Category Archives: business models

What Does it Mean for Movable Type to go Open Source?

While I like to see Movable Type going in the direction of open source, I am also a bit skeptical. According to

“The Movable Type Open Source Project was announced in conjunction with the launch of the Movable Type 4 Beta on June 5th, 2007. The MTOS Project is a community and Six Apart driven project that will produce an open souce version of the Movable Type Publishing Platform that will form the core of all other Movable Type products.”

Aside from their inability to correctly spell open source (or run spell check), they are not particularly clear about what will be in this new open source “publishing platform” vs. their commercial products. By announcing the new open source project along with the beta of their new version (not open source), it is a bit difficult to see how the open source project will fit in with their commercial products. I suspect that some of this announcement might be to put Movable Type in a better position when compared to open source rival WordPress to reduce the numbers of people migrating off of Movable Type due to licensing concerns over the past few years.

Skepticism aside, I really do like to see commercial companies embrace open source. If Movable Type embraces the open source community in a collaborative fashion, this could be a great step. Companies who work with a community to create an open source product that is awesome by itself when used without the commercial product can successfully sell commercial products with additional functionality and services needed by enterprise customers. I sincerely hope that this is the direction that Movable Type is headed.

Open Source as a Marketing Strategy and a Compiere Blog

Lately, I have been thinking about the different ways that an open source business model can benefit the companies that base their businesses on an open source product. Although there are many benefits, one of these benefits is that open source can be used as a marketing strategy. I blogged about this idea in some detail on the new Compiere Blog, and here is an excerpt:

Since Compiere is freely available for download, anyone can install the software, try it, and see if they want to use it in their environment. Many of these people will never generate any revenue for Compiere, but maybe they tell a few other people about Compiere, and maybe those people tell a few more people … This viral marketing helps to promote and market open source products with little involvement from companies like Compiere. Having an open source business model can generate a level of awareness that might otherwise cost a substantial amount of money to achieve through trade shows, advertising, etc.

Using open source as a marketing strategy requires a shift in thinking for anyone coming from a proprietary background. As open source companies, we need to encourage people to download our software for free – the more, the better! It does not matter to me that someone gets our software for free without paying Compiere a dime. Yes, they are benefiting from our hard work without giving anything in return, but all I need is for them to tell someone who will eventually want to attend training or purchase some type of support or other services from Compiere.

Open source companies also need to be a bit careful not to be too heavy handed with pushing people into revenue generation. We cannot (and do not want to) force people into purchasing support agreements or other services, because this would severely limit our ability to benefit from open source as a marketing strategy. Instead, we need to provide compelling services (support and others) that benefit our customers. Those customers who need and want our help will pay for it. (Quote from the Compiere Blog)

Compiere’s New Partner Program

Today we announced our new Authorized Partner Program at Compiere. As many of you know, designing a partner program within an open source company has a unique set of challenges. The program must be designed to provide Compiere and our partners with enough revenue to sustain our businesses while creating product offerings at appropriate price points for customers. This is not unique to open source companies; however, most open source companies have to find creative ways to achieve this balance without relying on revenue from product license sales. The new partner program is designed to provide the resources partners need to build their businesses by providing consulting services, training, and support, since Compiere partners tend to have business models similar to value-added resellers, system integrators, and service consulting firms.

When I started working at Compiere at the end of November, they had a pretty good idea about what they wanted from a new Partner Program, but they needed someone to pull everything together to define the exact specifications for the program, write brochures and other promotional materials, and draft a completely new legal agreement between Compiere and our partners. My skills are a bit diverse (I’ve done everything from UNIX sys admin to market research on roller bearing usage in steel mills), and at a small company, the “just get it done” attitude means that I can get my hands into all sorts of fun things and do something a little bit different every day. I really love working for a company where I can jump in headfirst and quickly have a real impact on the company. Prior to Compiere, I had always been at very large companies, most recently Intel, where as one of tens of thousands of employees, it can become very difficult to see how your work impacts the profitability of the company. Additionally, the bureaucracy inherent in large corporations can result in much slower reaction time, and it can take many months to launch even the smallest program. I started working on the partner program at Compiere during the last week of November and the program launched just over a month later, which is amazing when you take into consideration the holiday downtime and the effort involved in getting a new employee (me) up to speed!

