Monetizing open-source projects

© 2016, iText Group NV© 2016, iText Group NV
OPEN SOURCE INDIA
How can large, open-source projects be monetized?
Bruno Lowagie, CTO iText Group NV

© 2016, iText Group NV
Introduction: who and what?
How can large open source projects be monetized?2
Bruno Lowagie
Original developer of iText
ex-CEO, current CTO at iText Group

An economic law

You’re an open source developer…

… What are the implications?
Users will ask
questions on how to
use it,
Users will demand that
you fix bugs,
Companies will expect
warranties (even if the
license says they
accept FOSS as-is),
Companies will want
100% clarity with
respect to the IP,
Companies will expect
you to maintain and
update the software,
Companies will want
you to upgrade to the
newest specifications,
You will be cursed if
you don’t answer fast /
friendly / accurate
enough!
What if you can’t live
up to all these
expectations?

What can you do about it?

Create a business model
http://www.theserverside.com/news/2240234582/Reflecting-on-open-source-software-Java-9-and-startup-strategies-at-Devoxx-2014
http://www.zdnet.com/article/openssl-needs-corporate-funding-to-avoid-heartbleed-repeat/
http://arstechnica.com/information-technology/2014/04/tech-giants-chastened-by-heartbleed-finally-agree-to-fund-openssl/

Ideas to monetize your project

iText: the early years

Donations

Generating revenue using ads
How can large open source projects be monetized?
Free online tutorial:
• Google AdSense
• 2004: $8,900
• 2005: $14,500
• 2006: $6,200
• 2007: $2,350
• 2008: $1,900
• 2009: $1,500
• 2010: $280
• 2011: $520
• 2012: $350
• 2013: $160
11

Making money with ads?

Writing documentation
1st Edition: 2006
• 11.600 copies
• Approx. $33K
2nd Edition: 2010
• 9.200 copies
• Approx. $30K
13

Selling support

Selling professional services
Not scalable
There are only so many hours in a day
All time spent on a tailor-made application is time you don’t spend on your product
Are you really going to compete against these guys:

What did we do at iText?

Which business are you in?
•For instance: Amazon sells books and AWS
•For instance: Google sells ads, services,…
•For instance: Uber sells rides
Are you selling a service?
•For instance: an ERP system
•For instance: a PDF library
•…
Are you selling software?
I’m assuming a context of selling software

B2C or B2B?
•For instance: a tool or a game people can download,
•Users download and install the tool: use, no distribution,
•The users have no commercial activity relating directly to the software.
B2C
•For instance: a library that parses XML, creates PDF,…
•It doesn’t work unless you write some code around it,
•Typically, it is distributed (e.g. in a SaaS context).
B2B
I’m assuming a B2B context

Copyright versus Copyleft
Copyright law
• allows an author to
prohibit others from
reproducing, adapting, or
distributing copies of the
author's work.
Copyleft
• gives every person who
receives a copy of a work
permission to reproduce,
adapt or distribute the
work as long as any
resulting copies or
adaptations are also
bound by the same
copyleft licensing scheme.
©
©
19

Open Source License overview

GPL-style software licenses
It’s all about distribution
License: MPL / LGPL GPL AGPL
Car distribution
(e.g. OEM)
Commercial use? OK for gratis commercial use Commercial license needed Commercial license needed
Bus service
(e.g. SaaS)
Commercial use? OK for gratis commercial use OK for gratis commercial use Commercial license needed
Free/Proprietary Before iText 5:
Improvements engine: LGPL
Car or bus: can be proprietary
Car: must be GPL
Bus: can be proprietary
Since iText 5:
Car or bus: must be AGPL
Or: buy commercial license

Dual licensing
Enterprise
closed
source
open
source
commercial
source
FOSS Company
The product is available for
free for those who accept
and comply with the F/OSS
license
If the product is also
distributed under another
license, a commercial
license is needed.
The FOSS company makes
the product available under
a custom license for those
who pay for the product:
• Support,
• Warranty,
• Indemnification,
• Release from the
requirements of the
F/OSS license

Open Core licensing: e.g. iText 7
Open source
Closed source Your
project
?

Business Source License: e.g. MariaDB
All source code is open,
but not “open source”:
it’s “business source”.
MaxScale is only needed
in case of heavy use of
MariaDB.
This prevents perceived
abuse by GAFA & co.

