David J. Teece

Customers uptake of value propositions leads to Revenue Streams1.

As Snapfix business model evolves we will need to carefully consider what aspects of our service to Open Source and what aspects to consider core vs ancillary and which parts of our overall platform to commercialize or upsell. These decisions can have downstream negative effects if transparency and clarity are not provided to potential outside contributors. If value is created in a community or collaborative manner and the service is subsequently altered or made opaque for whatever reason then it may be negatively received by users and contributors. Choice of software licence can dictate the course of a service and should be considered from the outset so that value can be captured while respecting the spirit in which the service is created.

OSS revenue streams centre around license choice and also acts as a signalling mechanism to the IT profession and may affect the firm’s ability to attract OSS contributors and skilled employees. Community Open Source developers have a preference for restrictive licensing that protects their contributions, but companies generally require more permissive licensing (Ågerfalk and Fitzgerald, 20082; August et al., 20173).

The GPL (General Public License) is considered one of the most restrictive licenses and the BSD (Berkeley Software Distribution) is considered one of the least restrictive. The GPL uses the concept of ‘copy-left’ which requires the contributor to apply the same license to their contributions which limits their ability to profit from the project. The BSD license is more permissive and allows contributors to retain rights to their contributions and profit from them but it can also leave the Open Source project open to exploitation by competing firms (August et al., 20173)

Regardless of which OSS license is chosen, another proprietary license is also applied to whatever aspects of the whole-product or service that generates revenues.

Dual-Licensing will generate revenues by attracting large numbers of customers to the free OSS project while convincing a subset to pay for proprietary services or products related to the OSS (Andersen-Gott et al., 20124; Fitzgerald, 20065). Therefore, the balance of OSS and Proprietary licenses coverage is critical to Open Source Value Capture (Fitzgerald, 20065). One of the most common sources of revenue is through the sale of consultancy hours and support contracts. The firms employees contribute to the OSS to demonstrate competence and legitimacy while also carrying out their for-profit activities (Andersen-Gott et al., 20124).

Deodhar et al. (2012)6 adds to the large body of research that exists with regards to licensing strategies. They encourage firms to make non-strategic modules open source, including free access to maintenance packs, if they are critical to the functioning of the community Open Source project. This is an important point and illustrates the importance of striking the right balance between profit seeking and sharing of IP.

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  1. Osterwalder, A., Pigneur, Y., Clark, T., 2010. Business model generation: a handbook for visionaries, game changers, and challengers. Wiley, Hoboken, NJ. ↩︎

  2. Ågerfalk, P.J., Fitzgerald, B., 2008. Outsourcing to an Unknown Workforce: Exploring Opensourcing as a Global Sourcing Strategy. MIS Q. 32, 385–409. ↩︎

  3. August, T., Shin, H., Tunca, T.I., 2017. Generating Value Through Open Source: Software Service Market Regulation and Licensing Policy. Inf. Syst. Res. 29, 186–205. https://doi.org/10.1287/isre.2017.0726 ↩︎

  4. Andersen-Gott, M., Ghinea, G., Bygstad, B., 2012. Why do commercial companies contribute to open source software? Int. J. Inf. Manag. 32, 106–117. https://doi.org/10.1016/j.ijinfomgt.2011.10.003 ↩︎

  5. Fitzgerald, B., 2006. The Transformation of Open Source Software. MIS Q. 30, 587–598. ↩︎

  6. Deodhar, S.J., Saxena, K.B.C., Gupta, R.K., Ruohonen, M., 2012. Strategies for software-based hybrid business models. J. Strateg. Inf. Syst. 21, 274–294. https://doi.org/10.1016/j.jsis.2012.06.001 ↩︎