“Business models and strategies for open-source projects.“
Since it emerged in the mid-80s through the protagonism of pioneer organized movements, the notion of freely shareable, collaboratively developed technology has steadily established itself in the following decades to enter the 21st century as a leading industrial paradigm.
Today, nearly 40 years after the formal concept of free and open source (FOSS) was introduced, despite initial skepticism gradually dissipating by positive empiric evidence, some questions remain hard to grasp for newcomers and even experienced practitioners.
❝ How have many large community-run open-source ventures evolved from experimental undertakings into long-standing, economically sustainable projects?
❝ Why are major commercial enterprises increasingly engaging in developing open-source systems, and how do such decisions meet their business goals?
❝ How to design an economically-effective business model and a sustainable development strategy for an open-source product or service in a given industry segment?
By shedding light on those issues, this book aims to offer a starting point both for individual entrepreneurs venturing into innovative undertakings and for already established organizations willing to consider the open, collaborative paradigm for a new product or service.
More than “why use open-source,” the book is about “why create open-source.” It is inspired by the observation that while, on the one hand, it is not difficult to enumerate advantages of FOSS from the users’ standpoint — whether related to cost, socio-technological inclusion, flexibility, dependability, or transparency — on the other hand, understanding the driving interests of individuals and organizations that invest massively in FOSS development is not equally straightforward. Why would anyone commit resources — money, labor, time — in the production of intellectual creations, only to deliberately relinquish the exclusive profiting prerogatives endowed by intellectual-propriety enforcement? True, it is plausible to look for clues in initiatives conceived on ethical grounds, like GNU, and intellectual enjoyment, like Linux — as well as portfolio building, like the ever-growing collection of personal projects hosted in GitHub and GitLab platforms. However, while such hints may point to valid origins of many community-driven projects, they do not address how those endeavors matured into lasting, sustainable enterprises. Moreover, arguably, neither hobby nor philanthropy is to be accounted for as the only goal of large corporations that have decided to embrace the open-source development model.
Against this background, while successful experiences of FOSS have been around for over three decades, more often than not, when considering the option of delivering a given innovation product under an open-source license, a preeminent question that arises for both new entrepreneurs and industry veterans is how to figure out a suitable business strategy that is economically sustainable in the long-term.
This book addresses those questions. In exploring study cases, the investigation aims at understanding the rationales and strategies underlying those companies’ decisions to produce and release open-source products. By addressing the topic from varying perspectives, the book’s chapters examine which business models have succeeded, and which ones might apply to leverage the open-source industry in areas where world-class FOSS solutions have not flourished yet.
From a contemporary perspective, the book embraces the realization that the principles of collaborative construction of publicly accessible knowledge grounding the open-source paradigm have been extended beyond the software industry’s original ambit, coming to encompass any intellectual artifact made available under non-exclusive rights of utilization, adaptation, and distribution. From this standpoint, the study assumes a comprehensive view of free and open-source systems that applies to all technological, educational, artistic, or other creations, including computer programs, hardware design, artwork, scientific data, and other types of intellectual artifacts.
The contents of this volume cover relevant topics such as the foundations of the free and open-source paradigm, scientific and technological innovation, business models, industry cases, community fostering, decision-making, licensing, project governance, community ethics vs. corporate ethos, challenges to the FOSS industry, and the dynamics of collaborative ecosystems.
By calling forth the knowledge of experienced authors, the material is expected to be a state-or-art reference for researchers and practitioners involved in the development or the management of open-source projects, as well as decision-makers considering the appropriate strategy to design open-source business models for their products and services.
To give a glimpse of what is in the book, we can briefly refer to some of the original ideas discussed by the authors.
We can start, for example, by recalling that the success of FOSS was not initially received without a good deal of surprise. Indeed, it is fair to say that FOSS debut was less of a shy rookie aspirant with a timid proposal than of a rebel endeavor with a disrupting call to action. In the chapter “Open Source and Economic Models in an Evolutionary Approach: Toward a third stage of FOSS development“, Dr. Marco Berlinguer lays a comprehensive review of the trajectory of FOSS along its history, and the different interpretations that have been attempted in order to explain its seemingly paradoxical success amid the traditional innovation industry. In his analysis, the author criticizes the premature bid to co-opt FOSS into the conventional logic of the capitalist market, as well as the naive trivialization of FOSS as yet another more-of-the-same hype — as those narratives fail to account for the transformations FOSS has been yielding in the mainstream digital production standards. Berlinguer discusses the varying phases through which FOSS has evolved, from the self-organizing volunteer communities to widespread market adoption, and highlights the new phase we are entering now when public policies and significant geopolitical unfoldings are expected to call forth a more organic involvement of the government sphere in the trajectory of FOSS. By assuming an evolutionary-economics perspective, the chapter frames FOSS as a digital commons and dissertates on how the success of FOSS may be evidence of a broader role of this concept in the emerging digital economy. Anyone venturing into the FOSS-based enterprise domain would benefit from glancing at what is to come.
