Top Five Open Source Business Models You Never Heard Of

Sunday Jul 1st 2007 by Matt Hartley
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There are numerous ways for open source developers to boost revenue.

The art of “selling” or generating revenue from open source is a topic of growing importance as open source takes a larger piece of the software business. In the past, open source revenue has largely been associated with services marketed by many top tier Linux companies: Support, middleware solutions, etc.

In contrast, I’ll examine things from a much smaller, more creative perspective. I’ll look at five open source businesses opportunities you have likely never conceived of. Most of these ideas are aimed at people who are not looking to start the next "JBoss," rather, they hope to opt out of the daily rat race with an income that provides a steady stream.

1) Selling Open Source software

Baring potential trademark issues and the possible community backlash of being perceived as overtly taboo, there are some open source applications that can easily be bundled onto a CD, labeled and sold for a reasonable price. When done responsibly, especially locally, you will find that most people are rather receptive to the service of having this all bundled for them. Generally speaking, charging a couple of dollars more than your expense for disc, labels, etc, is not frowned on.

The dark side of this is companies who take advantage of the Internet, and do not follow the Open Office rules by not linking to the OpenOffice.org whatsoever. Then, to make matter worse, treat the usage of the open source software as if it should be charged as a service.

The kinder, more lucrative approach to doing something like this over the Internet would simply be to clearly link to the OpenOffice.org website as required by their trademark usage policy explaining that it can be freely downloaded. Then sell access to faster servers for a flat $5 fee.

Why? Because if these guys were smart, they would start off with a beefy dedicated system like CacheFly, thus guaranteeing people wishing to Paypal them a measly $5 for a faster download rate.

Combine this with OpenOffice CDs with a $3 profit after CD creation expenses and you would see a LOT more ethical traffic going their way, in my opinion.

2) Selling open source software how-to videos

If done properly, I could see the sale of clear how-to videos for a variety of open source applications being a smashing success. The biggest challenge preventing this from successful thus far is the total lack of creativity in marketing efforts in this field.

In many cases, endeavors like this are targeting their marketing efforts toward the wrong demographics completely. Taking virtual lessons and putting them in front of people who are competent enough to locate other, potentially free how-to materials on Google, is a complete waste of time. Thus far, this seems to be the only avenue taken by those who have ventured into this arena, which is too bad.

Which applications would do best for such a video series? OpenOffice, GIMP, Blender, Audacity – the list goes on. As a matter of fact, I know people personally who would gleefully spend five dollars for someone to show them how to setup this POP mail account in Thunderbird.

Think I am nuts? Ask anyone who repairs PCs for a living – people pay too much for pretty basic services. You could even go the super-newbie router, creating a dual-video set for successfully migrating to Firefox and Thunderbird. Again, painfully easy for us, but it would save Joe User a LOT of wasted time and money, especially when the easy answer is an automatically-starting video series right from their computer.

3) Provide open source services to small businesses

As most open source companies scurry to help out big businesses with their operational needs, I would point out that right from your own locale, plenty of smaller businesses are losing productivity due to spam, viruses/malware and a general operational breakdown.

By helping your potential clients plug into open source solutions like Jooma, SugarCRM and ClearHealth, you provide substantial savings to them in terms of license fees. And if they’re set up properly, these things can take care of themselves.

Two other very cool projects making their way into the open source universe that I discovered recently include DayCare Office (still being developed) and SureInvoice. Both of these options prove that some web-based applications do, in fact, provide both value to the end user and security for your growing consulting businesses. Seriously, even if the code is open, do you really believe the local dentist office is going to grab it and then manage their own servers? Not too likely.

Once you grasp the concept that you are selling solutions rather than software, you will find this to be an extremely lucrative field, with the right approach. If you come from a development background and need a solid place to start, I would recommend this book Open Source Solutions For Small Business Problems. This book provides you with an outstanding head start over most who enter this field from the beginning.

4) Coding local applications to sell products for you

Ever hear of an application called Firefox? Chances are, I bet you have. What about amaroK? Less known, but still working along the same lines. Both of these applications found ways of taking existing products and services in the physical world and implemented open source software around them. Let me explain further...

Firefox has a Google search bar built into the web browser. Each time you search, then click on an AdSense ad, they are generating revenue. Now here is the truly powerful part – the revenue is 100% passive! Yes, you are doing all the work for Mozilla and they in turn concentrate on working with their community of developers to better improve the Firefox browser.

So how does amaroK play into all of this? Like Apple's iTunes, they now have the fixed inclusion of a music store for independent music. But for those needing something more mainstream, Amazon affiliate links for specifically target music groups are also provided.

Again, this is a fantastic solution to open source software development supported by passive income. Once they are ready for a mainstream release, those not using Linux will also have similar options through the songbird project, also well positioned for a similar approach to passive income through music sales.

Is any of this soaking in? Recap: Build your application with passive income in mind! Locate an appropriate product or hosted service that correlates well with an application that you are working on from within the depths of the open source universe. Unlike the options above, this approach provides a retail aspect with a worldwide reach.

5) The Web-based Advertising model

Not to be confused with Yahoo Instant messenger or AIM type applications, I am referring to developing a web-based framework that allows for duplication of efforts such as Plentyoffish.com type content websites. Not dating content only, rather community created content with complete and total flexibility that is much simpler than most CMS platforms seen today. Think more drag and drop using Ajax. Allow for cut and paste API compatibility and you could really have something here.

The value to the developer is that they provide ongoing hosting for this type of framework, which happens to include “first call” on any non-security related patches that provide improved functionality. For the company needing more of a custom solution, the pricing is left to the imagination of the marketplace and the developer.

Imagine developing a framework where, as easily as one creates a WordPress blog, the end user can create the next Craigslist, Plentyoffish.com or even Digg.com?

The obvious flaw that closed source types immediately point to is the likelihood of duplicated efforts. Unfortunately for them, this has been proven time and time again to not be an issue with any open source project, as the success of such an endeavor comes from the buzz of its originality. Digg.com clones, anyone?

These Digg clones provide a fantastic example of just how ill-accepted attempts like this really are. That said, perhaps a Digg-styled site that allowed the community to review cars and trucks might be of value? Again, offer something different, the buzz will follow. So where does the revenue come from? Check this out – the AdSense Sharing Revenue and Earnings System, but redesigned for a new kind of framework. Other managed affiliate programs would work as well, but in the end – both involved parties would be making a fortune.

In the end, the developers would be offering the code freely, providing optional hosting and support, in addition to redefining the way we look at social media website creation. If you are a web developer, then you might even argue that I have just handed you the car keys to one of the best money making concepts out there. But to be fair, perhaps this already exists someplace? If so, I certainly have never heard of it.

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