Subject: Making money from software - another shareware approach

From: Omer Zak <[email-masked]>
Date: Mon, 29 Nov 2004 12:57:54 +0200

The following idea is an outgrowth of MySQL AB's licensing policy.

Basically, they dual-license MySQL.  For Free Software applications, it
is GPLed (or LGPLed in special cases).  For software-for-profit, they
charge money for a non-GPL license.  They ask the software vendor to
contact them and negotiate terms.

Presumably their policy is that they want to have a cut from the
vendor's profits but they do not insist upon payment if he does not make
a profit from MySQL (given an appropriate definition of "make a profit
from MySQL").

The idea is that software developers (probably from the world of
shareware developers) would say something like:
"You are welcome to use my software.  If you make no monetary profit
from using the software, pay me nothing.
But if you use my software in your business and make a profit from using
it, then I expect to be paid my cut from your profits.
Hence, my prices are (for example):
1. If you are private individual, a non-profit or business running at
loss, then this software is available to you for free.
2. If you use my software in your profitable business as is, pay me say
$500.
3. If my software is central to your business operations, as evidenced
by your need to heavily customize it to your needs, such that you need a
non-GPL license for it, then my price is say $50,000 plus $5000 a year
for service contract."

The enforcement mechanism is that if a business really uses software and
does not pay for it, then this would tarnish their credit rating.

My question:  does this idea hold water?  can it fly?  Can it be solid
foundation for a small software business?  would it energize prospective
users who would otherwise have been turned off by having to pay first
and realize a profit later? [notice the references to water, air, land
and energy=fire]
                                     --- Omer
-- 
My own blog is at http://www.livejournal.com/users/tddpirate/

My opinions, as expressed in this E-mail message, are mine alone.
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---

From: "Tzahi Fadida" <[email-masked]>
Date: Wed, 1 Dec 2004 17:20:21 +0200

I think this can hold in the embedded's market, since if you just have to
pay once to plant
the software in your, I don't know, some kind of smart router/ids/ what
ever. Then buying
mysql could be profitable to you. If you want to use it in a big computer or
something
that does not necessarily requires a small and fast software with a very
limmited 
capabililities then you can use a BSD license software like postgreSQL which
you can do whatever you want with it. Obviously for that market it would
never fly.
They are targeting a niche business where limited capabilities are required
to have faster
performance on some features.
A small software vendor should target niche markets since they would never
want to compete
at this stage with the big dogs. Choose your rivals carefuly!

Regards,
	tzahi.

> -----Original Message-----
> From: Omer Zak [mailto:[email-masked]] 
> Sent: Monday, November 29, 2004 12:58 PM
> To: hackers-il
> Subject: [hackers-il] Making money from software - another 
> shareware approach
> 
> 
> 
> Basically, they dual-license MySQL.  For Free Software 
> applications, it is GPLed (or LGPLed in special cases).  For 
> software-for-profit, they charge money for a non-GPL license. 
>  They ask the software vendor to contact them and negotiate terms.
> 
> Presumably their policy is that they want to have a cut from 
> the vendor's profits but they do not insist upon payment if 
> he does not make a profit from MySQL (given an appropriate 
> definition of "make a profit from MySQL").
> 
> The idea is that software developers (probably from the world 
> of shareware developers) would say something like: "You are 
> welcome to use my software.  If you make no monetary profit 
> from using the software, pay me nothing. But if you use my 
> software in your business and make a profit from using it, 
> then I expect to be paid my cut from your profits. Hence, my 
> prices are (for example): 1. If you are private individual, a 
> non-profit or business running at loss, then this software is 
> available to you for free. 2. If you use my software in your 
> profitable business as is, pay me say $500. 3. If my software 
> is central to your business operations, as evidenced by your 
> need to heavily customize it to your needs, such that you 
> need a non-GPL license for it, then my price is say $50,000 
> plus $5000 a year for service contract."
> 
> The enforcement mechanism is that if a business really uses 
> software and does not pay for it, then this would tarnish 
> their credit rating.
> 
> My question:  does this idea hold water?  can it fly?  Can it 
> be solid foundation for a small software business?  would it 
> energize prospective users who would otherwise have been 
> turned off by having to pay first and realize a profit later? 
> [notice the references to water, air, land and energy=fire]
>                                      --- Omer
> -- 
> My opinions, as expressed in this E-mail message, are mine 
> alone. They do not represent the official policy of any 
> organization with which I may be affiliated in any way. 
> ------------------------ Yahoo! Groups Sponsor 
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> Now with Pop-Up Blocker. Get it for free! 
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> ------~-> 
> 
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> Yahoo! Groups Links
> 
> 
> 
>  
> 
> 
> 
>

---

From: guy keren <[email-masked]>
Date: Thu, 2 Dec 2004 00:58:52 +0200 (IST)

On Mon, 29 Nov 2004, Omer Zak wrote:

> Basically, they dual-license MySQL.For Free Software applications, it
> is GPLed (or LGPLed in special cases).For software-for-profit, they
> charge money for a non-GPL license.They ask the software vendor to

personally, i think this kind of attitude does not realy match the spirit
of free software, because you can only have this dual-licnese if you have
the copyright for the _entire_ source code. which means - no contribution
from the community.