Actually, when talking about the digital economy, the scope of this analysis is not confined to how people use laptops and smartphones. These and other types of traditional devices fell into the category of general-purpose computers, conceived as stand-alone units aimed at operating as independent appliances. The class contrasts with that of embedded computers, referring to hardware designed to be part of larger equipment and perform dedicated functions. Since the 1990’s, the evolution of embedded computational architecture has been spotlighting the notion of ubiquitous and pervasive computing. Modern electronic equipment is more and more being designed as a collection of peripherals around computer hardware: smart TVs, internet routers, smartwatches, vehicular control units, video-gaming consoles, and wearable internet-enabled gadgets in general, are today, essentially, computers as well. FOSS is running on those computers, causing open-source to be literally embedded in our daily lives, even when we are not typing on a keyboard or swapping a touch screen. In the chapter “Open Source and Free Software Licenses for Embedded Systems: Operating Systems, Free Software and Open Source licenses“, Dr. Renê de Souza Pinto discusses the effect of FOSS in the embedded system segment, and how open-source licensing impacts the consumer electronics industry. The author evokes one of the best examples, the Linux kernel, which is present in millions of different embedded devices. Renê discusses Linux’s copyleft license, which enforces any derivative work to be released under the same terms as the original license. Embedded device manufacturers should be aware of such clauses and understand how to handle the distribution of their open-source systems. The chapter covers relevant aspects of different open-source licenses and common issues of interest for the business model design.
Still in connection to business models, many different approaches have been developed for commercial open-source products. The chapter “A Business model framework for open-source software companies“, by Dr. Karl-Michael Popp, analyzes varying such models through a unified framework. The author distinguishes between community and commercial open-source projects, and looks at different alternatives based either entirely or partially on open-source licenses. Popp breaks down the several examples into basic building blocks, and explores the possible combinations of main business models to reveal different hybrid instances to deliver differentiated value. The chapter overviews how commercial open-source companies foster contributor communities for their enterprises, and look further into the future of on-demand and software-as-a-service deployments.
Opportunely, while certainly the canonical example, the software case is not the only representative of open-source technology under the industry’s attention, as the influential success of that area has also impacted other segments where the concept of free open collaboration has been felt. Among those new extents lies the emergence of the open-source hardware (OSH) concept. Regarding this new compelling topic, the chapter “Building Open Source Hardware Business Models” by Dr. Laetitia Marie Thomas, Prof. Karine Evrard-Samuel, and Prof. Peter Troxler reviews the state-of-the-art of OHS communities. The authors build on the Commons theory to shed length on how OSH initiatives have developed economically effective and sustainable business models. Thomas, Evrard-Samuel, and Troxler develop the ideas grounded on empirical evidence collected through nearly 30 study cases which they followed over an extended period. Their findings propose a framework for helping OHS practitioners design viable business models, enumerating actionable, strategic steps for this purpose, and raising the potential of the open-source approach to meet the sought-after equilibrium between our social demands and the environmental capacity of the planet.
In the same vein as free and open-source hardware extended the original idea of free and open-source software, related concepts have gradually emerged in the context of other kinds of intellectual creations, including open-source educational content, scientific communication, commercial artwork, research experimental data, to name only a few examples. In the chapter “Coherent Synergy: fostering innovation in open-source ecosystems”, Dr. Francisco José Monaco abstracts the fundamental principles shared by those varying instances into the unified notion of open-source innovation, referring to any kind of intellectual creation, irrespective of its nature, whether technological, artistic, scientific or other. The author addressed the question of how an innovation-based business that deliberately renounces the exclusive prerogatives endowed by intellectual property can foster continuous innovation. Against this background, Monaco approaches the open-source model as a new paradigm of innovation fostering that does not rely on the IP-enforcement model, and brings up a comprehensive conceptual framework to understand different kinds of open-source business models in a unified and systematic way. The study formulates the notion of coherent synergy: a property that determines the roles of intellectual creation and the essence of value delivery in open-source innovation ecosystems. The chapter examines some fundamental criteria that should be considered during the design of open-source business models with respect to their adequacy to sustain a consistent, continuous innovation process.
Finally, the chapter “The successful use of Fedora and CentOS in the RHEL business model from the kernel Linux perspective” by Julio Cesar Faracco addresses one of the most iconic practical illustrations of open-source-based enterprise, the case of Red Hat Inc. The author introduces the entire business model behind Red Hat’s Linux development, highlighting its contribution to the Linux kernel. Faracco describes the main aspects of Red Hat Enterprise Linux, undoubtedly one of the most successful commercial Linux distributions, as well as the company’s experience in using other open-source distributions such as Fedora and CentOS. The chapter brings a brief historical overview of each distribution and their communities, and comments on how their histories impacted the enterprise’s products.
Through an in-depth discussion of these and related topics, the authors gather valuable information and critical analysis that help the interested audience understand open-source development’s rationales. The study explores new referential frameworks upon which individuals and organizations can devise strategies and design appropriate business models for a particular product or service.
We wish this book is a valuable resource to researchers, students, and practitioners investigating the foundations of the open source model and its economic, social, technological, and ethical implications.
A word about the authors
We are enormously glad that we could count on the contribution of the acknowledged authors that helped to write this book. A word about each of them is more than deserved.
