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Software license like this?

Posted: Thu Apr 20, 2006 1:17 pm
by alex.barylski
Being a fan of open source, I have strongly considered releasing my application as such, plus it would assist in marketing efforts and testing...

And separate me that much more from my competition, which I need as a startup...

Heres my biggets grief with OSS...

Everyone wants something for nothing, myself included, but that just can't be...it's simple economics...

But so many people use OSS as the "free" alternative.

I am afraid that by releasing my app as OSS, it will be used, but people won't pay!!!

At the same time, I would like to release my software as open source, free for personal use, but NOT commercial, because there is somehting that really bugs me about people who make money from my ideas, etc and don't return the profits...

The way I see it...I make money using your software by catching a client who needs sugarCRM or something similiar (which is OSS) I should be obligated to give you what you ask in return.

The problem with sugarCRM and others is they offer 2 versions:
1) Standard open source edition
2) Professional closed source edition - which you pay for!!!

I don't currently offer a professional edition or two versions...I only have one...

So that license idea of marketing with free and making money off the pro doesn't apply to me...

So I would prefer a license where I allow people to use it for free in non-commercial settings or require $99 USD if they wish to use it commercially...

Does this sound fare? Is this something that is common in the OS community? I haven't seen a license like this...is there one? Do you think it would work or would the community (developers/designers in particular) ignore that request?

Cheers :)

Posted: Thu Apr 20, 2006 1:37 pm
by feyd
MySQL uses a dual licensing system. RedHat as well, I believe.

Re: Software license like this?

Posted: Thu Apr 20, 2006 1:49 pm
by Roja
Hockey wrote:Being a fan of open source, I have strongly considered releasing my application as such, plus it would assist in marketing efforts and testing...

And separate me that much more from my competition, which I need as a startup...
This is an excellent start. You've identified positive elements that come from the choice to go opensource. I think you have missed some of the biggest positive elements, but these are a great start.

Going opensource can indeed help with both marketing and testing.
Hockey wrote:Heres my biggets grief with OSS...

Everyone wants something for nothing, myself included, but that just can't be...it's simple economics...
Actually, this is a common misconception. First, economics shows that in fact you can get something of value (to you) from something of no value (to someone else). That difference allows the profit potential to grow, based on your ability to maximize the value between them.

Or put another (more crude) way, if you can get programmers in their spare time to code for you, and you can sell the result, thats free labor - the very best kind of economic force multiplier.
Hockey wrote:I am afraid that by releasing my app as OSS, it will be used, but people won't pay!!!
Thats an important realization and concern. It is entirely possible. Consider the case of Redhat. They have a commercial product (RHEL), and a non-commercial community product (Fedora). They charge for one, but not the other. They make a great example because the flaw in the concern is the assumption that people would pay for both. They won't.

I'm not saying there isn't a solution to the problem, as you will see, but the problem might not be as tragic as you think.

Some users will not pay, at all, period, no matter what. Those users, rather than being a "lost sale" can instead be converted to something worthwhile to your profit pursuit: Testing and marketing. Having a group of users that do not pay for your software, but that test it and advertise how great it is - is still a net value add for your goal.
Hockey wrote:At the same time, I would like to release my software as open source, free for personal use, but NOT commercial, because there is somehting that really bugs me about people who make money from my ideas, etc and don't return the profits...
This is where the dramatic difference between Open source software and Freedom software becomes obvious.

If the most important thing is allowing users the freedom to manage their information, their software, and empower them to help you, Freedom software is the choice.

You are making a clear statement that to you, Profit is more important than the end-user freedoms. I am not framing or implying that is a bad choice. But it is a choice. This means you are embracing Open source software, not Freedom software.
Hockey wrote:The way I see it...I make money using your software by catching a client who needs sugarCRM or something similiar (which is OSS) I should be obligated to give you what you ask in return.
But what specifically are you asking for in return? Testing? Marketing? Feedback? Fixes? or raw profits?
Hockey wrote:I don't currently offer a professional edition or two versions...I only have one...