> "You are welcome to use my software.If you make no monetary profit

i don't realy like this attitude - "making my cut from your profits".
you'll start having arguments such as - this company uses your product, as
well as 20 others - if everyone will want 5% from the profits - there no
no profits. and you won't be able to run after each and every client to
start calculating how much of their profit is due to your product. soon
enough, they will throw your product out, and use something else
(= cheaper). in a free software market, after all, you can earn well, but
you can't be a pig - someone else will suggest the same product for a
lower price. oh, i forgot - we're not in free software land any longer...

> does not pay for it, then this would tarnish their credit rating.

i beg your pardon? what credit rating exactly?

> My question:does this idea hold water?  can it fly?  Can it be solid
> foundation for a small software business?would it energize prospective
> and realize a profit later?[notice the references to water, air, land
> and energy=fire]

many closed-source companies allow people to evaluate their software
before buying it. many give you the development environment for free and
only ask for royaltees (and then start arguing with you how much of the
royaltees you need to pay in advance under the assumption _they_ make
about how much _you_ are going to sell ;)  ).

since your product is not free-software for your clients, i don't see
where is your advantage for them over a regular product that is not even
trying to look like free software, and still comes with the source (e.g.
borland's OWL, microsoft's MFC, roguewave's libraries, etc).

-- 
guy

"For world domination - press 1,
 or dial 0, and please hold, for the creator." -- nob o. dy

---

From: Omer Zak <[email-masked]>
Date: Thu, 02 Dec 2004 01:47:56 +0200

> the copyright for the _entire_ source code. which means - no contribution

You are very right about this problem.

This is why it would be nice to have a business model, which would allow
the principal developers of a GPL/LGPL software package (without dual
licenses) to make a nice profit from developing, maintaining and
customizing it.

> lower price. oh, i forgot - we're not in free software land any longer...

I wonder how MySQL AB manage this.  One possible answer (I didn't check
with them) is to have a single per-seat price, which can be negotiated
downwards if the client has a persuasive case that the original price
would price his product out of its target market.

> > loss, then this software is available to you for free.
[... snipped ...]
> i beg your pardon? what credit rating exactly?

If it becomes known among the credit bureaus that a company is making
commercial use of software package XYZ, but does not pay the regular
royalty fees, then it means that the company is utilizing clause (1)
above i.e. the company can be assumed to be operating at loss.  So you
had better be careful before extending them credit!

Of course, the company may have good reasons for not paying the
royalties (for example, need to extensively customize/debug the software
before it becomes really useful).

> borland's OWL, microsoft's MFC, roguewave's libraries, etc).

If the software is GPLed, then the advantage for the clients is that
they can fix or customize the software.  They also can use it freely (if
they are willing to tarnish their credit rating by the above mechanism).

Summary:

The above is just a speculation.

The real-world credit rating system would not cooperate with the above
approach of pricing Free Software.  Credit extended to a profitable
company remains as safe even if the company is stingy and does not
volunteer to pay for Free Software.

Back to the drawing table and to dreaming up more harebrained business
models for Free Software.
                                   --- Omer
-- 
My own blog is at http://www.livejournal.com/users/tddpirate/

---

From: Tal Rotbart <[email-masked]>
Date: Thu, 2 Dec 2004 09:13:58 +0200

I couldn't agree more with Guy. I think he hit the nail on the head.

An alternative and appealing business model for an open-source
business is still the classic free-software cross-polinating with
contracting/consulting + guide books, just like JBoss, or Apache
TomCat/Struts do.

-Tal

-- 
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---

From: [email-masked]
Date: Thu, 2 Dec 2004 11:02:42 +0200

> the copyright for the _entire_ source code. which means - no contribution

You can always request, and merge exclusively, contributions licensed with a
less restrictive license than the one(s) with which you, yourself, offer the
software. E.g., if my software product is licensed GPL to anyone, and dual GPL
with with Adi's Own Propostrous Proprietary End-User License Agreement
(AOPPEULA) only to those who pay me, then I can say that I will only merge
contributions made under a license that is both GPL-compatible and which allows
me to relicense them as AOPPEULA at my will. A possible choice is BSD. 

