

Once companies began to use the database, it wasn’t long before clients wanted it customized and supported. Naturally, they turned to the company that built it.

But MySQL found another way to make money with what it calls dual licensing. When a company wants to package the MySQL database as part of a proprietary solution, MySQL will sell the company a commercial license that allows it to do so. MySQL can do this because even though the product is being offered under a GPL, it does not incorporate free GPL code from other sources.

“Not only does the GPL give us new users every day, it also triggers license sales on the commercial sales because many companies do not want GPL'd software,” Mickos explained.

Often, companies approach the Free Software Foundation requesting the right to buy out the GPL for GNU. Because promoting free software is part of its charter, the FSF refuses, Kuhn said. Still, issuing software under the GPL to attract users and then later relicensing the software for commercial use is an approach many companies have found profitable, he said.

“You’re not prohibited from relicensing. If you’re the sole copyright holder on a work, and you release it under the GPL, you’re still permitted to release it under other licenses as well,” he said. “It’s a viable free software business model.”

The downside to this approach: You won’t be able to tap into the large free software development community, since you won't own the copyright to any code it might provide.

Will GPL work for you?
Releasing the software under GPL will protect your rights, ensure that no one steals your code, and possibly allow you to build a successful service-oriented business, Kuhn said.

Mickos recommended that you consider the GPL if your software fits into one or both of these scenarios:
  • Users will need or want support from the original developer. It will be easy for you to sell add-on services to users, even though they obtain the original software for free.
  • The software will be deployed in large numbers. Releasing under the GPL will help you build brand, while still enabling you to sell support and add-ons.

However, he also noted that some products are just not good candidates for release under the GPL, such as "truly novel categories of software that are based on new algorithms you do not want to show to everyone.”

Ultimately, the GPL is a tool, and as with any tool, you have to ensure that it meets your business needs.

Is the GPL for you?
Do you think the GPL would work for your software? Does your company use software in-house that is distributed under the GPL? Send us an e-mail with your thoughts and opinions or post a comment below.

 

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