Commercial open-source software

Companies in this category develop open-source software but pursue commercial business models around additional features, enterprise support and services, professional services, etc.

See the Commercial open-source software company index

Selling proprietary features / "open-core" business model

Some companies make some core version of their software available under unrestrictive licenses, but offer additional features under proprietary licenses. This model is often called "{open-core}."

Elastic, GitLab, Redis Labs, and Confluent all offer a core version of their product under a permissive open-source license, then offer many extra features (particularly those which might be interesting to enterprise customers) under proprietary licenses.

Open-core businesses often use "source-available" licenses for their proprietary features, usually meaning that customers may {access and modify the source code}, but they may not {redistribute or create competing services} with it. Examples include: {The Commons Clause, the Elastic License, the Confluent Community License | Confluent}

When the boundaries between the open-source components and the proprietary components are drawn well, it appears that these companies get to have their cake and eat it too. Large communities contribute to their open-source software, and the public projects represent a great distribution and sales channel, but they also sustain their business by selling the proprietary features.

Empirically, open-core models seem to have the most success when the proprietary features primarily appeal to {enterprise customers}. My best theory: because community open-source developers are {less interested in developing such features}, while those customers are {relatively price insensitive}.

Q. What’s an example of a business with an "open-core" model?
A. Redis, GitLab, Elastic, Confluent

Dual-licensing

Companies pursuing this model offer their software as open-source, but under a license which inhibits commercial use (e.g. Affero General Public License). Then they sell a proprietary license which removes these encumbrances.

This model seems to work best when your source code would likely be used as a library in a larger software system.

Examples of products pursuing dual-licensing models include: {MySQL, MongoDB, RethinkDB, Berkeley DB, Asterisk, and Qt.}

SugarCRM initially pursued a dual licensing strategy, but later {stopped contributing updates to the open-source repository}.

Oracle NetBeans pursued this strategy for 20 years, but eventually donated the project to the Apache foundation, where it is now fully OSS.

Cloud services

Some open-source developers drive revenue primarily by offering hosting services. For example, Automattic develops WordPress, an open-source publishing platform, but earns its revenue primarily through WordPress.com, a hosted service.

This model seems to make the most sense in combination with another model. I don’t know of any companies using this alone as a value-add offering. My understanding is that the commercial WordPress offering makes most of its money not through hosting services but through enterprise consulting (e.g. to NYT).

Many "open-core" businesses also offer cloud services. This is a core value-add for Elastic, GitLab, Redis, and Confluent.

Selling support subscriptions

One of the oldest open-source business models is to sell support and professional services. Red Hat was perhaps the best exemplar.

References

Conversation with Adam D’Angelo, 2020-02-23
Business models for open-source software - Wikipedia
Open-core model - Wikipedia
Multi-licensing - Wikipedia