Why There Will Never Be Another RedHat: The Economics of Open Source (2014)

I feel that there is an inherent conflict of interest in the OSS support sales model. Hypothetically, if your software were really simple and robust (think standard unix utilities), nobody would pay for support. On the other end, if you have to deploy openstack, kubernetes, or any other stack with a lot of moving parts, you need support and personnel. So in a perverse way, it's in your interest to make complicated shit. In reality, it is perhaps not quite as bad, but I definitely feel that with a lot of projects for which RH is the sole upstream, the quality or elegance isn't quite there when compared to more traditional linux or unixy things which have more diverse upstreams. This manifests in systemd, freeipa, glusterfs etc. too. These are generally hard problems though. So it's not quite black and white.

One thing we could do, if we wanted, is to build a society focused on automating away jobs. Such a society would not rely on people to work for its function, but on the labor of machines.<p>In such a place, people would be free to work as hard as they want for additional gain. They could also, however, take as much time off as they desired to go to school, learn on their own, spend more time with loved ones, or just relax and explore life in their own way.<p>In such a society, I think many people would be motivated to give their labor to open source projects. I think the machines that run such a society would necessarily be open source, and many people could give back to society by contributing to the design and improvement of the machines that provide for us all.<p>What do you all think of this? Would you want to live in a place like that?

This old VC written article reminds me of Francis Fukuyama&#x27;s &#x27;end of history&#x27; thinking at the end of last century. <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;The_End_of_History_and_the_Last_Man" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;The_End_of_History_and_the_Las...</a><p>VC&#x27;s love the winner take all big platform investment world. I suspect (and hope) that era is coming to an end, not open source...

If you don&#x27;t think about how you will sustain an open source project, your project will not be sustainable. &quot;Those who fail to plan, plan to fail.&quot;<p>Building a business model on top of my open source Sidekiq[0] project was the best decision I&#x27;ve ever made. That doesn&#x27;t mean my approach will work for all (or even many) projects but anyone who is trying to build a popular project needs to consider: if I succeed, what will the project look like five years from now? Will you or a core team still be helping users every day?<p>[0]: <a href="https:&#x2F;&#x2F;sidekiq.org" rel="nofollow">https:&#x2F;&#x2F;sidekiq.org</a>

The problem of open source is attribution, more specifically attribution back to individual contributors and the significance of contributions, and it is especially hard if you want to do attribution based on revenue performance if the licensee is small and do not have an audit department. A large proprietary software licensee can work with a licensor to track revenue performance because the licensee already have the right infrastructure to do so. So here is a startup idea:<p>An external auditing company with APIs to streamline the process of rev share and attribution back to the open source community and contributors, so that open source projects will make revenue and have the resource to reinvest and improve the projects.

&gt; no other public standalone companies<p>Well, SUSE isn&#x27;t public, but they&#x27;re mostly &quot;standalone&quot;. And there are plenty of other companies based around a single open source platform.<p>Sure, they aren&#x27;t $1B+ companies, but they don&#x27;t need to be.

To update the terminology - the RedHat model is freemium - you give away something to market the part that you sell.<p>The problem with freemium is always how much you give away and how much you charge for. One idea that I have not yet seen is to do the split in the time dimention - sell licenses that convert into a Free Software or Open Source license after a year or two.

&quot;We had made the product so easy to use and so important, that we had out-engineered ourselves.&quot;<p>Yeah, so &quot;easy&quot; that we had to debug and extend microdhcp code to properly support PXE booting and add option 150 because you guys offered nothing with which to properly boot XEN VM&#x27;s; XEN was so woefully unfinished that we had to finish it for you and now you&#x27;re telling us how complete of a product it is and patting yourself on the back.<p>&quot;Details-schmetails&quot;, it&#x27;s &quot;the big picture&quot; that&#x27;s important, which is that someone cashed out, am I right?<p>This is one of the reasons why my passion and love for computers turned to bitter disappointment: the lies and really bad, half-cooked software. Damn it all, Keith Wesolowski was so right[1].<p>[1] <a href="http:&#x2F;&#x2F;dtrace.org&#x2F;blogs&#x2F;wesolows&#x2F;2014&#x2F;12&#x2F;29&#x2F;fin&#x2F;" rel="nofollow">http:&#x2F;&#x2F;dtrace.org&#x2F;blogs&#x2F;wesolows&#x2F;2014&#x2F;12&#x2F;29&#x2F;fin&#x2F;</a>

Why doesn&#x27;t anyone try to simply sell free software?<p>You want me to give you a copy of the software? Pay for it. And here&#x27;s a gratis sample to see what could get, but it doesn&#x27;t have all of the features I wrote for it.<p>You want access to login to the web platform? Pay for it.<p>You want the source code for it, so you can modify it and&#x2F;or redistribute it? Also pay for it. The GPL has explicit provisions for allowing access to the source code only if you pay, for example.<p>Surely <i>some</i> money is to be made this way. Maybe not enough to create a giant monopoly that completely dominates the market, but enough to make a living. Not everything has to be a winner-takes-all unicorn.<p>If we are to believe that the copying of non-free software that happens right now happens and companies are still profitable, surely explicitly allowing that copying wouldn&#x27;t make it any less profitable?