So that license idea of marketing with free and making money off the pro doesn't apply to me...
There is an alternative. You are thinking of value-add in the software itself. ie, you assume that the "pro" version has different features than the "free" version. What if that different feature was official support by the vendor that created the software?

Thats the exact model followed by MySQL, Zend, RedHat and other freedom software vendors that do extremely well, despite "giving away" the software.

If you position your software that way, where the free version is the same software as the pro version, but it is unsupported, then you have established a value to your support. That support, in turn, can be priced as you feel is appropriate. You could (for example) offer 10 hours of support for a paid version that costs $500, setting your support rate at $50 an hour (not a bad living in this economy!). Maybe you want it to be more affordable, and you offer unlimited email support, but 4 hours of phone support for $200. Suddenly, they have a supported product, AND a value proposition. Oh, and as a bonus, its freedom software - they can do what they want with it.
Hockey wrote:So I would prefer a license where I allow people to use it for free in non-commercial settings or require $99 USD if they wish to use it commercially...
If none of the arguments above sway you (and they may not apply or be persuasive in your situation - nothing wrong with that), then yes, there are licenses that do that. For example, the Creative Commons licenses offers a no-commercial-use option. You use that for the 'free' version, and if they want the ability to use it in a commercial setting, you sell a proprietary use license for $99.
Hockey wrote:Does this sound fare? Is this something that is common in the OS community? I haven't seen a license like this...is there one? Do you think it would work or would the community (developers/designers in particular) ignore that request?
Its not uncommon, it has happened before. However, it will reduce the interest and ability of the free software community to be involved. By way of example, almost all of the code I work on is under the GPL. If I worked on proprietary code, I would feel conflicted and concerned that I might commit that proprietary code (including methods in it) to a GPL project. Since I value my freedom above almost everything else, I would decline to work on the proprietary code.

Others make similar choices in the freedom software community, so your focus on profits as the key benefit to get from end-users may cost you other benefits such as widespread advertising, awareness, testing, documentation, support, patches, improvements, and so on.

Re: Software license like this?

Posted: Thu Apr 20, 2006 2:32 pm
by alex.barylski
Thanks for the feedback and to you too Feyd :)

Interesting...

Having been a Windows supporter and developer for many years now (almost since it's introduction) I have become quite accustomed to closed source, but I am slowly changing my mind over the years.

The open source model you suggest, in that I make money off of official support...

I have two arguments or I should say concerns:

1) If you develope an application properly why would anyone need support?

2) Who pays for upfront software development costs then? I have just invested the last several months, writting, re-writting an appication which makes editing web pages a breeze when compared to any other CMS applications. I spent a great deal of time tweaking the interface, design, etc...not to mention the little bit of documentation I have, plus testing, etc, planning (for next version, etc)...

If I calculated my costs I would likely be in the tens of thousands, even at $15-25 USD/hour which is my current going rate when I do contract work.

I want to release my hard work for someone to use for free, while they make money, cuz their more business savvy than me??

So in short, I guess I am more for profit than end user experience...but thats business...or simple economics...if you spend more than you make you'll go broke real quick :P

I've learned that lesson the hard way a few times... :)

Although I find that statement unfare...because although the bottom line comes before the customer...it's a bit of a misnomer...

Nothing drives people like money, so long as people pay me, there is no reason to think they would get anyting less than top quality, fast, helpful responses...more so than from a business who did things because they cared over everything else (not sure if thats the point you were reying to make, but thats how I received it :P )

Anything else IMHO goes against basic principles of a society ruled by commerce...

No business will assist you for "free" yes some might offer something for free, but there is always a hidden catch.

Thus my outlook on open source being slightly against the GPL...

I expect very little programmer input on my project, as I have very specific goals in mind, bug fixes, etc are always welcome, but not essential, yet anyways!!!

I don't mind people seeing my source code, as my application is nothing new, but it does use some techniques which are likely unique to my application. However I do have a problem with people using ideas in competiting products...

