Is freemium compatible with open source?

Question

I've been working on a software product for quite some time (several years) now at a personal cost of approx $80,000 in terms of lost wages and business specific overheads (not including regular cost of living).

The product itself (being vague here) is a business product that is designed to significantly reduce IT costs for certain types of business procedures for certain types of businesses.

My plan was to open-source the majority of the product and to charge for certain components or use-cases so that I could leverage viral marketing and allow users to try the majority of the features for free. As such, I've been researching freemium, where I give away the main product and I charge for certain features that would only appeal to customers of a certain size.

There are a few problems:

• If I open-source the product, what is to stop others from adding in the features I have I plan to charge for as the value-add features? If others add-in the features that others might want to buy, then where does that leave me as the developer?
• If I don't open-source the product, what chance to I have to actually get any kind of adoption?

The for-sale/closed-source features are relatively easy to replicate as these components themselves would have to be plug-ins. Much as I agree with open-source, and wish for the product to be open-source, I want a period of time where I can actually sell my product to larger organisations before I destroy my own business model.

Some questions:

• Is it possible to open-source a product but to restrict commercial usage via the license terms themselves (I wish to grant unrestricted commercial rights for particular use-cases but to restrict access to certain features)?
• Is there an example of a popular software library that is both open-source and freemium?
• If I open-source the product under restrictive terms, would it be illegal for another individual or organisation to fork off the open-source?

I really would like this product to benefit smaller organisations at little or no cost, but I require a business model that will allow me to charge for Enterprise features as I need a chance to recoup my investment.

Thanks.

P.S. As my reputation is less than 1,500 I can't tag this article with 'freemium' as it doesn't already exist. If someone has a hugh reputation, can they create the 'freemium' tag for me please. Thanks.

Answer 1

Open sourcing for marketing reasons is a crummy reason. Basically, it means you don't want to open source it but feel you're "forced" to open source it. When you're forced to open source something, you tend to not commit to it BEING open source, so the community falters. They can "feel" your heart is not in to it.

Rather than open sourcing it, simply give it away. Give away the "free" "lite" edition, and charge for the "interesting" parts.

Splunk is a "free" system, but not open source. And many products get virally marketed just fine without being open source. Look at the IDEA IntelliJ IDE. That's basically marketed Word of Mouth. It's OSS now, but it has not always been.

You can always open source something later, but it's more difficult to take it back.

Selling "free" software is hard. It can be done, but it's hard.

But, frankly, your issues with other programmers still exist. There's nothing to stop them from re-implementing your idea. If it's a compelling offering, that fills a real need, especially in a large market, don't be surprised if someone clones it and starts underpricing you, or giving it away, or whatever. You come first, so you get a head start, but that doesn't mean you can stop. No rest for the wicked.