Thursday, October 9th 2008 | Ismael Ghalimi
For the past three years, Intalio has developed a Commercial Open Source Model (COSMO) that gives users and customers most of the benefits of the traditional Open Source model (as defined by the OSI), while granting vendors a truly sustainable business model as software companies, primarily based on license revenues. In order to refine this model and promote it with customers and vendors alike, we have defined the following set of guidelines, which will be further discussed on this blog.
Past and current evidence suggests that no software company has ever been successful at generating the kind of gross margins that traditional software companies can produce, over an extended period of time (more than 5 years), while releasing 100% of their code under an OSI-approved license. A broadly accepted answer to this challenge is layering, whereby a subset of the product is available for free and/or under an Open Source license, while the complete product can only be used in the context of a commercial relationship with the vendor.
Dual or Triple Licensing
With a two-tier layering approach, the Open Source Edition is usually released under a viral license (GPL, LGPL, or similar licenses), and the Commercial Edition is released under a traditional End User License Agreement (dual licensing), while adding features and services to the Open Source Edition. With a three-tier layering approach like Intalio’s, an Open Source Edition is available under a liberal license (Apache, BSD, or MIT, etc.) and covers at least 80% of the overall product’s codebase, a Community Edition is available free of charge (for development and production), with or without source code, and a Commercial Edition (called Enterprise Edition in Intalio’s case) is made available under an End User License Agreement, while providing access to 100% of the source code, and granting customers the right to modify the original source code, without having to give modifications back to the vendor.
Open Source Foundation
With either two-tier or three-tier layering, over 80% of the overall code base is available under a pure Open Source license, as defined by the Open Source Initiative. When using a three-tier layering model, the middle-tier edition (Community Edition) might or might not be available under an Open Source license, but must be available free of charge, for both development and production usage.
Source Code Availability
100% of the Commercial Edition’s source code is made available to customers, with rights to modify the source code, and no obligations to submit modifications back to the vendor. Modifications made by customers to the original source code might not be supported by the vendor. If modifications are donated back to the vendor for inclusion into the original product, they must be accompanied with full transfer of intellectual property rights, usually granted through a signed contributor agreement.
Unlike traditional software sold through perpetual licenses and yearly support contracts, the COSMO model is based on yearly subscriptions that include both licenses for the product’s Commercial Edition and support services. The later usually include patch updates for software upgrades, access to better documentation and a customer support infrastructure, etc. As a result, a product that is commercialized through the COSMO model is purchased from an operating expenses budget (OPEX), rather than a capital expenditure one (CAPEX).
A more detailed introduction to COSMO can be found on the Intalio 2.0 article.