Openness wins

January 14, 2011 | 3 comments

Android and iPhoneDan Lyons, writing in Newsweek, doesn’t think the introduction of the iPhone on Verizon will stop Android’s momentum:

Apple’s phone would have snuffed out the Android a year ago, but now Google’s device has become an unstoppable juggernaut.

[…] “Android is a global phenomenon,” [Fred Wilson] says. “The big deal is, Android is free software, and handsets that can run it are getting super-cheap. So we are going to see a massive shift from ‘dumb phones’ to ‘smart phones’ around the world this year, and iPhone will not be the big beneficiary of that trend.”

This is exactly the mistake Apple made over twenty years ago, when it let IBM walk all over the personal computer market with its open specification. Sure, the Apple Mac popularized the idea of easy-to-use home computing, but over 90% of the machines actually sitting on peoples’ desks were IBM PC compatible. Worldwide, Mac market share is less than 5%.

I’ve complained about Android in the past, but version 2.2 changed my mind; more recently, Android-only features have been saving my bacon. It’s a great system, and its open structure allows for more innovation both in hardware and software than its competitors. To build an iPhone app, I’d need to pay to join the developer program and buy a Mac. To build an Android app, I can download the SDK and get going – no matter what kind of computer I use. That’s a real difference in attitude, and one that will ultimately see Apple’s phone devices share the fate of their desktop cousins.

Illustration: Android and iPhone by Quinn Dombrowski, released under a Creative Commons license.

Making money with open source

January 12, 2011 | 10 comments

If you’re going to do something, do it well

Open source chairI’ve been thinking a lot lately about open source business models. The project I’m most often associated with, Elgg, developed a business some two years after the project itself was founded. Now that I’m considering a new project, I’m exploring what it might mean to create an open source model that has a business model baked in from day one. Not as a loss leader or the engine for a consultancy company, but as the core of a scalable business that turns a profit proportionally to the popularity of its end-user product.

An image problem

Particularly on the web, open source isn’t cool anymore. For a while, in around 2004-2006, the success of projects like WordPress and Firefox meant that new, web-based open source projects were coming out fast and strong. The former arguably gained its market share after Movable Type, previously the market leader in blogging, imposed an ill-conceived commercial license. Five years later, although new projects like StatusNet and Diaspora are getting headlines, and WordPress is going strong as the basis of at least 12% of all websites, most new open source efforts are on behind-the-scenes technical infrastructure like CouchDB and node.js.

Furthermore, open source in general faces a demographic problem. Only 1.5% of open source contributors are women, for example, compared to the already questionable 28% in mainstream software.

Yet off the web, end-user open source projects are growing, often in conjunction with a strong business model: think Ubuntu, Android, Boxee et al. However, on the web, WordPress’s parent company Automattic is the only company I can think of that’s significantly bringing in revenue (estimated to be $30-40 million annually, and breaking even).

I believe in open source, but I also believe that for open source projects to be sustainable, they need to be able to fund their developers and be emotionally rewarding. I think there’s a place for a friendly open source project that’s both accessible to new users, and to the kinds of people who would not ordinarily contribute, while both turning a profit and having a good time.

Routes to success

There are a bunch of different commercial open source models out there. Here are a few, in increasing order of commercial viability:

  1. Donationware. Some projects solicit donations from their users, charity-style. Although this may result in a few hundred dollars here and there, it’s not going to make a significant contribution to payroll; people mostly won’t pay for something unless they absolutely have to. Asking for donations bases your business on goodwill alone.
  2. Advertising. Think Firefox, which makes around a dollar per user per year from its integration with Google search. Products like Vuze also contain advertising. For stand-alone apps, products like OpenCandy can bring in real cash. Open source web apps, however, are very easy to edit and customize. While that’s a strength and a net positive, it means that adverts – perhaps embedded into an admin system, for example – are very easy to remove. Once again, you’re reliant on goodwill, unless the advertising is present on the open source project’s community site. Elgg has a page where users can find third-party hosting, and makes money from affiliate links. Meanwhile, many have forgotten Matt Mullenweg’s foray into search engine spam before WordPress settled on a business model, which speaks more to the difficulty of making money with open source than Matt’s ethics. (Automattic is a great company, and he’s proven himself to be a great guy.)
  3. Consultancy services. Many projects provide tailored customization features to individual customers. This can be profitable, but isn’t particularly scalable: because each customization or advisory report is bespoke, your potential profit is capped by the number of human-hours your team can put in. Effectively, you become a digital agency, with your open source product acting as a way to draw attention to yourself. Think of your software as a fridge. If GE had to design a new fridge for each customer they had, they’d never make any money, and fridges would cost $100,000. Instead, they design a fridge once and sell hundreds of thousands of them for $500. Fridges scale; bespoke consultancy does not.
  4. Freemium hosting. This is the model used by WordPress, StatusNet and others: allow anyone to create a free, hosted account, and charge for professional extras like analytics features and support. Determined, technically savvy users can still download and install the software themselves (this site runs WordPress on my own server), but using the commercial offering is often a simpler, more sustainable way to go. This is a slow burn, but WordPress has shown that if you create a product with enough critically reliant users, it can work.
  5. Physical, commercial products. Boxee sells an actual set-top box in conjunction with D-Link, which is doing well. Android is a red herring here: while it certainly sells phones, with the exception of Google’s Nexus range, where the company presumably takes a cut, the operating system is provided for free to handset manufacturers. The real money comes through search advertising.

