Does open source still make business sense? How can the open source movement be sustained and funded in the future? Is the open source business model broken or does the magic cauldron still have power?

At first it may seem counter intuitive…right? Give away our software for free in order to reap more benefits than we could if we sold the software? That is exactly the point that ESR makes in his “Magic Cauldron” essay. One of the most fundamental points that he makes in this essay is that software on a whole isn’t something that people make money from selling. Instead they make money from the service side of things…providing good support, providing quality updates, ensuring there is good documentation that goes with the software, etc, etc. ESR argues that the value of most software is not in sale value but instead in use value, in how valuable software is to someone using it. It is exactly for this reason that I believe in the “services instead of software” business model. By giving your software away for free, you are doing two important things: first, you are opening your software to endless amounts of high quality peer review that could be invaluable in fixing bugs and quickly developing new features; second, it allows a potential customer to evaluate your software on a no-risk basis then decide if they will use your software or not. If they do decide to use your software that then opens the door for you to sell them lots of other related things (each one of the indirect sale-value models that ESR discusses).

Another idea to keep in mind when thinking about open-source and how it can be profitable, is that open source on a whole, because it involves so many more developers and people truly interested in the software, will be much more robust and reliable than closed source could ever hope to be. This means that most likely as long as reliability is a key factor in growth of software, open source will almost always be more profitable than closed source software. An example of this is the boom in online cloud infrastructure. AWS for example sells a service of computer infrastructure over the internet. Meanwhile almost all of the software frameworks/libraries/examples developed by AWS and others is open source. The software has use value but no sale value, but it does drive the sale of other subscription services like AWS because of all of the many cool things one can do with that software on AWS.

One of the final problems that people perceive with open source is the idea that there are too many free riders that don’t give back to the community. ESR makes a point that I agree with here, that no matter how many end-users one open source project has even if they don’t give back financially or pragmatically, the number of developers stays the same so the free rider “problem” is not really that big of a problem. Overall you can see that indeed open source can make a lot of business sense and that as for sustaining and funding in the future there isn’t a need to worry as more and more companies are realizing the value in open source and starting to move toward open-source or at least open-core practices in order to gain a competitive edge in business. Tasking all of this into consideration I would say that indeed the magic cauldron still has power!