Business model: appropriating returns from Commons
Boundaries between public goods and private investments are blurred in the Open Source Software industry. A number of studies published over the last years tried to address the issue from a theoretical and an analytical point of view, nevertheless none of them return the key to bypass the storm of problems caused by a tactical approach.
An Italian research based upon 146 firms shown that where OS firms preach participation, in general such positive attitude to cooperation is seldom put into practice.
A study conducted on the linux-embedded vertical market, shows how averagely 53% of code is revealed, showing how participation to a technological club done by virtual and informal R&D networks can have beneficial effects on their business.
Nowadays quite few OS firms are doing very well Red Hat who recently acquired Jboss moving a step forward on the application level, is the first pure open-source success story to point to, being the only vendor publicly traded. The Swedish firm MySql makes open-source database software and is said to be closing in on $40 million in revenues this year, but it has a 1/1000 ratio of customers/users, showing how being the first mover is a must to get success.
Meanwhile, meta-organizations like Object Web are federating vendors around enabling technology and its compliance with open standards, renewing middleware market who appears doomed to fail even more dramatically than other software markets. In the middleware development area a new rationale is emerging, targeting sustainable development of a “business ecosystem” where stakeholders could share beneficial middleware strategies, just like in the Linux-embedded example.
- Intellectual property indemnification and licensing issues
(Black Duck, Palamida, Software Freedom Law Center);
- Warranty (Open Source Risk Management);
- Stack dependability and Benchmarking (SourceLabs, SpikeSource);
- Mediation (Open Logic).
All those business models are possible because only few projects are held by a specific corporate actor who market its products, tracking the production process, developing partnership in order to let hardware or software vendors do benchmarking, delivering form of indemnification and/or warranty to customers, and last but not least working with under contract developers.
Winner takes most, as usual, and such opportunities are bound to small oligarchies. Investments might be high to start form scratch such businesses, as seen with Canonical, struggling to be noticed in the distro arena. As a matter of fact, barriers are higher when everybody sells the “same” product, and it’s definitely not a sure bet.