This does require contributors to offer enhancements at more permissive terms
than those under which they were offered the software in the beginning, but on
the other hand it requires no copyright assignments, or, for that matter, even
reference to me specifically in the license. The only reason I would be special
among the other contributors is because I would have exclusive copyright of a
crucial part of the program, and would not license it BSD.

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---

From: guy keren <[email-masked]>
Date: Thu, 2 Dec 2004 23:56:33 +0200 (IST)

> me to relicense them as AOPPEULA at my will. A possible choice is BSD.

question: the people who supply patches:

1. what kind of license did _they_ get the software under? if it was GPL -
   they cannot put the patches under BSD - this violates the GPL.

2. even if you managed to make some hocus-pocus and both eat the cake and
   leave it whole - why on earth would people want to contribute to your
   software, when they can contribute to some _real_ free software?

-- 
guy

---

From: guy keren <[email-masked]>
Date: Fri, 3 Dec 2004 00:01:32 +0200 (IST)

> licenses) to make a nice profit from developing, maintaining and

actually, this is why you should stop thinking of how to become filthy
rich from free software - the spirit behind free software wasn't meant to
make people rich.

> above i.e. the company can be assumed to be operating at loss.So you

i'm not sure where you came up with this one, but i'll not argue - it
sounds quite illogical to me, but i'm not familiar enough with economic
laws in order to completely dismiss it ;)

> > before buying it. many give you the developmentenvironment for free and
> > about how much _you_ are going to sell ;)).
> >
> > since your product is notfree-software for your clients, i don't see
> they can fix or customize the software.They also can use it freely (if

you just said that for the clients, the software is NOT GPL. if it was GPL
for them, you wouldn't have needed this dual-licensing to begin with.

-- 
guy

---

From: Omer Zak <[email-masked]>
Date: Fri, 03 Dec 2004 00:20:31 +0200

[... snipped ...]
> for them, you wouldn't have needed this dual-licensing to begin with.

You missed the part which said "without dual licenses" above the part
which suggested one way for developers of GPLed software to make good
money from their developments.

About the spirit of Free Software:
Stallman stressed many times that the point is to be free to study,
improve and share.  Not to piously refrain from making money.  Proof: 
GPL allows you NOT to release your modifications to GPLed software, to
combine it with non-GPLed software and all the other sins as long as the
monsterosity is confined to your home or business and is not distributed
further.

A business model, which allows one to become filthy rich from Free
Software has the following social benefits:
1. People will have less economic incentive to develop non-Free
software.
2. People will be able to devote more time to Free Software projects and
advance them further.
3. There is more software, which can be used by people and businesses,
which don't (currently) have the financial means to pay for it.
4. Useful software brings more income to its developers than less useful
software, hence there is better incentive for better software (according
to all criteria, which may have economic consequences - stability,
extensibility, user-friendliness, power,...).

I think that one of the features any business model for Free Software
must have to be legal and successful is that people can use the software
for free if they are not successful in making a profit from the venture,
for which they use the software.  On the other hand, people, who make
huge profits from the software, will pay high price for using the
software.[One way this happens today is that if a company has critical
dependence upon a software package, it would pay its developers good
money to add features to the software, which would benefit the company.]
                                                     --- Omer
-- 
My own blog is at http://www.livejournal.com/users/tddpirate/

---

From: Adi Stav <[email-masked]>
Date: Fri, 3 Dec 2004 00:47:15 +0200

>    they cannot put the patches under BSD - this violates the GPL.

They get the software under the GPL and supply patches under the BSDL
(without the licensing clause).

This does not violate the GPL, which requires that "the program is 
licensed under the terms of this license [the GPL]". As the terms of 
"this license" are clearly the same or more restrictive to the licensee 
than the terms of the BSDL, this is fully compliant.  Numerous examples 
exist (e.g., BSDL patches to Linux).

>    software, when they can contribute to some _real_ free software?

It is REAL free software.  People can do as they damn please, including
forking, and the code is GPL or more permissive, allowing cut-and-pase.  
The limitation is not in the license but merely in that I will not merge 
patches not licensed under a sufficiently permissive license, and no one 
claims that the merging policy of a specific, even if critical, 
contributor to the project determines how free it is.  Many GNU projects 
will not merge patches unless their copyright is actually transferred 
to the FSF and not many say that they are not real free software because
of that, claims regarding reduced incentive to contribute notwithstanding.