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Has Canonical licensed away its business model?

Canonical has licensed its popular Launchpad hosting software under the AGPLv3. In so doing, has it licensed away its best way to build a scalable software business?

By announcing that it has open-sourced its Launchpad project under the Affero GPL version 3, a year after rumors swirled that it would, has Canonical licensed away one of its best revenue opportunities?

Roughly two years ago, I walked up London's High Road from Seven Sisters Tube Station with Mark Shuttleworth, founder of Canonical and the popular Ubuntu Linux distribution. Mark and I talked about a range of things, but one of the things that particularly caught my attention was Launchpad, a collaboration and hosting platform for open-source projects that makes it easy to track code, ideas, and other things across projects.

Then, as now, Launchpad struck me as a fertile field for Canonical to discover a scalable, winning business model to support Ubuntu development. In fact, I remember a long conversation with open-source guru Larry Augustin about Launchpad. Augustin felt that there was a great business lurking in Launchpad.

I agreed.

While I can see how "opening up Launchpad gives the free-software world the beginnings of an open, programmatic interface to its own infrastructure," as Canonical speculates, I'm struggling to see how it helps Canonical make money. Any chance of directly monetizing Launchpad is effectively gone now.

That, of course, may not be the point. Canonical has been experimenting with other models, including hosted services that may well be augmented by this move.

As RedMonk analyst James Governor suggests, "(It may be) possible to make money as a tools company, without owning the runtime, if you offer hosting for the apps. IDE (integrated development environment) + cloud = dollars." Open source may help to make Launchpad more widely used, which, in turn, better positions it to be a Canonical-sponsored on-ramp to the Canonical-monetized cloud.

Not a bad idea. (Certainly better than the apperi-sponsored Ubuntu application store, as reported by The VAR Guy.)

It does suggest, however, that Canonical may be placing a lot of eggs in the cloud basket, a basket that has yet to prove that it can deliver solid, consistent returns to software companies. It comes with its own baggage, as Jonathan Zittrain writes).

Time will tell if the cloud can feed Canonical's employees. But Shuttleworth isn't the sort of person to do something just because all the "in" kids are open-sourcing these days. Licensing Launchpad under the AGPL version 3 is a calculated move. We just don't know what the calculus will yield quite yet.

Follow me on Twitter @mjasay.