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revenue in a Free Software Industry

From: Tom Lord
Subject: revenue in a Free Software Industry
Date: Tue, 21 Aug 2001 20:22:52 -0700 (PDT)

       David Masterson writes:

         You haven't fully answered [two questions]:

             * How do I profit from this endeavor?
             * How are my costs going to be paid for?

Both cost recovery and profit come from having sizable, sustainable
revenue.  So your two questions are really one: where does the revenue
come from.

I did answer that question, though only very briefly: proprietary
licenses are not a necessary mechanism for implementing revenue; other
legal mechanisms are possible.  The free software business world has
already invented revenue mechanisms, and shown that they can produce a
profit.  To name only some: the sale of CDs and printed documentation;
the sale of support contracts; the sale of custom development
contracts; the sale of software by subscription; the sale of training
and certification processes; the sale of pre-configured hardware
systems; the sale of customized infrastructure design (systems
engineering); and the hosting of conferences.  Those mechanisms can be
generalized and replayed in many ways, to suit specific markets, from
consumers to device manufacturers to the notorious "Fortune 500
companies".  And I haven't named all of the mechanisms that have been
shown to succeed.

A counter question is: where do the revenues come from without this
project -- with a reliance on proprietary licensing?  Formally,
legally, the answer is that revenues come (partially) from the sale of
licensing agreements.  But as a practical matter, customers aren't
receiving value from those license documents.  Customers obtain value
from the services provided by sales teams, and by the relationships
sales teams build between customers with problems to solve and
development organizations with the ability to develop solutions.  In a
Free Software industry, those same sources of value continue to exist
-- only they become more better, because better software can be
developed and deployed with greater overall efficiency.


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