Confused about open source Dual-Licensing?
Recently a couple of analysts have shown confusion about dual-licensing of open source software.
A Matt Aslett (451 Group) survey shows that he was asking which business model open source companies are using ‘open-core licensing strategy’, ‘single open source license’, or ‘dual-licensing’. This make it looks like dual-licensing is an alternative to the other options.
During Brian Prentice’s (Gartner) session at OSBC last week he inter-changed the terms ‘open-core’ and ‘dual-licensing’ were the same thing.
In reality dual-licensing is not open-core or an alternative to it. Dual-licensing is the provision of the same software under two licenses, an open source one (usually GPL), and a commercial one. Dual-licensing can be applied to open source software regardless whether the company also offers proprietary software or not. So you can have an open-core model with or without dual-licensing. You can also have a pure-play open source model with or without dual-licensing.
James Dixon's Blog 
Hi James,
you sayd…
“So you can have an open-core model with or without dual-licensing.”
that’s absolutely true in theory but in reality can you give me an example of a project that uses open-core model without using at the same time dual-licensing?
Regards,
Andrea Gioia
Andrea Gioia
March 25, 2010 at 8:49 pm
Sure. For a long time Pentaho did not provide a dual-license. When we switched the BI platform we introduced a dual-license option.
I think your point is really, ‘why is dual-license’ so popular with open-core companies?
The answer is that dual-license is an easy option. If a potential user of the software is concerned by the GPL, this gives them an easy option to side-step the issue. Offering a dual-license costs a vendor very little and will drive some incremental revenue.
James
March 25, 2010 at 9:41 pm
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March 25, 2010 at 9:43 pm
Yes you are right. My question was a little bit rethoric in nauture. I believe that dual-license, with a community version based on the restrictive and not business friendly GPL, is a kind of condicio sine qua non for projects based on opencore business model in order to make them appetible for VC. Not adopting dual license causes infact a lot of extra risks that for sure VC want to avoid. I list here only the 3 greatest ones:
– less conversion from community users to enterprise users
– risk of fork made by community or by an external company (in the worst case by both)
– reduced (almost to 0) revenue stream from OEM contracts
In conclusion I think that, in general, opencore model is a sufficient condition, but not a necessary one, in order to have also a dual-license model in place. What you think? Am I wrong?
P.s. before the adoption of dual license, under what license was released pentaho?
Andrea Gioia
March 25, 2010 at 10:32 pm
Don’t your three risks apply to a pure-play open source company as well.
Your third assumption about OEM revenue reducing to almost zero is not valid. Most OEM’er coming to us come for support and integration assistance, not the commercial license.
Before switch to GPL dual-license the Pentaho platform was MPL.
James
March 25, 2010 at 11:31 pm
“Don’t your three risks apply to a pure-play open source company as well.”
Absolutely yes. My point was that, while this three risks apply to pure-play opensource company, they are incredibly reduced when dual license is used. I mean, when you have a community edition distributed under GPL, more community users, ‘concerned by the GPL’, will scale up to enterprise edition (risk 1 reduced), forking is not an appealing option if than you have to ridistribute your forked verion under GPL (risk 2 reduced) and last but not least OEM need to move to enterprise version in order to freely resell their product without the limitations imposed by the GPL license (risk 3 reduced). For this reasons VC tend to invest more on projects based on opencore+dual-license than on pure-play opensource companies.
‘Your third assumption about OEM revenue reducing to almost zero is not valid’
Ok, just a question than: how can OEM resell freely their products if they embed the GPL based community edition of pentaho?
Thanks,
Andrea
Andrea Gioia
March 26, 2010 at 9:03 am
Hi James,
While I agree that “you can have an open-core model with or without dual-licensing” I was referring to “dual licensing” as a strategy, rather than a practice (companies using an open core strategy are not using a dual licensing strategy, even if they dual license in practice). Your point highlights why Simon Phipps’ suggestion that we instead use a phrase like “selling exceptions” would reduce any confusion.
Thanks
Matt
Matt
March 26, 2010 at 7:21 am
Thanks for the clarification, Matt.
I wasn’t the only person at OSBC that was confused by by the distinction between the dual-license strategy and the practice.
Is the distinction useful? Does the strategy consist of a single practice – one which is shared with other strategies?
James
March 26, 2010 at 8:01 am