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I've only recently begun to learn about the tensions between free and proprietary software, and I've been very confused by the way that free software can make money.

I understand that free software is "free as in speech, not as in beer," but if I release an open source program and then try to monetize it, what could possibly prevent someone from forking that software and creating a proprietary version?

Is the only thing that stops them the investment of other members of the open source community in improving the software?

It seems like every improvement free software makes is transparent so a proprietary copycat can make sure they are always up to date with the latest features in the free version, and then add their own features on top of that independently. I'm confused about how free software can survive in serious competition with proprietary software.

gnat
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Kvass
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    Learn the difference between software and a software based product, ideally before you try to monetize anything..... – mattnz Oct 10 '13 at 00:21
  • @Kvass - If you write software and you release it with an open source license, what stops people from selling that software, is the license itself. Furthermore you continue to retain the copyrights to the software itself, its your creation, unless you give those rights away specifically. – Ramhound Oct 10 '13 at 11:26

4 Answers4

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There are two answers here, because there are two principal ways to look at this.

First, sometimes free software thrives in competition with proprietary software because it wasn't designed to make money in the first place. That's not the only thing that motivates people, after all.

But if you're looking for a way to monetize free software, you're absolutely right in saying that anyone could fork it and use it to compete with you. What you have to do, then, is what other successful services which run on open-sourced platforms have done: build value beyond the software itself.

Reddit is open source, for example. If I wanted to, I could download it and host a Reddit instance of my own. But you know as well as I do that that wouldn't do me much good, because I'd still be missing the thing that truly makes Reddit valuable: the large community of users.

The key to making money off of something with little to no inherent monetary value--such as software that anyone can obtain for free--is by providing a related service that does have a high value, such as connecting people together and making it easier for them to communicate with each other.

Community
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Mason Wheeler
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The open source business model is not much about selling lots of copies to many individual customers. This model would not be sustainable, because each of your customers could compete with you and underbid you. But there are other business models which allow you to make money from open source software:

  1. Support and consulting fees: Your software may be free, but who is the best person in the world to help people use it? The people who made it, of course. Being one or the main developer of an open source software makes you most qualified for this job, and allows you to charge a lot for an hour of your time.
  2. Collaboration for strategic reasons: Some companies support the development of open source software because they are using it themself and want the best software possible. Or they are creating other products which benefit indirectly from a certain open source project. Take a look at the top twenty contributors of the Linux kernel, for example. You see some Linux distributors in there, but also companies like IBM or Intel who sell hardware running Linux or companies like Oracle who sell software running on Linux.
  3. Customized software: While the one-size-fits-all model works well in consumer-software, many companies have very specific requirements for the software they are using. Taking an open source software and modifying it to fulfill these exotic requirements is a viable business. The company could resell the modified software, but there wouldn't be anyone to sell it to, because their requirements are too unique. You need a web shop which can interface with your industrial welding robots? I don't know one which can, but I could hack Magento to do it.
  4. Multilicensing: Many corporations (like Oracle, for example) offer the same software under both an open-source share-alike license and a proprietary license. In some cases the proprietary version has additional features the free version lacks (this might look like a glorified demo version, but there can be good reasons to do so, for example when the proprietary version uses 3rd party technology which is not open source). In other cases, both versions are functionally identical, but the proprietary license comes with an agreement to create derivate versions which are also proprietary allowing the buyer to sell his derivate to multiple customers.
Philipp
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  • Magento might be a bad example consider there are free and paid versions of Magento. How else is Ford going to hack Magento to sell a brand new F-150 once its ordered by the customer – Ramhound Oct 10 '13 at 11:31
  • @Ramhound I was referring to the community version. But thanks for your comment, it gave me the idea to add point 4 to my answer. – Philipp Oct 10 '13 at 11:43
  • I figure thats what were talking about. I really wanted to make a sarcastic remark about Ford using Magento tied to their production line. – Ramhound Oct 10 '13 at 12:11
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  1. Nothing prevents anybody from forking your software and becoming a competitor.
  2. If you use a copyleft-type license, their fork cannot ever become non-free software (if that's what you mean by proprietary). Things are different with permissive open source license, like BSD-style licenses.
  3. If there are other Free alternatives, the only way to monetize on your software is to provide added value: service, community, reputation, etc.

It can be done, and successfully. But be prepared to invest more effort in service and communication than pure software development.

Zilk
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The GNU General Public License was created explicitly to prevent proprietary forks - it allows you to distribute derived works (forks or add-ons) only if you agree to put them under the same license.

The GPL grants the recipients of a computer program the rights of the Free Software Definition and uses copyleft to ensure the freedoms are preserved whenever the work is distributed, even when the work is changed or added to. The GPL is a copyleft license, which means that derived works can only be distributed under the same license terms. This is in distinction to permissive free software licenses, of which the BSD licenses are the standard examples...

