I loved this line from TechDirt, reporting on Flat World Knowledge's (FWK) $8 million round of funding. FWK is an "open-source textbook provider," with Wikipedia-style transparency and editability, but it's demonstrating that open source is about much more than free:
Flat World Knowledge, of course, is using free properly -- as a part of a larger business model where scarcities are charged for, but infinite goods are given away freely.
Bingo. Open-source business models, including Red Hat's, have never been about giving everything away and praying for charity. Rather, they've always been about driving adoption first, then layering in add-on services and software that are for-fee, rather than for-free.
My own company, Alfresco, just took this path, as company co-founder John Newton explains. Ultimately, it's a better way to ensure a transparent, open relationship with one's customers and community.
Nor is this a sacrifice in quality. As Eric Frank, a co-founder of FWK suggests, his company cares as much about quality as traditional textbook publishers, but chooses to license its content differently, and to good effect:
We are highly focused on quality textbooks. Our development process mirrors traditional publishers - we contract with leading academic experts to write our books. The books are heavily peer-reviewed, proofread, copyedited, professionally illustrated, etc. It is when we get ready to publish the book that we do things differently.
We openly license the books under a Creative Commons license so anybody can modify the book legally FOR THEIR OWN USE - in essence they fork from the original and modify for their own classes. The original always remains on our catalog, is is maintained and updated by the original author team, who earns royalties on all sales of softcover print copies, audio versions, digital study aids, etc.
Do businesses like FWK and Alfresco run the risk of sliding down the slippery slope into a proprietary software business? Perhaps. But once you recognize the power of an open, freely-adoptable core, there's little sense (and, hence, little risk) in closing it off.
Incumbents like Microsoft are dabbling in the inverse:. But that's because they're trying to protect existing revenue streams, and understandably so. For anyone building a new business, however, opening up the heart of one's code is the key to adoption and, hence, the fastest path to revenue.
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