9 ms·

A handy guide to financial support for open source

175 points by craigkerstiens 9y ago

nwatson 9y ago
Sales people get paid largely on commission for "transactions" ... it should be possible for open or closed source software developers to be paid this way as well. There should be an option that pays open- (or closed-) source software developers for business value derived, where metrics (representing aspects of "remunerable transactions") from developed software use are gathered, and the company using the software pays based on some formula related to those metrics. The classic way to do this of course is to provide the software via some metered and billed SaaS API (users pay monthly base + tiered charges per network I/O, storage, CPU-hour, document-processed, etc., or a combination thereof), but that can have adverse performance impacts and can introduce larger integration headaches. In an ideal setup, the "contractor" adapting and deploying the open- (or closed-) source software for a particular company's use also gets a cut of the fees, just like the originators of the software. This structure would be ideal for smaller companies that can't afford or might not want to pay the full up-front cost for the development and/or configuration and/or deployment of software they need ... * these companies don't have a lot of money to spend, but independent developers might be willing to develop (permanently- or temporarily-)closed-source software for the companies' use cases ... and to get their compensation based mostly on a "commission structure" * the company needs might be already satisfied by existing open-source software, but the company may not have expertise in configuring, adapting, and deploying the software -- in this case the deploying expert would hopefully share their fees with the open source software originators * agreements could sunset the "acquiring" company's exclusive use of this software so the developers can start selling the software elsewhere as closed- or open-source software There are surely many complications to a model like this, and perhaps can easily work only in a "high-trust" environment ... but it lets developers with a tolerance for risk avoid the illiquid equity trap of stock compensation, while letting companies build their service for less and issue less stock. There are surely scenarios where this would be attractive to larger companies as well. I'm currently exploring starting a company that incorporates these concepts, I'd appreciate some discussion if this interests you. (You can find instructions to derive my email address from my profile.) EDITS: minor clarifications
- dboreham 9y ago
  I think you're vastly underestimating the difficulty getting people to pay for stuff, especially stuff they can get for free.
zaarn 9y ago
Liberapay should probably be mentioned instead of gratipay since IIRC gratipay is shutting down.
- jelv 9y ago
  Liberapay is a fork of Gratipay and growing steady https://liberapay.com/about/stats https://liberapay.com/about/stats. Biggest projects on Liberapay are Mastodon https://liberapay.com/Mastodon/ https://liberapay.com/Mastodon/ and Matrix https://liberapay.com/matrixdotorg/ https://liberapay.com/matrixdotorg/
zokeia 9y ago
A good approach would be to license your work under GPL3/AGPL3 and charge a fee for a commercial license.
- zaarn 9y ago
  That approach only really works if you have sufficient adoption in enterprise/commercial. Doesn't really work if you target the hobbyist market, which will simply not bother with the commercial license.
  - deleted 9y ago
    [deleted]
  - crdoconnor 9y ago
    >Doesn't really work if you target the hobbyist market The hobbyist market isn't typically a great place to make money from anyway.
    - zaarn 9y ago
      Yes. But making any money is preferable to making no money from your OSS project, no?
      - yjftsjthsd-h 9y ago
        It really depends. Sometimes the money is not compensated by the support "fun".
        zaarn 9y ago
        There is no support "fun", atleast not from my side. I do not feel like anyone is entitled to me supporting the application unless I am specifically paid for that. If I see such comments they will get removed and the offender banned very quickly.
  - zokeia 9y ago
cdancette 9y ago
Is it hard for an individual to get a non negligible revenue on platforms like patreon?
- fastball 9y ago
  Really depends on what you're making and who your base is. I've seen some Patreon projects that pull down £16k a month.
amelius 9y ago
It would be nice if some example grant application letters could be included. By the way, this guide could include a donation button serving as an example :)
xchaotic 9y ago
"I do open source work, how do I find funding?" Shouldn't the question be - I am doing a project - is open source a sustainable way of keeping it alive?
- ekianjo 9y ago
  you could have philoshophical motivations to prefer open source so the context is valid if you start from there.
- rhizome 9y ago
  They're both valid starting points!
rplnt 9y ago
Side question about the "core" approach. Can your core be *GPL (in case it needs/ships with GPL libraries/tools) while some "plugins/modules" would be closed source? Let's say you have an IRC client that is GPL (because you want to use grep for example), but it's only a service with an API. You then make closed front-end that utilizes it. Or other way, there would be a closed tool that the client can use (e.g. auto reply module).
- user5994461 9y ago
  The short version is no. The long version is that it is unclear whether it's possible or not and it will vary depending on what integrates with what and how. GPL is a nightmare. Note there is a strong and justified barrage against GPL components in the enterprise world. Assuming you are doing a "core" model because you intend to sell it, that might be a problem.