Andres F.
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Michael Borgwardt
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    The GPL was created to prevent a lot more than just that. It's pushing an ideology that believes that proprietary software in general is inherently evil and must be fought against, which is why the GPL is a strongly viral license that requires its terms to be spread not only to modifications of the software, but to essentially anything the software touches as well. – Mason Wheeler Oct 09 '13 at 22:54
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    Note that it can't necessarily _prevent_ anything. It simply gives you legal protection after someone has broken the license. It's then up to you and the legal system to try and make things right. – Bryan Oakley Oct 09 '13 at 23:27
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    This is wrong. The GPL doesn't cover using the software *at all*. It covers *distribution* and *derivation*. It cannot possibly cover use, because it is a copyright license and copyright doesn't cover use, it only covers, well, copying. – Jörg W Mittag Oct 09 '13 at 23:57
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    @MasonWheeler: Sorry, but that's bullshit. There are certain rights which are reserved to the copyright owner, and if the copyright owner decides to give away those rights than he is free to set any price he wants for that … and in the case of the GPL that price is the source code of any derived works. There are, however, a lot of rights which are *not* reserved for the copyright owner, and there is absolutely nothing the GPL can do about that. It's a copyright license, and as such is limited to copyright. IOW: it can basically restrict copying and nothing else. – Jörg W Mittag Oct 10 '13 at 00:00
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    Also, what's up with trying to compare the GPL to a disease? And if you really *must* compare it to a disease, do it properly: it's not viral, it's hereditary. It doesn't spread through contact, only through genetics to its children (derived works). – Jörg W Mittag Oct 10 '13 at 00:02
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    It's amazing how common it is to see the attitude "if it wasn't for that damn viral GPL, I could do whatever I wanted with that code!" No. If it wasn't GPL'ed, you *still* wouldn't be able to do *anything* with it (legally) without it being licensed to you. – Carson63000 Oct 10 '13 at 03:51
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    @JörgWMittag Sorry, but it is not really bullshit. Over the years Richard Stallman and the FSF from http://www.gnu.org/philosophy/why-free.html on have made it clear that they view proprietary software as evil. The intent of the GPL from the beginning is to spread free software. The GPL is intentionally designed to be the most effective legal tool to do so that could be designed within the limitations of a straight copyright license. – btilly Oct 10 '13 at 04:04
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    It is true that @MasonWheeler overstated what the license can do to that end. But he stated the desired intent perfectly. And people have been calling it a "viral license" for decades. I know it has been called that since the 90s, and I suspect that the term dates back to the late 80s. – btilly Oct 10 '13 at 04:11
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    Isn't this attitude against proprietary use of scientific developments reflected in the patent system as well? It seems Stallman is not alone. – Andyz Smith Oct 10 '13 at 04:43
  • GPL and similar licenses may give you the moral high ground, but good luck doing battle to stop pirates with profits from your position of moral but poor. – ddyer Oct 10 '13 at 05:52
  • @Jörg W Mittag: derivation is what this question is about, though. – Michael Borgwardt Oct 10 '13 at 07:08
  • @MichaelBorgwardt I took the liberty of editing your answer to change "create works" to "distribute works", since the GPL says nothing about usage or creation; just distribution. Please edit it or reword it if necessary! – Andres F. Oct 10 '13 at 14:02
  • @ddyer Piracy is orthogonal to the choice of license. Both proprietary and free software can be the victim of piracy/illegal distribution (though it's usually proprietary software that suffers the most, for obvious reasons). I should note that most people involved in FOSS don't seem to be "poor". Stallman lives like a hippie, but that's about it :P Look at Linus Torvalds... – Andres F. Oct 10 '13 at 14:03
  • @AndresF. it would seem that the practical patterns cause the restriction on distribution to silently extend to other things, the extreme case where an individual *uses* GPLed code but in no case distributes it would seem to be a practical absurdity. and i'd go further and say that this goes back to patents, in that if a plaintiff can show that you were enriched in some way, by a patent, and then profited, but not directly using the invention, but perhaps just the fact that the invention guides you to NOT go down a certain development path.... – Andyz Smith Oct 10 '13 at 15:28
  • @AndyzSmith Why would profiting from work derived from the GPL, without distribution, be an absurdity? I can hack a modification of Linux (or LibreOffice, or whatever), use it for my own private work, and never distribute my changes to anyone. Why is that absurd or impractical? – Andres F. Oct 10 '13 at 16:00
  • @AndresF. well, i guess if you can 'profit' that way, ok, but i really don't see that happening much. in the same way that many proprietary vendors have a basically zero enforcement policy for people on their basements using a nonlicensed AutoCad once in a while for a wood birdhouse. For me, the profit is always going to involve others, and that is much more common and a much bigger issue, and that is where the controversy is. so i guess, it's a bit absurd to say that the GPL is ok and good in general because of the birdhouse in the basement 'model'. – Andyz Smith Oct 10 '13 at 16:14
  • we even have indirect infringement in patents, where by producing and distributing a good, that itself does not infringe the patent, but whose only use could be to infringe the patent, is actionable. it's stretch, and for a single person case,it is trivial and unimportant, but you might say that by eliminating a person's dependence on a buggy GPLed product by introducing a closed source workaround is verging on indirect violation of GPL, analogous to indirect patent infringement. – Andyz Smith Oct 10 '13 at 16:22
  • @andresf My point is that choice of license is like choosing what color shirt to wear. All choices have the same practical effect. – ddyer Oct 10 '13 at 16:30
  • @ddyer Same practical effect with piracy? Sure, agreed. With the rest? Not so sure. Arguably the success and adoption of FOSS projects is _caused_ by their unencumbered, non-proprietary licenses (not specifically the GPL, but _any_ FOSS license) – Andres F. Oct 10 '13 at 17:59
  • @ddyer Then, even within the FOSS world, which license you pick can have serious (and unintended) consequences. Some projects will refuse to use an incompatible FOSS license. So it's definitely not an irrelevant issue. – Andres F. Oct 10 '13 at 18:01
  • and the success of science in general is furthered by patents. but they too extract a significant price from you the intended privatizer of such new innovation, they give someone else a 17 year headstart. but they never totally privatize the development. similar with GPL , it fosters building upon the shoulders, but extracts a serious price from you. it's a balancing act. – Andyz Smith Oct 10 '13 at 18:49
  • This is getting rather long. Take this to chat if you want to keep discussing this, please. –  Oct 10 '13 at 19:05