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The free-download economy is dead

When SourceForge's statistics function broke, it told us something we needed to hear: free downloads don't matter anymore. Conversions matter. Customers matter.

Perhaps you didn't notice, but 2008 marked the last year when SourceForge downloads mattered.

Throughout the year, and for a consistent period of several months, the statistics function on SourceForge stopped working. My own company, which had been tracking our downloads closely, suddenly was flying blindly.

Guess what? Life went on. Not only that, but we moved our central downloads repository to our own Web site because we needed consistency that SourceForge apparently couldn't give us. It also became obvious that download tallies were secondary to something SourceForge never gave us: insight into those downloading our software.

The download economy, in short, gave way to the customer economy, at least for Alfresco.

Chris Anderson, longtime champion of "the Long Tail" and the power of giving stuff away, has captured this idea well in a Saturday column in The Wall Street Journal. He argues that the allure of "free" is no longer as strong as it once was for businesses that need to make a buck:

Until September of last year, the model (for companies trying to build a business on the Web) was pretty simple. 1.) Have a great idea. 2.) Raise money to bring it to market, ideally free to reach the largest-possible market. 3.) If it proves popular, raise more money to scale it up. 4.) Repeat until you're bought by a bigger company.

Now steps 2 through 4 are no longer available. So Web start-ups are having to do the unthinkable: come up with a business model that brings in real money while they're still young.

In boom times, it's enough to be popular. In down times, you deservedly die if you don't make money. Open source has shifted from the "free" economy to the customer economy, and downloads have largely become irrelevant.

Of course, open-source companies still need to drive downloads. Downloads feed into leads, which feed into customer conversions.

The critical strategy for open-source vendors is no longer to find ways to goose download numbers; it is to devise product strategies that encourage more paid adoption, something I addressed at OScon in 2006 that has become much more important in the past two years.

This is why Sun Microsystems' MySQL has been changing its business model to accommodate commercial add-on services that help drive paid subscriptions to an otherwise free database. It's why Red Hat has always constrained access to its Linux binary distribution. And it's also why Canonical's Mark Shuttleworth is going to have to move beyond "free" to create a compelling business out of Ubuntu.

SourceForge download statistics didn't work for much of 2008, which helped us to see that they largely don't matter, anyway. Conversions matter. Customers matter. Welcome to the open-source customer economy.

Follow me on Twitter at mjasay.