Open for business: emerging business models in open source software

Abstract

Open source software (OSS) has come of age, and a number of maturing business models allow OSS companies to make a profit even when their product is distributed for free. This article considers the dynamics of value creation fuelling the proliferation of OSS and examines the business model factors that enable value capture. After interviewing leaders from over 20 OSS firms and organisations through early 2006, we found that three factors were consistently important in defining a vendor’s adoption of a given business model: software licence choice, which takes into account intellectual property ownership; management of developer communities; and the unique features of the markets and product categories in which the vendor participates. Considering these factors, we characterise seven business models. One striking finding is that it is rare to find business-model purity. The majority of firms in our sample are pursuing either blended business models or multiple models simultaneously.