Thursday, October 29, 2009

Open Source Licensing Considerations

The two predominant forms of open source licenses are BSD and GPL. PostgreSQL is licensed under the BSD license , while MySQL is licensed under GPL . While the details are arcane, the business impact is significant, and that is what this post addresses.

The BSD (or BSD-style) License: This license basically says: ‘This code is provided as is, do what you want with it, and include this copyright in your resulting product.’

The GPL License: This license, also known as the copyleft license, essentially says: ‘This is free and distributed as source code, and any addition or extension must also be distributed under these exact terms.’

BSD essentially says I prefer open source code, so I’m making my source code open and freely available, but what you do with it is your own business. GPL is based upon the belief that all software should be open source as espoused by Richard Stallman and the Free Software Foundation (FSF). The GPL license acts like a virus, attaching itself to anything that combines with that GPL code. I don’t mean to imply negative intentions, their intentions are to ensure that open source does not become perverted through the insertion of proprietary code, which is a very admirable goal.

Companies that want to operate in the ecosystem of a GPL product must agree to forgo the most common and most profitable business model used in software, namely licensing of closed source applications. (Note: This excludes those companies that utilize hybrid licensing, of course.) While the intentions behind GPL are good, there are unintended consequences. Consider the following situations:

1. Inbound License Conflicts: My application might include licensed images, code, linked libraries, etc. that is not GPL and refuses to accept the GPL license. I cannot use this in a GPL environment.

2. Reuse of Code in Other Products: If a GPL product (e.g. MySQL) has a really cool piece of code I want to deploy in another product, whether closed source or open source, that is licensed under a different model, I cannot do so.

3. If I donate my code to a GPL effort, giving them the copyright, I cannot reuse that code in a non-GPL product, unless the GPL product uses a dual license for the copyright (AKA shared copyright).

4. Niche Markets: All companies must make money in order to survive. If your software is free, then you can make money in ancillary ways, such as charging for support or consulting. This is fine if you have a large number of users. Consider that only 1 in 14,000 MySQL users pay for support. Let’s assume that you invest considerable effort into building a niche product that appeals to a total addressable market of 10,000 customers, and over time you get 50% market share or 5,000 customers. Now, if you charged $1,000 license subscription, you would make $5,000,000 per year. Even if your user base was 10% of this size, as a result of charging, you would still make $500,000 off of 500 customers. But if you charged $1,000 per year for support and 1 in 5,000 paid, you would make $1,000 per year. In conclusion, it is very difficult to recoup your investment of time and money if you invest in a niche market and you are prohibited from charging a license fee.

These are just a few of the challenges one faces when working within the restrictions of a GPL license, as opposed to other less restrictive open source licenses. GPL makes it more difficult to assemble a thriving ecosystem because it limits the types of applications and business models the ecosystem can use.

GPL extends the terms of its license to cover additions and extensions to GPL products in an effort to ensure that the code remains open source. But is this really necessary? If we look at Postgres, it uses the more permissive BSD-style license. Yet Postgres remains open and supports a thriving ecosystem. One might argue that MySQL is larger, thus validating its licensing model. I believe that this is not tied to the license. The real impact of the license is tested when the companies build sustainable ecosystems around their products, and in that realm, the jury is still out.

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