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Open Source: The Open Core Conundrum
Open Source software is publicly accessible and can be downloaded, modified, and reused. It is developed in a decentralized way with peer collaboration and review.
Open Core is a business model where a company drives creates an open-source software project around a specific competency and then offers the software as free open-source to the community, but also offers a second track or version commercially for a fee of the core software that is fully supported and has more features.
The Open Core approach became popular starting in 2008. The advantage of Open Core is that because it is based on open source, the project is able to build a community quickly that can help test, provide feedback, and create name recognition for the company very quickly. The only cost to users that try the community Open-Core software is their time.
Open Core software has enabled a number of projects to achieve rapid success. But problems often happen once the project achieves recognition. Its free availability of it makes it easy to adopt commercially by others without providing any or only small amounts of money to the developing company. Cloud vendors in particular became notorious re-packagers of open source, hosting it, and then reselling it as a solution with providing little or no compensation to the original developers.
Or Weis, CEO of permit.io, wrote for TheNewStack that ” times have changed. Previously it could take years for a [software] project to gain significant traction. This allowed businesses that relied on an open core model to create a project, nurture it, and only then find the correct approach to start a commercial offering on top. Things move much faster these days. Trying to do this now, there’s a good chance you’ll end up racing against your own open source offering, or that someone will build an offering on top of your project faster. Leaving you with only the leftovers of the meal you cooked.”
Weis proposes ‘Open Foundation’ as a better way than ‘Open Core’. Open Foundation software is managed as an Open Source project, but the key component is that it doesn’t give away the core competence of the business. That makes sense, but successfully executing that approach may be easier said than done.
