WTF is Commercial Open Source Software?

Open-source evolution

Open-source is the backbone of almost all digital technologies today. Without open-source, most of the modern tech companies that you rely on in your day-to-day life wouldn't be able to operate or more precisely, wouldn't become what they are in the first place.

What started as a selection of smaller projects back in the 70s created by programming enthusiasts to oppose the unfair profits of closed-source software, has evolved to become the main industry driver of software development in the past decade.

This "recent" acceleration in the number of open-source companies being launched, frequently called The Open-Source Renaissance, has been fueled by various circumstances on the software industry market. But one of the main reasons behind this has been the significant innovation around various business models that allowed the open-source companies to commercialize their products while keeping the open-source approach to software development.

Open-source has always been, and still is, the best possible way to create new software as it can gather whole communities of motivated, like-minded software developers that can through their contribution not just help speed up the development process, but also help steer it in a direction that would be the most beneficial to the global developer community.

What is Commercial Open-Source Software?

The elephant in the (meeting) room of the majority of the open-source project founders has been one common, basic question:

How can we build a business around a product that we are committed to give away to the community for free?

What started with Red Hat and their paid support and services model over 20 years ago has opened the door for open-source communities to start exploring the various ways to monetize their products - which created a new wave of companies that we can group under the name of Commercial Open-Source Software.

This commercialization has not only allowed these companies to become sustainable but has also created this perfect symbiosis between the open-source and its proprietary license counterpart that has become a credible new way of funding further technology development and innovation.

COSS business models

The majority of COSS companies have built their business model in a way that allows them to capture part of the value that is delivered by their open-source core product, by offering commercial versions of their products, alternative license options, or add-on proprietary software. While their success still fundamentally depends on their open-source core technology.

The opportunity to commercialize open-source software has increased the appeal of OSS to investors, who in this modern-day also play a fundamental role in the development stage of open-source start-ups by providing the crucial funding needed to form a dedicated full-time team to manage the project more effectively, grow the project up to a higher scale, and achieving the product-market fit.

There are numerous different ways the open-source companies have successfully approached the commercialization of their products, but we can group them under five main groups:

1. Support services
   
2. Hosting
   
3. Restrictive licensing
   
4. Open core
   
5. Hybrid licensing

All five of these groups provide a different set of benefits and challenges that fit different types of open-source products, and all have found their purpose amongst the COSS companies. But in the past ten years, one of these groups has really been standing out vs. others. The approach referred to as the Open Core model has proven to be the most frequent business model used by highly successful open-source companies, that have managed to grow their business to the 100+ million dollar levels.*

COSS company index

The concept of the open core business model is that the majority of the code base is open source - the core - while the smaller part, usually aimed at enterprise clients, is made proprietary - the crust. This allows the COSS company to stay true to the open-source movement and support the developer community while being able to capture a small portion of the delivered value that will fuel the whole project and unlock scale and longevity. The most important task of the company that decides to take the open core approach is to find the right balance between the core and the crust. One that will not restrict the value and performance of the open-source part, while still providing enough incremental value to its paid users that will justify their investment.

Webiny approach to COSS

At Webiny, we have made a deep analysis of all the available and potential business models and have also found the open core to be the best way forward for our product. And we have put a massive focus on making sure we find the perfect balance point between the two parts.

Our commitment to our community is that we will always keep access to our Webiny open-source framework and apps completely free of charge. And rather than separating a part of the code and turning it into proprietary software, we have decided to build a completely separate product that will perfectly complement our Webiny OS by providing additional features that will further improve the Webiny OS usage for larger teams and multi-project circumstances. And most importantly, not taking any value away from our open-source users.

This new product has recently been announced on our product roadmap under the name of the Webiny Control Panel. You can find more details about it here: Webiny product roadmap

The Future

The software has completely changed the world as we know it and is part of almost every aspect of modern life. It is hard to predict what the world will look like in the future and how technology will further develop it, but it is absolutely safe to say that software innovation will be one of the main drivers of that evolution.

The constant and rapid software innovation is unlocking new levels of what is possible every day. And to circle back to what I mentioned at the very beginning - there is no better way to develop new software than by joining the strengths of the global community of developers around an open-source project. Especially when these projects can be turned into credible businesses by implementing modern COSS business models.

References:

• COSS company index, by COSS Media
• Open Source: From Community to Commercialization, by Peter Levine & Jennifer Li / Andreessen Horowitz