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Open Core and OSI
Sunday, July 04 2010 @ 08:55 PM EDT

Simon Phipps is correct: Open Core is Bad for You, the "you" here being you and me, end users:
The open core model exploits open source and is a game on software freedom. The fact the game is played does not invalidate software freedom, but it suggests we need to revisit definitions and make the game harder to play.

Open core is a game on rather than a valid expression of software freedom, because it does not cultivate software freedom for the software user.

Mark Radcliff worries that the anti-open core position will scare away VC investment. So be it. But here's my question: what is OSI's position in this debate? With both men associated with OSI, it's getting confusing.

Note Mark's acknowledgment about OSI and the GPL:
Simon says that open core does not provide software freedom for “end users”. Yet, nothing prevents the end users of the open source version to modify it and distribute it or otherwise exercise the rights under the license. In fact, Compiere demonstrates the fallacy of this position because it created two different forks. Simon complains about the lack of access to the “commercial extensions” of open core programs. However, as Marten Mickos notes, the effect on the end user of the employment of the Apache license is the same as the open core model: commercial extensions are not made available to the community.

I agree with Matt Aslett that the open core model does not violate the Open Source Definition, either literally or in spirit (please note that this position is a personal one and does not reflect the view of the OSI which has not yet taken a position on this issue). Simon appears to be suggesting that only a “copyleft” approach in which all of the software must be available under an open source license to meet the Open Source Definition, which is simply incorrect (the Open Source Definition was a reaction to the limitations imposed by the copyleft approach).

Is Mark suggesting that OSI intended to facilitate less freedom for the code and end users than the GPL offers, that this was an OSI goal, that "software freedom for the software user" isn't and never was an OSI goal? Does freedom mean only the right to fork the code? If so, I'd like OSI to say so clearly and on the record. If so, it might provide insight into why OSI is struggling and provide indisputable proof that they were foundationally wrong. I hope they'll weigh in on this debate and plant their flag, because if that is what OSI stands for, maybe it's time to let them float out into outer space without the community, thus making it clear there really is no connection between the real FOSS community and OSI any more.

If that is not what OSI stands for, I'd like to hear them say so. I hope it isn't. But the community wants to know where they stand, and for what.

For myself, I believe that OSI, in order to be relevant, needs to reinvent itself and restructure to represent the entire community with its license list and its definition. Enough with the old divisions and the debates. The community needs to face the world more unitedly now, as a broad spectrum, including those who had the foresight to realize that VC guys and proprietary types would be coming along someday and would try to close down the freedom of the code and the freedoms of those using it just to make a buck.

Not every license needs to be the GPL, obviously, but if the world has gotten the idea that *less freedom* for end users is the goal of OSI, then OSI needs to respond. If open core is the OSI goal now, tell us. If that's where OSI wants to plant its flag, then it's time for someone else to maintain the list of approved licenses.

Or, alternatively, revamp, and seriously consider the licenses approved on the list and even more so the licenses approved going forward, rewriting the Open Source Definition to keep the wolves out of the chicken coop. OSI needs to make clear what the point of Open Source is. Its foundational corporate documents say its goal is to protect Open Source. What exactly does that mean in 2010? It's time to get explicit. Or it's time for the approved list of licenses to move somewhere that does reflect the entire community and not just one insular point of view. Otherwise, OSI will inevitably undermine the community.

If any VC guys can't grasp all this, they need to get out of this space. They'll just ruin everything, and they'll even lose money because of acting like bulls in the china shop. Their departure won't leave a big hole forever, and in time more clueful VC money will replace them.

Mark doesn't see it that way:

Most venture capitalists will not invest in companies that do not use the open core model, so if the open source community leaders are successful in demonizing the open core model, they will decrease the willingness of venture capitalists to invest in open source companies (just a reminder, that a recent book, Mastering the VC Game, recently noted that venture capitalists typically look at 300 companies for each company in which they invest). Although not all open source projects need venture capital support, venture capitalists have been a significant source of support for open source projects (as well as new software made available under open source licenses) and end users have been the beneficiaries of their investment. If the open core model is no longer considered open source, the biggest losers will be the end users; they will lose the opportunity to benefit from that investment and that is certainly not consistent with the goals of open source.
The community doesn't need VCs that don't understand FOSS better than this suggests. They aren't investing in open source communities if their influence results in closing down the openness. That's called exploiting the open source community. It's not the same thing. And if faced with a choice of VC money or openness and freedom, the community as a whole isn't going to choose money. It just isn't, although some individuals might do so.

Compiere did so. It gave in to VC pressure to go open core, and now look at it. To me it's Exhibit A on how VC backing can ruin your project if they don't understand FOSS values and principles. As Jorg Janke himself says, "I think that the Commercial Open Source model is still valid, but Compiere overstepped the balance between proprietary and open product components." I note that Brian Prentice at Gartner is advising clients to look at what open core means for them:

Open Core, if you’re not aware, is being pushed by many start up companies as a new approach to delivering products combining open source and proprietary software. There may be others nodding in agreement that this in fact a dazzling new business model. Regardless of the way that vendor struts, you should trust your instincts. You’ll soon realize that the fabric making up the garb of their stated innovation is a fabrication. They’ll then be exposed for exactly who they are – a good old fashion software vendor. Just like every other one you’ve come to know.

The open-core emperor has no clothes.

Let’s keep in mind that when we start talking about business models, what matters is not how a vendor generates incremental revenue but how you generate incremental value. In order to understand whether that’s going to happen or not we should start with the foundation of the open-core model – the distinction between a full-feature proprietary version and a free, open-source functional subset of that offering.

Now, if this sounds familiar to you then you’d be correct. That’s called “freemium” in the consumer world. In the corporate market, attempting to broaden the appeal of a software solution by parring back the functional footprint into a low cost alternative has been a staple mid-market strategy of enterprise software companies for over a decade.

It's hardly surprising that VC investment would look for incremental revenue, but they need to keep in mind that while Open Core benefits them, or at least they so imagine, it's not providing value to anyone else. Éric Barroca's Business of open source: my take on "open core":
I think a lot about business models leveraging open source as it’s what makes our business run and I’m deeply convinced that "open core" is fundamentally flawed. This conviction has been formed by real world observations: running a real business for several years now. ...

With an open core model, you have to exclude/remove features (hence value) from the open source software to in order to preserve your business: you could be forced to even limit innovation in the open source branch because it could damage your business. It does not leverage any benefits that should be derived from the open nature of the code — which is the very core aspect of open source. It only leverage free distribution not the open aspect of the source code.

You really can't expect to be a success in the Open Source space if you take advantage of your upstream providers and thwart their hopes and purpose in writing the code in the first place and provide no value to anyone but yourself. That's not a business plan the community will support. Even Steve Ballmer gets it that you can't be successful without developers, developers, developers. And as for subtracting value from end users, why would we end users want that? End users means companies too. So if that is what you want to do, do it, by paying developers to write whatever you need. But why would the community want to help you make money off their work, with nothing in it for them? And instead of worrying about losing VC money, maybe it's time to help VC guys get more up-to-speed on how to work in this space effectively. It surely won't be by reimplementing old, proprietary styles. There is no success with open source without community backing. Period. You can't say that for VC backing.

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