14 Jan

Making money from free

How can companies offering “free” products (e.g., Linux, Netscape) make money from these products? How can other companies compete with these fast-rising standard products?

Free products

Offering free products is type of promotion that motivates buyers to continue in future with that company that provided free products; there are some facts behind this opportunity:

  1. Free products can be tested and used without losing money.
  2. Interest and loyalty: these attitudes can be empowered by free testing.
  3. Population: free products leads to easily publish provider’s name in the market, so that it returns more benefit in long-term investment, and this point can be seen as main point for offering free products because its usual that most companies and organizations working toward their long-term goals.

Free Software

Free software definition is different from other promotional free products or services, also from free trail or demo of software, Free Software Foundation (2010) described free software as: ‘“Free software” is a matter of liberty, not price’ and the following concepts of freedoms:

  • “Freedom 0: The freedom to run the program
  • Freedom 1: The freedom to study how the program works, and change it.
  • Freedom 2: The freedom to redistribute copies.
  • Freedom 4: The freedom to distribute copies of your modified versions to others”.

From above points, and according to nature of software, free software always came with its source code.

Providing free software can benefit the provider several advantages, it depends on provider’s strategy, how planed to benefit from returns of free software, “All software companies exist to make maximum profits. Therefore, it is common for these corporations to seek out new ways of generating revenues and reducing costs. Increasingly, companies are using open source as a business strategy to achieve both these objectives.”  Sandeep Krishnamurthy (2011, pp.279-280).

Each open software project is behind a community (people who interested in developing that project) so that, maximum people can participate and improve the software.

Free Software can provide profit in more ways:

  1. Advertisements: the publisher website can take benefits from advertisements, for example: Backtrack Linux (http://www.backtrack-linux.org/ https://www.kali.org/).
  2. Hosting: for example: Drupal (Drupal.com) is a free open source content management system, the website place and advertisement for siteground.com and usually developers providing special customizations in drupal package and hosing configuration for bet compatibility with drupal.
  3. Help and Support service: complex free software like Linux require an expert to change and edit the functionality, so that, for using such software with such customization, help and support required from developers.

Another idea is mixing free software with commercial packages; it provides benefits in two ways:

  1. Using open source library for fast development
  2. Getting support from free community, as described above.

Finally, free software also came with some risks like: unsolved bugs and some fake patches from un-trusted sources, the advantages above are for providers not users, users must be carefully understand free software because it’s not came with any guarantee.

References:

  • Free Software Foundation, Inc (2011) Selling Free Software [Online]. Available from: http://www.gnu.org/philosophy/selling.html (Accessed: 12 November 2011)
  • Free Software Foundation, Inc (2011) What is free software? [Online]. Available from: http://www.gnu.org/philosophy/free-sw.html (Accessed: 12 November 2011)
  • John Viega and Bob Fleck (n.d.) Dispelling Myths about the GPL and Free Software [Online]. Available from: http://www.cspri.seas.gwu.edu/oss/cpi_rebuttal.pdf (Accessed: 12 November 2011)
  • Joseph Feller, Brian Fitzgerald, Scott A. Hissam, and Karim R. Lakhani (2005) Perspectives on Free and Open Source Software [Online]. Available from: http://mitpress.mit.edu/books/chapters/0262562278.pdf (Accessed: 12 November 2011)
  • Steven Weber (2001) The Political Economy of Open Source Software [Online]. Available from: http://www.gbn.com/articles/pdfs/gbn_open_source.pdf (Accessed: 12 November 2011)
  • Thondom Raughts (2009) Making money with Free Software [Online]. Available from: http://www.thondomraughts.com/2009/03/making-money-with-free-software.html (Accessed: 12 November 2011)