This article has already been proven wrong... e.g. what about Elastic

I am not sure why the service business is any better.<p>Sure you can cash the checks you get from your customers and write out a check for AWS. Or you can run a data center the old way or some new way. So can anybody else.<p>There is just no moat. Running the service you can pocket the money you make learning how to run it more efficiently. You share some attributes with Salesforce.com but you don&#x27;t have the patent portfolio and other proprietary IP that makes Salesforce a great product for what it is.

If legislation required (certain&#x2F;any) publicly funded projects to use open source software, whose code would be made freely and publicly available, then open source would see a much greater market share and level of investment and we&#x27;d likely see new open source business models.

The problem with open source software is ultimately that of scarcity:<p><a href="https:&#x2F;&#x2F;journal.dedasys.com&#x2F;2007&#x2F;02&#x2F;03&#x2F;in-thrall-to-scarcity&#x2F;" rel="nofollow">https:&#x2F;&#x2F;journal.dedasys.com&#x2F;2007&#x2F;02&#x2F;03&#x2F;in-thrall-to-scarcity...</a>

In all my decades of working with computers, redhat was by far the worst company with the most incompetent staff that I&#x27;ve encountered. redhat&#x27;s &quot;engineers&quot; preferred to spend time arguing with their customers rather then solving their problems and severely struggling to understand where in the code the issues are.<p>Where they particularly struggled were higher order architectural abstractions and their consequences and system engineering for backwards compatibility.<p>Their bugzilla.redhat.com is chalk full if examples of struggling to understand and debug the code and arguing with customers.<p>I sure as hell hope there will never be another computer company like redhat.

I thought free software was about freedom, not how to monetize it. You can never trust a service - only your own hardware (it&#x27;s not quite possible with modern mass-market CPU though, only on IBM Power or some dummy MCU or even FPGA-based RISC&#x2F;MIPS&#x2F;whatever ) with free software on it. When did Linux become about cloud and containers, not about desktop?

&quot;Sure, when you first launch a business built using open source components, (...) you might start off looking a little like Red Hat. But if all goes well, you’ll start to more resemble Facebook, GitHub, Amazon or Cumulus Networks as you layer in your own special something on top of the platform and deliver it as a service, or package it as an appliance.&quot;<p>I sure hope not.<p>The original intent of ICOs was to monetise open-source development, and now there are many great teams with huge treasure chests building great software, funding research and providing grants for anyone wanting to work on blockchain and the wider web3 ecosystem without having to go through a token offering, given the current sad state of affairs.<p>I know this isn&#x27;t necessarily appealing for everyone, but for those interested:<p><a href="https:&#x2F;&#x2F;blog.ethereum.org&#x2F;2018&#x2F;10&#x2F;15&#x2F;ethereum-foundation-grants-update-wave-4&#x2F;" rel="nofollow">https:&#x2F;&#x2F;blog.ethereum.org&#x2F;2018&#x2F;10&#x2F;15&#x2F;ethereum-foundation-gra...</a><p><a href="https:&#x2F;&#x2F;blog.aragon.org&#x2F;tag&#x2F;nest&#x2F;" rel="nofollow">https:&#x2F;&#x2F;blog.aragon.org&#x2F;tag&#x2F;nest&#x2F;</a>

Strange. Most hills look small compared to the Mount Everest and the Aconcagua. That doesn&#x27;t mean they&#x27;re actually easy to climb.<p>Why is RedHat compared to the biggest companies on the planet?

I won’t miss them. They’ve been a very difficult vendor to work with. At least once they go to IBM it’s easier to justify sunsetting them.

What is a better business model then taking something that is virtually free and selling it at a premium !?

I&#x27;ve been thinking about this for some time and I agree with the gist of the article.<p>Most OSS that comes out:<p>1. Either funded by giant megacorps because they&#x27;re trying to commoditize their competitor&#x27;s edge: See kubernetes, LLVM etc.<p>2. Common frameworks that people sell consulting around. This is tricky because if your software is easy enough for consumers to use, they won&#x27;t have use for your consulting. This leads to this bad incentive of complicating software where not necessary. See: Pivotal selling consulting around Spring and Redhat etc.<p>3. Anything that doesn&#x27;t fit in #1 or #2 above is mostly not possible with OSS. To think about it, we can just examine the most consumer facing software that we use. Where is a OSS developed messenger app that is as popular as Facebook or Hangouts? 20 years back, we had OSS for most consumer facing software, Unix coreutils etc. Basically, today OSS is reduced to professional frameworks and middleware libraries because that is beneficial to megacorps and they fund this kind of software, but OSS by indie developers is pretty much dead.

Admins: the title needs &quot;(2014)&quot;

One model that might work is the Unreal Engine model, so an OSS license that is free for personal use, but for commercial use, it might require 3% (say) of your profit from sales of the software product.

I dislike the current debt-based economy in general myself.

tl;dr: Tragedy of the commons.

There is economics beyond that of redhat. Open source can and does exist without profit. Lots of people donate time&#x2F;energy to projects every day and by doing so create great products that do compete (linux).

AWS largely makes money off of open source, it just provides virtualization as a service along with the actual hardware. It may not be as straightforward as RedHat, but it basically is the same thing.