Dual License model: Future of open source?

I have noticed a trend developing in the business models of successful open source companies. These companies are implementing a business model that is based on dual licensing their software.

This press release provides an excellent summary of what dual licensing means.
The guiding principle behind dual licensing is "quid pro quo," or a fair exchange. Under this model, vendors offer their products under both an open source license and a commercial license. This allows open source projects to use the software at no cost, which contributes to widespread use and testing of the software and the fast growth of a large installed user base. Companies redistributing the software as part of commercial products can also get the benefits of the open source software by purchasing a commercial license, which releases them from requirements to publish their source code. Commercially-licensed customers generate revenue for the open source vendors, which contributes to the rapid development of high-quality software.

In an recent blog post titled "Giving and Taking", Asterisk creator Mark Spencer explains why dual licensing can be a good thing for open source.
The dual licensing model that Digium has chosen introduces an explicit monetary cost to choosing the proprietary route, thus providing greater direct incentive to people to choose to open their changes, and further allowing people who do not choose to open their changes to subsidize the work that Digium does with Asterisk by allowing us to add more open source resources (think Green Energy Credits here). In fact, our staff of open source dedicated programmers has more than doubled in 2007 alone!

The only people with a real reason to be upset feel that way because they cannot choose the proprietary route without paying a fee. In other words, it gets in the way of their desire to make money through proprietary add-ons without having to share in the cost of development of the underlying technology.

Alfresco explains why they prefer a dual license model.
Alfresco is an open source software company. We license 100% of the source code of our products – Alfresco Enterprise and Alfresco Community – under the GNU General Public License (“GPL”). This does not mean that Alfresco has released its software into the public domain – like any software creator, we own and retain copyrights, trademarks, and patents. Rather, it means that we author software like any software company, but license our software under an open source license that permits and encourages access to our source code, modification of this source code, and redistribution thereof.

For developers or organizations who wish to embed Alfresco into proprietary software products, we can accommodate this with a commercial license to our software (“Alfresco Enterprise”), which provides the benefits of our software without the requirements of the GPL. While we encourage everyone to use the GPL, we recognize that some prefer not to. For this purpose, we can provide a commercial license to Alfresco Enterprise.

The popular open source database MySQL (soon to be part of Sun Microsystems) also follows a dual license business model. They do a great job of briefly explaining the different license options on this page, and they also have an excellent FAQ on this subject.
MySQL's dual license model supports the company's mission: to make superior database software available and affordable to all. The dual licensing creates a circle that sustains both innovation and growth: MySQL channels the revenue from this viable open source business model back into support for its open source user community that, in turn, supports MySQL AB's commercial business.

The dual licensing business model is a "win-win" for all parties:
  • MySQL's open source community gets superior software for no cost
  • MySQL's commercial customers have the option of using reliable, community "battle tested" MySQL software for a relatively low cost
  • MySQL's business is healthy and viable, which also strengthens the open source movement

Open source legend Eben Moglen speaks highly of dual license business models.
"Dual-license products give customers who redistribute a choice in license terms," said Eben Moglen, professor of law at the Columbia University Law School and recognized as one of the world's leading experts on copyright law as applied to software. "Proprietary commercial licenses can offer customers fewer restrictions on inclusion in closed source products and enable open source software developers to grow strong businesses. This model is a win for the free software movement too, as it ensures that dual-licensed software products will be developed and supported by viable companies, and also remain available for free copying, modification and redistribution for the long-term."

Funambol is another open source company that believes in a dual-license business model. In fact, CEO Fabrizio Capobianco has blogged about why they selected this model.
My epiphany with dual licensing happened in London some years ago. I met Marten Mickos and I decided that was the way to go. I loved the "quid pro quo" concept: you either give back code to the project or you give back cash, so we can put it back in the project itself. That's being honest.

Conclusion

It is my strong opinion that open source software will become the dominate model for software development in the future. The only question left to decide is just how long will it take for open source to replace the traditional software model? The dual license model provides incentives for open source businesses to protect open source and at the same time allows them to make money from selling proprietary licenses. This model creates strong businesses that provide a lot of value to end users. Therefore I believe that the dual license model will accelerate the adoption of open source.

So what do you think about the dual license business model for open source companies? Is it a good thing or a bad thing?

Comments

  1. Anonymous1/28/2008 6:06 AM

    You've got some strong arguments here for dual-licensing but it's not all roses either. Dual-licensing is great when you are the source of software as it gives great flexibility, it can be a real pain in the butt if you're a midstream developer though and depend on other open source software. If I decide I want to dual-license a work any libraries I use must be compatible with both licenses. A good example of this is the Ubuntu Documentation team using a GFDL/CC-By-SA dual license. It was great for people working downstream because they could choose what license. It was a real pain though because it meant we could draw from virtually no other resources because very few works had the same dual license.

    ReplyDelete
  2. Anonymous1/28/2008 7:21 PM

    I was wondering how does the GPL apply to patches that end up under a proprietary license.

    If I make a patch for eg. MySQL and it ends up in the product to be distrubuted for everyone, isn't there a conflict when the same code ends up part of some other company's proprietary software?

    ReplyDelete
  3. Mark S.1/29/2008 12:46 AM

    @Anonymous - All of these dual-licensed packages require you to assign over the copyright for any patches in order to have them included in the base product. Thus, the owner can then relicense the patches in any way they see fit.

    If you don't want to contribute patches under those conditions, then you have the option of forking the project as allowed under the GPL (or other license), or maintaining your own patch set.

    This is unlike Linux, where each contributor keeps the copyright to their contributions, and no one owns all of -or even a large percentage of- the source code.

    So, I would say that while the dual license model may be the future of commercial open source, it is not the future of open source or Free software in general.

    Cheers!

    ReplyDelete
  4. Dean landolt1/29/2008 4:27 PM

    I agree that dual licensing is the future, and that it provides the necessary incentives for businesses to protect open source -- especially with the GPL3 reaching into web apps, allowing some companies to just pay up may prove lucrative for these projects.

    But I'm always a little weary when I'm evaluating a dual licensed product... Are they going to try and SugarCRM you (that is, tier the feature set and only open source the good stuff when it's convenient)? That's the only real knock I have on the model -- it often makes me suspicious...

    ReplyDelete
  5. Tristan Rhodes1/29/2008 4:54 PM

    Laserjock - Great point, I will address it further in a follow-up post. It is true that MOST open source projects will not be able to take advantage of a dual license model because they do not own the copyright for all parts of their project.

    Anonymous - See Mark's answer.

    Dean - You don't need to be concerned. If the open source vendor starts acting in ways that displease the open source community, then the GPL version can be forked and a new vendor will replace the bad one. That is the beauty of competition in a free market! Secondly, the dual license model is NOT the same as what SugarCRM does. With the dual license model, the code is the same in both versions. The difference is found in redistribution rights. See my follow-up post about this.

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