The market is crazy stupid saturated...I'm probably competing with 10, 000 other CMS applciations - each with their strengths and weaknesses. So every edge I have I appreciate.

I feel I should be rewarded financially if someone uses my software for commercial purposes, but I have no problems with people using it for personal uses. I've always really liked the idea of Shareware, where you can try before you buy.

Unfortunately or fortunately (depending I guess) PHP makes it nessecary to release code as open source if you wish to follow this business model...

Byte code is easily reversed engineered so that doesn't even count :P

Besides, I don't mind people looking at my code, i'm always up for change if you can convince me your way is better.

Anyways, not sure what else to say, as I am busy thinking about what to do next. :)

Thanks for the input, it's always appreciated :)

Posted: Thu Apr 20, 2006 2:42 pm
by alex.barylski
One other thing I wanted to make note of.

MySQL is released under dual licesing like Feyd suggested...

You can use MySQL as GPL or choose their commercial license...

Which is great for MySQL because many commercial desktop applications could use MySQL and likely not want to release their code as GPL.

But for a web application, I don't think it makes sense...

Because under that medium people would never have to pay, except for support, which I personally think should be additional charges.

Using my CMS on their web site freely wouldn't be breaking any rules if my app was under GPL am I correct in thining this?

Posted: Thu Apr 20, 2006 2:54 pm
by feyd
There's another path to take if you want to do a "try before you buy" thing: ASP. (Not Microsoft) Application Service Provider. Host your CMS on your own servers with a live demo where they can go in and play with it.

Kind of like how the phpbb group offers to download it, or hosting people's forums for them.

Re: Software license like this?

Posted: Thu Apr 20, 2006 3:03 pm
by Roja
Hockey wrote:Thanks for the feedback and to you too Feyd :)
Very welcome!
Hockey wrote:Having been a Windows supporter and developer for many years now (almost since it's introduction) I have become quite accustomed to closed source, but I am slowly changing my mind over the years.
The two aren't incompatible, and lately, the economics are becoming more "obvious" in their benefits. :)
Hockey wrote:The open source model you suggest, in that I make money off of official support...
That is one model (and it happens to be the most well-proven model).
Hockey wrote:1) If you develope an application properly why would anyone need support?
First off, I will point you at the entire proprietary software industry, and ask for an example of a single product that doesn't need support. Apple, the paragon of optimal design, still has enough quirks in Mac OSX (years later!) that the faithful flock to buy "Mac OS: The Missing Manual". Microsoft makes billions off support contracts. Adobe, Blizzard, the list goes on. It is one of, if not the largest, sources of income for software houses.

Thats just the commentary on how normal it is for an application to not be developed "properly" by your implied definition of needing no support. Then consider that many companies will not use software unless there is a company that sells them a clear license to use it (due to legal compliance issues). Also consider companies that will not buy software unless they can get a support contract - because why should we run software that is so bad no one will offer support for it?

The reality is that NO application is support free. Whether that support is in the form of forums, mailing lists, or paid support models doesn't change the fact that users need support for EVERY application.
Hockey wrote:2) Who pays for upfront software development costs then?
You do.
Hockey wrote:If I calculated my costs I would likely be in the tens of thousands, even at $15-25 USD/hour which is my current going rate when I do contract work.
Using business rules, that means you have a sunk cost of roughly $20,000 to get your product to market. Now, you can sell support for that product at (lets say for example) $50 an hour, in the form of a license for the software which includes 4 hours (4*$50=$200). You want to aim to ensure that less than 100% of your support sales are used.

So, if you wanted to recoup your sunk costs in the first year, selling licenses at $200, you need 200 license sales that use *half* their support hours. Thats encouragement for you to write good documentation, be responsive, keep support answers short and accurate, and to use single-answer-multiple-user solutions (like a FAQ database online).

Also consider that AFTER the first year of sales, you are now actually earning double what you did the first year, making it possible for you to sell less, or sell FOR less, and make just as much money.
Hockey wrote:I want to release my hard work for someone to use for free, while they make money, cuz their more business savvy than me??
Its not just business savvy, its also familiarity with the code. Imagine I try to sell your product with support. A customer asks why the feedback form doesn't accept apostrophes, and asks for a fix for it.

