How do open source projects pay for themselves ?

[West201]

I'm aware this question might sound a bit "dumb", but how do those projects pay for themselves (including developers) ? I'm interested in pursuing a career in software development, so i'm intriged by how this works. Would developers be better off in a market dominated by open source projects ?

[sandyd]

Some open source projects are actually sponsored by companies, while others are non-paid or funded by donations.

[JDShu]

You're actually asking two questions. One is how do open source projects get funded, and one is whether open source software can be profitable.

Funding:

Open source projects can be funded in a variety of ways. Often they have a parent company that pays for development. Prominent examples are Canonical, Red Hat, Google, but even less obvious companies such as Apple, Microsoft, and Oracle. These days, we're seeing a lot of crowdfunded projects too such as Diaspora and Mediagoblin which promise that all development will be free and open source. Finally, some projects aren't even funded... they are just done in the developer's free time. For example the GIMP has no paid developers. It's just a bunch of people who code after work. If we think of it as time = money, then it's basically development funded by the developers themselves.

Is open source software profitable?

The answer so far appears to be "it can be". It's a big topic, but I'll try to summarize a few points.

The key is that 99% of software is sold as a service. For example, non programmers don't care about the Linux kernel code, but business folks do care about the ability to run a high performance machine for various web servers. Companies like Red Hat and Canonical contribute to the Linux kernel and gain Linux specific knowledge, which they are then able to charge customers for service support. And for a lot too if you look at Red Hat's service contract pricing. In addition, software you find off the shelf rarely fits your needs 100%. So even when there are amazing open source (EDIT: or even proprietary!) offerings that fulfill, say, 95% of your needs, you might be motivated to pay an open source company money to implement feature X that apparently nobody else needs but would make your life easier.

[andrew.46]

Have a look at Slackware which pays the wage of one man by CD / DVD subscriptions. Open Source does not always have to have big money and influence to be successful.

[haqking]

Have a look at Slackware which pays the wage of one man by CD / DVD subscriptions. Open Source does not always have to have big money and influence to be successful.

Dont forget T-shirts, I bought Patrick at least 20 Ramen dinners last year

[andrew.46]

I picked up a hat and an old book: 'Linux the complete reference' and some other bits and pieces :)

[mamamia88]

Also some open source projects like Apache are mass adopted because everybody who needs it gets a better overall product than they could afford by building their own for cheaper. And in return all they really have to do is contribute any changes you may make. Seems like a great deal imo

[West201]

Thank you all for your helpful responses !

It was just something i've always wondered. I always hear about figures like Richard Stallma advocating for "free software", but just never thought about how would developers be feed if the market were to be dominated by open source projects.

[andrew.46]

I always hear about figures like Richard Stallma advocating for "free software", but just never thought about how would developers be feed if the market were to be dominated by open source projects.

Perhaps Richard Stallman gives a hint as to his own feeding habits in this famous youtube clip:

http://www.youtube.com/watch?v=I25UeVXrEHQ

:)

[iamkuriouspurpleoranj]

You might want to check out the excellent article by Ganesh Prasad "Open Source-onomics: Examining some pseudo-economic arguments about Open Source" (http://people.mech.kuleuven.be/~bruyninc/linux/economy-oss)

Excerpt:

"Open Source is not economically viable"

OK, so Linux as a technical product may continue to exist, but if companies cannot make money from it (as is seemingly evidenced by the woes of the Linux companies today), then it's another great technical success that is a commercial failure. History is littered with such examples. Linux will never go anywhere unless people can make money off it.

Now here's an argument even Open Source sympathisers have trouble with, -- the assumption that money must be made for Open Source to succeed. However, the argument is incomplete because it chooses to concentrate on the supply side alone, without regard to the demand side.

While it may well be true that no one can make money from Open Source, that should only serve to discourage suppliers of software. On the demand side, however, consumers are saving tons of money by using Open Source. Since a penny saved is a penny earned, there is a strong economic basis for the success of Open Source after all. Someone is saving money, and they will fight to keep those savings.

The demand side is the one that should drag the rest of the market, kicking and screaming, to a regime of drastically lower prices. Vendors will see their margins shrink, many will close down, newer, leaner ones will spring up, vendors in other market segments will provide software, and eventually, the market will adjust itself to the new reality. Dollar volumes will go down even as unit volumes go up. The transition could be quite painful for suppliers of software, but no law of economics says it cannot happen. It is not a law of nature that vendors must continue to make the revenues and profits they are used to.

[lykwydchykyn]

I'm not making tons of money (or even regular money) from open-source, but I've made a small amount of income by basically offering consulting and custom development around my open source projects. I have heard of other projects that do this very successfully. Basically it works like this:

- client: I like your software, but for us to use it we need it to have $FEATURE
- me: I can add $FEATURE, but it will take N hours of development time. Would you be willing to fund the development of this feature at $X/hr?

If they say yes, they (and everyone else) get the feature for a nominal investment. If they say no, they can either contribute the feature themselves, or hope and pray that someone else funds it.

I've also been paid just to help set up and configure some of my software for specific purposes.

The bottom line is: the code is free, but my time is not. You're paying directly for my services, not the code.

[arpanaut]

@iamkuriouspurpleora nj

That article was written in 2001, the landscape of Linux and Open Source has changed quite a bit since then.
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