I love my job!

Second Life Moves to Open Source

Second Life has just announced that the Second Life client has been released under an open source license, and they described their move to open source as “inevitable”:

“At Linden, we have always been strong advocates of the use of open standards and the advantages of using open source products. Though Second Life makes abundant use of non-standard technologies, our basic UDP protocol message system for example, we rely on open standards and open source implementations when appropriate and available. Since many of the components that will make up this network are not yet done, we are not publishing long white papers or RFCs at this time — instead, we are giving everyone what we have along with a goal of producing those open standards with the input and assistance of the community that has brought Second Life to where it is now.

Releasing the source now is our next invitation to the world to help build this global space for communication, business, and entertainment. We are eager to work with the community and businesses to further our vision of our space.” (Quote from the Second Life Blog)

I also found it interesting that Linden Lab specified the GNU GPL version 2, rather than releasing it under the GPL and future versions … another company hedging its bets on the still under development GPL v3.

I think this is a great move for Linden Lab, and an astute business decision. By releasing the client software under open source, residents can modify their client experience, while Linden Lab continues to provide the server side code, which is where they make their revenue. Linden Lab is providing a more flexible environment for users, which should translate to additional users, and at the same time, they continue to have the revenue stream required to keep Second Life in business.

O’Reilly’s New Compact Definition of Web 2.0

Web 2.0 has always been one of those nebulous concepts that has been difficult to concisely define. Each person seems to have a slightly different idea about what is and is not web 2.0. Tim O’Reilly’s original essay, What is Web 2.0, was quite lengthy, and he is now trying to define web 2.0 using a short, easy to remember definition:

Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform. Chief among those rules is this: Build applications that harness network effects to get better the more people use them. (This is what I’ve elsewhere called “harnessing collective intelligence.”) (Quote from Tim O’Reilly on O’Reilly Radar).

I am not sure that this is a business revolution as much as it is a consumer revolution that businesses can take advantage of by building “ applications that harness network effects to get better the more people use them.” I think the key to web 2.0 is how the expectations of the users are changing. Only a few years ago, most consumers saw the Internet as a passive medium, like radio and television, to be watched and enjoyed without any direct involvement. Many consumers now expect to be able to participate in the online environment by commenting, uploading, or participating in the content in a number of ways. I think that the key to web 2.0 is consumer driven participation and interactivity. Businesses need to understand this fundamental change and focus on building online participation into their business models.

I do think that O’Reilly has a great start toward a more concise definition of web 2.0.

Web 2.0 Exit Strategies

Marco Rosella has an interesting idea about how companies can promote their exit strategies at the upcoming Web 2.0 Conference … (Note – this is meant to be humorous):

“The success of a new service, if really demonstrated itself different from all the others, however could decree the end: where there’s a lack of Venture Capitals and/or the ads are to cover the band costs, naturally proportional to the traffic, the only reason of survival remains the sell to a big company.

As we know by now, Web 2.0 web application’s interfaces have their peculiar style defined by reflections, fades, drop-shadows, strong colors, rounded corners and star badges, these standing out in the header of every homepage.

Badges are the key element of this kind of design, being the first to flash user eyes, and so extremely important for the right communication of a message with fundamental importance.

Below you’ll find some example badges, arranged in four incremental levels, each one related to a different business model.” (Quote from Central Scrutinizer)

This is a humorous way to portray the current environment; however, it highlights a serious issue facing web 2.0 companies. With so many new web 2.0 companies, it becomes difficult to stand out in the crowd. Not all of them are looking to rise above the crowd in order to exit the business, but even getting mindshare with users can be difficult. Those that succeed in growing a large user base tend to do so virally, YouTube / MySpace / / etc., which is difficult to predict. Web 2.0 companies will need to focus on finding ways to get attention. Maybe the acquire me badges are not such a bad idea 🙂