  - smichel17 9y ago
    I'd like to bring a bit of perspective to "GPL is a nightmare [because you cannot create proprietary derivatives]." That's the point of the GPL: to ensure that the code remains open rather than, for example, killed by 'embrace, extend, extinguish'[1]. The GPL is a user-focused license. It sacrifices some freedom for developers (the ability to produce proprietary derivatives) in order to safeguard other freedoms[4] for users. Whether that's a good trade-off is a matter of opinion, not a universal consensus as the parent comment might lead you to believe. [1]: https://en.wikipedia.org/wiki/Embrace,_extend,_and_extinguish https://en.wikipedia.org/wiki/Embrace,_extend,_and_extinguis... [4]: https://www.gnu.org/philosophy/free-sw.html https://www.gnu.org/philosophy/free-sw.html
    - zaarn 9y ago
      The GPL is a nightmare for Legal. Compliance can be difficult for larger corporations and as such expensive. Thusly corporations will avoid it in favor of licenses which aren't complicated. This goes doubly for the AGPL. In addition to that and as a side note; The GPL does not protect against EEE, only against EEE through a fork of the source code. No license can do anything about EEE through standards.
pablanopete 9y ago
Nice list! Adding https://openbounty.status.im https://openbounty.status.im to the #bounties section. Just pledged 1M to OSS development.
dessant 9y ago
I have a couple of browser extensions, one of them acquired 15k new users in the past two weeks and it is still trending on Firefox Add-ons, yet donation links are rarely clicked, and I haven't received any contributions. The effectiveness of asking for donations can vary a lot, and in my experience it is not sustainable at all, unless your project is wildly popular, or it supports the needs of an affluent and passionate user base.
- pgl 9y ago
  I get ~3-4m accesses to my block list per day, and about €5-€10 every 3 months!
- lucideer 9y ago
  I think this comes down to brand visibility, and also to a large extent, deliberately built emotional brand attachment. Both are completely missing in this article and should really be featured prominently. There's another article currently at number 2 on the HN front-page[0] about The Guardian. While this isn't an open source project (though they are open source contributors[1]) there are definite parallels. As well as having the nags and donation drives in place, people also need to think the Guardian is worth donating to. And they do, not just because it provides a valuable service to them, but also because the Guardian has a very recognisable name, and because it has been successfully sold to them as a reliable, stable entity they can trust. Obviously something of the scale of The Guardian is not the ideal comparison to most small FOSS projects, but the general ideas hold true - you have to invest in somehow developing in people an emotional attachment to the idea of your product if they're going to click donate. [0] https://news.ycombinator.com/item?id=15786802 https://news.ycombinator.com/item?id=15786802 [1] https://github.com/guardian https://github.com/guardian
- unabst 9y ago
  I'm not everyone, but many probably feel how I feel about browser extensions. The browser is free, and so are their extensions... I'm fairly certain that upselling is the best approach to monetizing browser extensions... Provide a freemium service, and have paid features. Much like apps I guess. But you really have to be providing a service. So it's more like the browser extension or app is just another marketing channel. Lastpass is a good example. Distill Web Monitor is another. I believe the latter was acquired to be monetized.
rplnt 9y ago
One more I don't think is covered, a trademarked product. You sell your GPL'd product, you deliver sources as is required, but only those who paid can build full functional product because it includes components that you can't redistribute (logos, etc). Probably only works for very complex software, or software where non-code assets would be important (a game). If I am not mistaken this is what RedHat does with RHEL.
- bluGill 9y ago
  Most open source projects taking that path have eventually been forked when someone created new assets under a free (as in beer) license and changed the name. The original project is now nothing while the fork is big. RHEL continues not because of assets but because Red Hat has people who staff who know the ins and outs of RHEL and will fix it. Red Hat employs many kernel developers because when a customer has a problem the customer knows an expert will get on the problem right away. The guy they talk to on the phone is useful, and can solve the vast majority of problems (as could any well trained system admin), but when you get to those rare special cases Red Hat is better able to handle them quick.
s73ver_ 9y ago
I feel that, if you're going to put a bunch of work into setting up donations and bugging people to get them to donate and all that, just charge for your work. There is absolutely nothing wrong with charging for your time, or with asking for what you believe your labor is worth.
cavneb 9y ago
True sustainable, scalable funding for open source will never come from donations. It must be approached as a marketing win for companies. This is the only way they can (and will) scale their funding paving the path for true financial sustainability.
scottmotte 9y ago
I'm pioneering a futuristic alternative. The user donates their CPU cycles -> to generate hashes -> to mine crypto currency on behalf of the open source project. http://opensourcecitizen.org http://opensourcecitizen.org If you need a way to accept donations worldwide - without a merchant account and without the donor even needing a credit card or bank account - it might be worth a look.