What’s the right path?

I’m not sure there is a correct solution for open source web projects – except to avoid #1 and, preferably, #3. Here’s what I’m thinking at the moment:

Open source projects are continually bombarded with feature requests. Fundry, the crowdfunding site for software projects, is very interesting to me as a platform for these, and as a contributory business model for open source development. The site allows users to add new feature requests and back them with money. The development team can then choose which ones to undertake. The core team would probably have to seed the Fundry page with a number of features to begin with, but with a little momentum I think it holds some promise. It’s also a great way for community members to practically contribute without creating code, documents or designs.

However, that alone is unlikely to allow anyone to eat (particularly looking at the current level of funding pledges – at the time of writing, Fundry itself has only managed to raise $128).

Another model might be to outsource the hosted freemium service, in a way that’s tightly integrated with the open source community site. A potential user might visit the project site and see a great big “create your site” button; on clicking that, they are led to a third party (or given a choice between third parties). An affiliate commission would be provided by the chosen service provider.

Commercial support services are a viable option, and can be deeply embedded both into the project site and the software itself (as a clear “get support” button). Commercially hosted value-added services, like Automattic’s Akismet anti-spam service, are another.

Most likely, a commercially successful open source project will use a combination of these. But what do you think? Is there a glaringly obvious open source business model that most projects have missed? And does profitability have a place in the open source movement to begin with? Let me know in the comments.

Open data at

January 21, 2010 | 1 comment

The British equivalent to Obama’s opened today. Over at ReadWriteWeb, Marshall Kirkpatrick points out the scale of the ambition involved:

At launch, has nearly 3,000 data sets available for developers to build mashups with. The U.S. site,, has less than 1,000 data sets today.

[…][Unlike the US equivalent, the site] includes 22 military data sets at launch, including one called Suicide and Open Verdict Deaths in the U.K. Regular Armed Forces.

However, these are raw datasets. As Paul Clarke points out, the site only pays lip service to openness until someone comes along and turns these sets into useful reports and applications:

The only test of real success is: use. Not usefulness. Not theoretical use. Real use. Getting beyond the novelty application, the demonstrator, and the hobby lies at the heart of really untapping the potential of

Indeed, the figures that Techcrunch Europe report suggest that turning this data into something useful may be harder than it sounds:

So far over 2,400 developers have registered to test the site and provide feedback, [while] 10 applications have been created.

I left a comment on Paul Clarke’s post pointing out some potential pitfalls that may inhibit innovation, including the government’s insistence on licensing the data under Crown Copyright and their impartiality regarding Twitter. There’s also been some criticism around the lack of a common data format for each feed (although the RDF triple proudly displayed on the front page suggests this is likely to change).

Nonetheless, I believe this represents a huge step forward. Turning raw materials into useful, compelling applications that improve the users’ quality of life requires a huge amount of creativity and talent, and providing the data feeds in the first place is a crucial first step.

You can list all the available datasets here.

The mechanics of "open"

March 9, 2009 | Leave a comment

PanelSince we started Elgg, I’ve always kept a very open philosophy about how the software should work. From the human perspective, we wanted it to be as inclusive as possible, with an easy-to-use interface and innards that allowed you to do very technical things (like, in Elgg 0.x, republishing aggregated RSS) with very little knowhow. From the organizational perspective, we didn’t want there to be a barrier to entry; we released it under the GNU Public License and allowed anyone to download and install it for free. And technically, we allowed anyone to augment, extend and replace its functionality, maintained an open architecture and embraced technologies like FOAF, RSS and so on.

That was five years ago. The world is only now beginning to catch up.

The Silicon Valley Web community is buzzing with “open” ideas: data portability, the open stack, the open mesh, OpenID, OAuth, and so on. There have been two Data Sharing Summits, a bunch of Identity Workshops, and efforts are crystallizing around open activity streams, contacts sharing, and virtually anything else you might want to transfer between web applications. David Recordon, co-creator of OpenID and all-round cheerleader for openness, has predicted that Facebook won’t be a walled garden by 2010.

This is fantastic stuff, which I intend to get even more involved with as the year progresses. Good work is happening all round, and even sleepy behemoths like Microsoft are beginning to take notice.

What worries me slightly is that the work is centered around the Silicon Valley community, and within that is largely built with public-facing commercial websites in mind. Those sites (like Digg, MySpace, the SixApart properties and so on) are awesome without a doubt, but the potential of social technologies falls well beyond the commercial web. People are beginning to use them on intranets, within universities, across governmental departments and so on – places that could use the same approaches, but need to be represented in the discussions.

Their exclusion is not the fault of the people producing the standards and doing this great work; they’re very happily welcoming anyone with a productive contribution to the table. Instead, it falls to those organizations to realize what they’re missing out on and begin to pay more attention to cutting edge technology. The Obama administration is certainly waking up to this, but others – notably the UK government – are extremely reticent to embrace anything open at all.

The technology is falling into place to allow for an open, transparent, knowledge-orientated economy. Now it’s time to look at what else is needed.