What are GAFA companies doing?
Googleplex, Mountain View, CA

When to use a permissive license?
•You want to use software and do whatever you want with it:
•You sell software as a service (Google)
•Your main business is ads; your users are your product (Facebook)
•You sell rides (Uber)
•You sell professional services (RealDolmen)
•…
Suppose that you’re Google, Amazon, o a similar big organization
•Developers can make you “King” and allow you to disrupt entire industries!
•You don’t want to pay for software; you want developers to release their code for free.
The software used in your company doesn’t represent any value, but…
•You hire / sponsor zealots that are popular among developers looking for a role model.
•You spread messages such as: “Asking money for software is bad” and “The (A)GPL is evil!”
•As soon as a product doesn’t meet your needs anymore, you drop it and replace it.
Hence you brainwash developers

Beware of “anti GPL” propaganda
• You are the King in your business (selling ads, rides, services,…).
• Your value is not in the software, hence you can give it away for free.
Suppose that you are the next GAFA company
• If they aren’t competitors, they might improve the software.
• If you can also benefit from their improvements: you win!
• If they are competitors, they can try to copy you, but:
• You can easily crush them because your brand is King,
• You can buy them if they are interesting (and possibly kill them afterwards).
Other companies can use your software
• Oracle dropped Glassfish,
• IBM backed away from Geronimo,
• Pivotal left Groovy…
As soon as there is no longer an economic benefit, drop all support

Is that a sustainable situation?
• Will we wait to put out the fire until after the house burned down?
When will we be confronted with the next Heartbleed disaster?
• Open source used to be written by enterprising people.
• Some of them were smart enough to become successful entrepreneurs.
• Nowadays, it’s as if most open source software is written by employees.
• Developers aren’t King; managers are.
• Developers are disposable, replaceable jokers…
• What will be the impact on the innovative aspect of open source?
Who is currently creating open source software?

Can a FOSS license be enforced?

The problem with B2C

Copyright infringements

How abuse is detected
•For instance during the due diligence for an investment or in the context of M&A
A third party performs an audit
•For instance: when an integrator introduced iText without telling his customer
A future customer finds out
•Directly “we are using iText at our company” or indirectly “We have a question about iText”
A developer informs us
•For instance: we see hundreds of visits from the private network of a specific company
•For instance: we discover a PDF that contains iText’s visible or hidden fingerprints
We find out ourselves
•Example: lawsuit against German company
A partner informs us

Step 1: Go to bailiff
Document the infringement:
June 12, 2015

Step 2: send a Cease and desist
June 16, 2015
June 30, 2015

Step 3: go to court
July 8, 2015

Step 4: Get confirmation from court
July 17, 2015

Step 5: Get confirmation from abuser
August 27, 2015

Is this the way we make customers?
Of course not!
• We are ethical people,
but we expect users to
be ethical too!
• We prefer a friendly
negotiation over a
trial before a court
• You don’t make
customers by adopting
a punitive approach
On the other hand, we
can’t afford being
abused…
• … so we have to set an
example once in a
while!
• Why should we
tolerate blatant
abuse?
The courts are there to
help you
• Case solved in about 2
months
• All costs paid for by
the party that lost the
case

Open source success story

Awards
•BelCham Entrepreneurship Award: “Most Promising Company of the Year 2014”
•Deloitte’s Technology Fast 50: Winner in Belgium
2014
•Best In Business International 2015 Silver Award: “Product of the Year”
•American Business Awards 2015 Bronze Stevie: “Most Innovative Company of the Year”
•European Business Awards 2015/16 National Champion: “Entrepreneur of the Year”
•Deloitte’s Technology Fast 50: 2nd place in Belgium
•JavaOne Rockstar Award
2015
•European Business Awards 2015/16 National Public Champion: winner of the national vote in Belgium
•Flanders Investment & Trade 2016: top 3 in the “Lion of the Export”
•American Business Awards 2016 Bronze Stevie: “Most Innovative Company of the Year”
•International Business Awards 2016 Silver Stevie: “Most Innovative Company of the Year in Europe”
•European Business Awards National Champion 2016/17: “Business of the Year with Revenue of 0 to 20M euro”
2016

You could be in this picture…

Monetizing open-source projects

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