Sales people get paid largely on commission for "transactions" ... it should be possible for open or closed source software developers to be paid this way as well. There should be an option that pays open- (or closed-) source software developers for business value derived, where metrics (representing aspects of "remunerable transactions") from developed software use are gathered, and the company using the software pays based on some formula related to those metrics. The classic way to do this of course is to provide the software via some metered and billed SaaS API (users pay monthly base + tiered charges per network I/O, storage, CPU-hour, document-processed, etc., or a combination thereof), but that can have adverse performance impacts and can introduce larger integration headaches. In an ideal setup, the "contractor" adapting and deploying the open- (or closed-) source software for a particular company's use also gets a cut of the fees, just like the originators of the software. This structure would be ideal for smaller companies that can't afford or might not want to pay the full up-front cost for the development and/or configuration and/or deployment of software they need ... * these companies don't have a lot of money to spend, but independent developers might be willing to develop (permanently- or temporarily-)closed-source software for the companies' use cases ... and to get their compensation based mostly on a "commission structure" * the company needs might be already satisfied by existing open-source software, but the company may not have expertise in configuring, adapting, and deploying the software -- in this case the deploying expert would hopefully share their fees with the open source software originators * agreements could sunset the "acquiring" company's exclusive use of this software so the developers can start selling the software elsewhere as closed- or open-source software There are surely many complications to a model like this, and perhaps can easily work only in a "high-trust" environment ... but it lets developers with a tolerance for risk avoid the illiquid equity trap of stock compensation, while letting companies build their service for less and issue less stock. There are surely scenarios where this would be attractive to larger companies as well. I'm currently exploring starting a company that incorporates these concepts, I'd appreciate some discussion if this interests you. (You can find instructions to derive my email address from my profile.) EDITS: minor clarifications

dboreham 9y ago
I think you're vastly underestimating the difficulty getting people to pay for stuff, especially stuff they can get for free.

zaarn 9y ago

Liberapay should probably be mentioned instead of gratipay since IIRC gratipay is shutting down.

jelv 9y ago
Liberapay is a fork of Gratipay and growing steady https://liberapay.com/about/stats https://liberapay.com/about/stats. Biggest projects on Liberapay are Mastodon https://liberapay.com/Mastodon/ https://liberapay.com/Mastodon/ and Matrix https://liberapay.com/matrixdotorg/ https://liberapay.com/matrixdotorg/

zokeia 9y ago

A good approach would be to license your work under GPL3/AGPL3 and charge a fee for a commercial license.