Dr. Marco Berlinguer has a Bachelor’s Degree in Philosophy (La Sapienza University, Rome), a Master’s in Knowledge and Information Society (Universitat Obierta de Catalunya), and Ph.D. in Public Policy and Social Transformation (Autonomous University of Barcelona). He lives in Barcelona, where he collaborates with the Institute of Government and Public Policies (IGOP), and teaches at the Superior School of Cinema and Audiovisual (ESCAC). Berlinguer is a researcher on new forms of economy, particularly at the intersection between the social economy and the knowledge and information economy. He is the author of several research articles and books, and contributed to the creation of the “School of the Commons”.
Dr. Karl-Michael Popp, has a Master’s degree in Economics and a Dr. rer. pol. in Information Systems from the Otto-Friedrich-Universität Bamberg. He is a senior member of ACM, a long-time member of IEEE, and of the German Informatics Society (GI). Popp is the author of several research articles and books, including a long list of works in the fields of open-source and software ecosystems. Together with Michael Cusumano and Slinger Jansen, he edited the IEEE Software special issue on Managing Software Platforms and Ecosystems in 2019.
Dr. Renê de Souza Pinto has a Bachelor’s degree in Computer Engineering, and both Master’s and Doctorate degrees in Computer Science from the University of São Paulo. Over the last eight years, he has been working on embedded systems development for the industry (automotive, medical, among others), especially with cutting-edge Operating Systems and Virtualization technologies for Embedded Devices. He has a strong foundation in Operating Systems and Embedded Systems development with several hardware and software platforms. Currently working with Edge Computing (EVE OS). Dr. Pinto is also an enthusiastic FOSS activist and contributor to the FLOSS Research and Education Center / CCOS-USP.
Dr. Laetitia Thomas holds a Ph.D. in innovation management from Université Grenoble Alpes and an MBA in marketing from Grenoble École de Management. Specialized in business model innovation and circular economy, she enjoys crafting tangible design and business solutions for positive social and environmental outcomes. Her multicultural background includes cross-divisional experience teaching, researching, and practicing sustainable design.
Prof. Karine Evrard Samuel is a Professor of Management and Faculty Member at Université Grenoble Alpes, Grenoble Institute of Engineering and Management, member of the Center for Studies and Research Applied to Management. She has published numerous scientific articles and books or book chapters in the field of strategic business management and supply chain management. Her areas of expertise relate to supply risks and the resilience of organizations, in particular within innovation ecosystems. She co-drives several multidisciplinary research projects jointly with foreign universities. She is Vice-President for International Affairs of Université Grenoble Alpes, and President of the International Association for Research in Logistics and Supply Chain Management (AIRL-SCM).
Prof. Peter Troxler is the research director of the digital research institute at Rotterdam University of Applied Sciences, The Netherlands. His field of research is the impact of readily available direct digital manufacturing technologies and the design and manufacturing practice of “fabbers” and “makers” on the creative and manufacturing industries, and the emergence of networked co-operation paradigms and business models based on open-source principles – such as Open Design and Open Source Hardware. Moreover, Peter studies the emergence of third spaces and new manufacturing initiatives in Urban Open Innovation Environments, how they relocate production and research functions to the centers of neighborhoods in the form of new spaces of production, and how the relationships between people and tools, people and capital, and people and authorities need to be remodeled to provide the conditions for radical innovations for the development novel socio-technical configurations. Peter is an industrial engineer by training (Ph.D. 1999 from ETH Zurich). He worked in factory automation, attaching robots and automatic tool changers to CNC milling machines before pursuing his career as a design consultant in Switzerland and later as a research manager in knowledge technologies and knowledge management at the University of Aberdeen, Scotland, UK. At the new media think tank Waag in Amsterdam, the Netherlands, he worked on Fab Labs in the development and promotion of Creative Commons licenses, and the development of Open Design.
Julio Faracco has a Bachelor’s degree in Computer Systems (University of São Paulo, Brazil) and a Master’s degree in High-Performance Computing (State University of Campinas, Brazil). He has more than 12 years dedicated to Linux Operating Systems, working with embedded systems, robotics, virtualization, and software development. Faracco developed research works in robotics and dynamic systems simulation. In the industry, he works primarily with operating system virtualization. He is currently with Red Hat, responsible for taking care of KVM/Qemu/Libvirt VDI solutions and Citrix solutions for IBM Linux. Today, he is a kernel engineer behind the Red Hat Enterprise Linux.
Dr. Francisco José Monaco has both a Bachelor’s and a Ph.D. degree in Electrical Engineering / Electronics from the University of São Paulo. He is currently a researcher in the Department of Computer Systems at ICMC–USP, where he teaches courses on system software for both graduate and undergraduate students, and conducts scientific research in Computational Modeling & Simulation. His major topics of investigation include multiobjective evolutionary optimization and unsupervised machine learning. Dr. Monaco has served on the steering board of the USP Open Source Competence Center for over a decade. In addition, he has authored several scientific articles, served in conferences and journal technical committees, and taken part in national and international research projects.
See the call for papers: Business Models and Strategies for Open Source Projects.