Hi! I’m Andy Matuschak. You’ve stumbled upon my working notes. They’re kind of strange, so some context might help.
These notes are mostly written for myself: they’re roughly my thinking environment (Evergreen notes; My morning writing practice). But I’m sharing them publicly as an experiment (Work with the garage door up). If a note seems confusing or under-explained, it’s probably because I didn’t write it for you! Sorry—that’s sort of an essential tension of this experiment (Write notes for yourself by default, disregarding audience).
For now, there’s no index or navigational aids: you’ll need to follow a link to some starting point. You might be interested in §What’s top of mind.
👋 Andy (email, Twitter, main personal site)
PS: My work is made possible by a crowd-funded research grant from my Patreon community. You can become a member to support future work, and to read patron-only updates and previews of upcoming projects.
PS: Many people ask, so I’ll just note here: no, I haven’t made this system available for others to use. It’s still an early research environment, and Premature scaling can stunt system iteration.
Companies in this category develop open-source software but pursue commercial business models around additional features, enterprise support and services, professional services, etc.
See the Commercial open-source software company index
Some companies make some core version of their software available under unrestrictive licenses, but offer additional features under proprietary licenses. This model is often called “{open-core}.”
Elastic, GitLab, Redis Labs, and Confluent all offer a core version of their product under a permissive open-source license, then offer many extra features (particularly those which might be interesting to enterprise customers) under proprietary licenses.
Open-core businesses often use “source-available” licenses for their proprietary features, usually meaning that customers may {access and modify the source code}, but they may not {redistribute or create competing services} with it. Examples include: {The Commons Clause, the Elastic License, the Confluent Community License | Confluent}
When the boundaries between the open-source components and the proprietary components are drawn well, it appears that these companies get to have their cake and eat it too. Large communities contribute to their open-source software, and the public projects represent a great distribution and sales channel, but they also sustain their business by selling the proprietary features.
Empirically, open-core models seem to have the most success when the proprietary features primarily appeal to {enterprise customers}. My best theory: because community open-source developers are {less interested in developing such features}, while those customers are {relatively price insensitive}.
Q. What’s an example of a business with an “open-core” model?
A. Redis, GitLab, Elastic, Confluent
Companies pursuing this model offer their software as open-source, but under a license which inhibits commercial use (e.g. Affero General Public License). Then they sell a proprietary license which removes these encumbrances.
This model seems to work best when your source code would likely be used as a library in a larger software system.
Examples of products pursuing dual-licensing models include: {MySQL, MongoDB, RethinkDB, Berkeley DB, Asterisk, and Qt.}
SugarCRM initially pursued a dual licensing strategy, but later {stopped contributing updates to the open-source repository}.
Oracle NetBeans pursued this strategy for 20 years, but eventually donated the project to the Apache foundation, where it is now fully OSS.
Some open-source developers drive revenue primarily by offering hosting services. For example, Automattic develops WordPress, an open-source publishing platform, but earns its revenue primarily through WordPress.com, a hosted service.
This model seems to make the most sense in combination with another model. I don’t know of any companies using this alone as a value-add offering. My understanding is that the commercial WordPress offering makes most of its money not through hosting services but through enterprise consulting (e.g. to NYT).
Many “open-core” businesses also offer cloud services. This is a core value-add for Elastic, GitLab, Redis, and Confluent.
One of the oldest open-source business models is to sell support and professional services. Red Hat was perhaps the best exemplar.
Conversation with Adam D’Angelo, 2020-02-23
Business models for open-source software - Wikipedia
Open-core model - Wikipedia
Multi-licensing - Wikipedia