How free software makes money

Ever wondered why a perfectly respectable system like Ubuntu Linux ships completely free of cost all the way from Africa? While many people focus on this point, it is actually just a consequence of something else- Ubuntu is only incidentally free of cost. Good people donate to it and sponsor its shipping costs because they like it. Ubuntu is “free software” or “software libre”. Free as in freedom, not cost, means 4 fundamental rights:

 

1. The freedom to run the program, for any purpose.
2. The freedom to study how the program works, and adapt it to your needs. Access to the source code is a precondition for this.
3. The freedom to redistribute copies so you can help your neighbor.
4. The freedom to improve the program, and release your improvements to the public, so that the whole community benefits. Access to the source code is a precondition for this.

 

There are many other free software products that aren’t necessarily free of cost- Ubuntu Linux is only one of them. How do these other companies manage to make money?
Traditional software companies create something, package it, and sell it, the same way a vegetable vendor sells vegetables on the street- price per piece. Simple revenue model. How do I “sell” free software though? Certainly not like vegetables on the street, because everyone has the right to redistribute it. So who’s actually going to come to me and pay for it? Well, it turns out that there are many other creative ways to make money. Since the models tend to be complicated hybrids,

I’ll illustrate with examples:
SpikeSource is an example of a very successful company that follows a pure service model. They specialize in maintenance, certification, and integration of free software into large workstations. They capitalize on the fact that they have the power to study the source code (modifying it when necessary) and pinpoint exactly what went wrong during tech support. Free software typically comes with no warranty of any kind. SpikeSource fills this void for large corporations.

RedHat offers RHEL, or RedHat Enterprise Linux which they build by gluing together various free software components and charge for the service of maintaining it. They capitalize on the fact that they are familiar with exactly what they built.MySQL and Trolltech Qt follow a double-license model. Why would people choose the proprietary license? The proprietary license offers some additional rights over the software over and above the fundamental free software license rights. Yes, it works. The proprietary license is available at a price.
Many companies also tend to maintain two versions of their software: a free software “community” version that the community continually improves and a proprietary version that can be purchased at a cost. Zimbra, the email client, is one significant example. Their desktop edition is free software but their network edition for large enterprises comes at a cost. RHEL/ Fedora is another example- RedHat constantly use ideas and code from Fedora, the community edition, to maintain RHEL (No, RHEL isn’t proprietary, but either is it developed by the community).
Many free software projects are funded by companies interested in seeing the project come up. SuSe, for example, sponsors a project called OpenSync because they want to see certain features in it that they probably wouldn’t see otherwise. They additionally get some good publicity and a major say in any crucial  decision. Instead of creating their own synchronization solution for their operating system, why not sponsor an already ongoing project? It’s far cheaper and they get additional programmer passionate about the software to work on it for free (yes, I worked on it for a while too because I liked it). Just like Google pays Firefox (yes, firefox is free software) to get their homepage opened at startup by default, several companies might have interests in different popular free software. For example, if OpenSync becomes really popular and supports synchronization with Nokia and Sony phones, Motorola will immediately jump in and help OpenSync support their phones by funding the project. Zimbra did so well that it was acquired by Yahoo! in September 2007.