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Open Source Software Licenses versus Business Models

It's not about the choice of license -- it's about solving customer problems

By Stephen Walli on Wed, 01/23/13 - 5:28pm.

I wrote a recent blog post on which FOSS license to use and it provoked Twitter commentary that wanted more discussion on how FOSS license choice can affect a company’s business model. I’m still not sure I agree that the FOSS license dictates the business model or that the business model dictates the license. A few examples probably better illustrate what I’m trying to describe.

Let’s look at each of Red Hat and Linux, and MySQL AB and the MySQL database (before the cascading acquisitions). Both open source projects are licensed using Version 2 of the GNU General Public License (GPLv2).

Red Hat packages an asset that they neither own nor control. They influence the Linux kernel through participation in the Linux kernel community. They use the Linux kernel in their Red Hat Enterprise Linux and Fedora Project operating systems. They surround the kernel with considerable other software (most of it free and open source project-based from a collection of other project communities in which they participate). They support and warrant their product solution, as well as develop and enable the Fedora project community. They are the most profitable and successful Linux vendor and indeed the most successful open source company to date, finally cracking the US$1B revenue barrier in 2012.

MySQL AB (the company) built and packaged the MySQL database engine. Here, they ran a very different pair of businesses. They evolved the MySQL Network, which was a subscription "product" that again ensured the MySQL database product was supported and warranted to run in specific configurations on specific platforms. As the company completely owned the software asset, they completely controlled its use. Asset owners can license the asset to as many people as many ways and as many times as they choose. (Think Microsoft and the difference between a Windows EULA and an enterprise agreement for the same OS.) This allowed MySQL AB to also evolve a healthy secondary revenue stream from licensing the MySQL database to others that wanted to embed the engine in their proprietary products without attaching the GPLv2 license of the public version. Sun Microsystems acquired MySQL AB for US$1B.

In each case, the FOSS project was licensed under the GPLv2, but asset control and ownership dictated how very different billion-dollar businesses were built rather than the license. This can be seen in other key licenses such as the Apache 2.0 and Eclipse licenses.

IBM doesn’t control or own the Apache projects. (Again, they do participate deeply and therefore have influence.) A number of Apache projects are key components in the IBM proprietary

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