It takes ME months to track down where in the code that happens, why, create a fix, and in the meantime, you've not only patched it, but you've changed the underlying core code to add other features (hebrew language support!), and now I have to lose MY patches to get YOUR code, upsetting my customers. Or worse, I have to manually attempt to merge across the two trees, which means less time answering my customers because I'm busy just keeping up with you.

Notice the lack of business savvy entering that equation at all. Further, you keep using the phrase "someone uses it for free", when in fact they aren't. They are testing on platforms you might not (do YOU have a mainframe running linux? I dont think so!), providing feedback ("On hebrew settings, the feedback form isn't visible"), even providing patches!

Better, I get access to their patches. Because its opensource, I get to use them too. I also get to learn from where other companies trying to support my code are failing. If I notice that company B refuses to support foreign languages, and it is the #1 request made by their customers, thats a business opportunity!

You are too focused on "Profit" as the only value provided by users of your software. Keep in mind companies that focus on Profit too strongly quickly lose their market position when the market changes (see Yahoo v. Google, Netscape v. Microsoft, etc).
Hockey wrote:So in short, I guess I am more for profit than end user experience...but thats business...or simple economics...if you spend more than you make you'll go broke real quick :P
Actually, your argument doesn't hold water. You are overemphasizing profits, and underemphasizing some of the most powerful elements in economics: Low cost labor, high customer satisfaction, and strong customer relationships. Simple economics says just the opposite: Reduce your costs, and the profits will follow.

Please, if you really want to understand better, read The Cathedral and the Bazaar, which explains in economic, social, and business terms why opensource software is deeply competitive and in some cases, outclassing proprietary software.

Re: Software license like this?

Posted: Thu Apr 20, 2006 3:25 pm
by alex.barylski
Hmmmm...
The reality is that NO application is support free. Whether that support is in the form of forums, mailing lists, or paid support models doesn't change the fact that users need support for EVERY application
I can agree to some degree and I knew that response was coming as I've been in this disscussion with many other OSS supporters :P

Heres the thing, there are applications which require zero support, their called small utility applications...

When was the last time you needed support using WinZip on Windows??? :lol:

My application is *not* a complex beast - it was designed to make editing web pages easy as possible for end users - not deisngers or developers, but people like my mom or dad or average business people.

There are no fancy template editors, etc...as most average laymen won't know what the heck a template is, never mind how to modify one. You use the templates supplied to you by the designer/developer you hire to build your web site.

So in that sense, selling to designers, I can't make money off support but perhaps template modifications, but those are easy and this market is likely frugal...so why hire me at $25 $$$/hour when the local community kid can do it for $10???

Thus my required upfront software costs... :)
Also consider that AFTER the first year of sales, you are now actually earning double what you did the first year, making it possible for you to sell less, or sell FOR less, and make just as much money.
Not quite...I know for a fact people in this market want product updates every couple of months and new versions every year or so...and my competition does this...so if I didn't...that wouldn't look good.
Its not just business savvy, its also familiarity with the code. Imagine I try to sell your product with support. A customer asks why the feedback form doesn't accept apostrophes, and asks for a fix for it.
That I can agree with...however again...my application is not 100,000 lines of pure PHP. So it wouldn't be too difficult for someone with average skills to make repairs or fixes :)

Thanks again :)

Posted: Fri Apr 21, 2006 9:55 am
by Chris Corbyn
Here's an article on the topic: http://www.thinkvitamin.com/features/we ... make-money
The Author of the Article wrote:You’ll get 1% - 2% paying customers

If you’re offering a free plan to your customers (for example DropSend offers a free plan that enables users to send 5 free sends a month before they start paying) then expect to get around 98% or 99% of your customers on that plan. That means that you can only really bank on 1% or 2% of your total customers on the paying plan. In our experience this is true and other major players in the web app industry have agreed. This is about the industry average.