zaarn 9y ago
That approach only really works if you have sufficient adoption in enterprise/commercial. Doesn't really work if you target the hobbyist market, which will simply not bother with the commercial license.
- deleted 9y ago
  [deleted]
- crdoconnor 9y ago
  >Doesn't really work if you target the hobbyist market The hobbyist market isn't typically a great place to make money from anyway.
  - zaarn 9y ago
    Yes. But making any money is preferable to making no money from your OSS project, no?
    - yjftsjthsd-h 9y ago
      It really depends. Sometimes the money is not compensated by the support "fun".
      - zaarn 9y ago
        There is no support "fun", atleast not from my side. I do not feel like anyone is entitled to me supporting the application unless I am specifically paid for that. If I see such comments they will get removed and the offender banned very quickly.
- zokeia 9y ago

cdancette 9y ago

Is it hard for an individual to get a non negligible revenue on platforms like patreon?

fastball 9y ago
Really depends on what you're making and who your base is. I've seen some Patreon projects that pull down £16k a month.

amelius 9y ago

It would be nice if some example grant application letters could be included. By the way, this guide could include a donation button serving as an example :)

xchaotic 9y ago

"I do open source work, how do I find funding?" Shouldn't the question be - I am doing a project - is open source a sustainable way of keeping it alive?

ekianjo 9y ago
you could have philoshophical motivations to prefer open source so the context is valid if you start from there.
rhizome 9y ago
They're both valid starting points!

rplnt 9y ago

Side question about the "core" approach. Can your core be *GPL (in case it needs/ships with GPL libraries/tools) while some "plugins/modules" would be closed source? Let's say you have an IRC client that is GPL (because you want to use grep for example), but it's only a service with an API. You then make closed front-end that utilizes it. Or other way, there would be a closed tool that the client can use (e.g. auto reply module).

user5994461 9y ago
The short version is no. The long version is that it is unclear whether it's possible or not and it will vary depending on what integrates with what and how. GPL is a nightmare. Note there is a strong and justified barrage against GPL components in the enterprise world. Assuming you are doing a "core" model because you intend to sell it, that might be a problem.
- smichel17 9y ago
  I'd like to bring a bit of perspective to "GPL is a nightmare [because you cannot create proprietary derivatives]." That's the point of the GPL: to ensure that the code remains open rather than, for example, killed by 'embrace, extend, extinguish'[1]. The GPL is a user-focused license. It sacrifices some freedom for developers (the ability to produce proprietary derivatives) in order to safeguard other freedoms[4] for users. Whether that's a good trade-off is a matter of opinion, not a universal consensus as the parent comment might lead you to believe. [1]: https://en.wikipedia.org/wiki/Embrace,_extend,_and_extinguish https://en.wikipedia.org/wiki/Embrace,_extend,_and_extinguis... [4]: https://www.gnu.org/philosophy/free-sw.html https://www.gnu.org/philosophy/free-sw.html
  - zaarn 9y ago
    The GPL is a nightmare for Legal. Compliance can be difficult for larger corporations and as such expensive. Thusly corporations will avoid it in favor of licenses which aren't complicated. This goes doubly for the AGPL. In addition to that and as a side note; The GPL does not protect against EEE, only against EEE through a fork of the source code. No license can do anything about EEE through standards.

pablanopete 9y ago

Nice list! Adding https://openbounty.status.im https://openbounty.status.im to the #bounties section. Just pledged 1M to OSS development.

dessant 9y ago

I have a couple of browser extensions, one of them acquired 15k new users in the past two weeks and it is still trending on Firefox Add-ons, yet donation links are rarely clicked, and I haven't received any contributions. The effectiveness of asking for donations can vary a lot, and in my experience it is not sustainable at all, unless your project is wildly popular, or it supports the needs of an affluent and passionate user base.

pgl 9y ago
I get ~3-4m accesses to my block list per day, and about €5-€10 every 3 months!
lucideer 9y ago
I think this comes down to brand visibility, and also to a large extent, deliberately built emotional brand attachment. Both are completely missing in this article and should really be featured prominently. There's another article currently at number 2 on the HN front-page[0] about The Guardian. While this isn't an open source project (though they are open source contributors[1]) there are definite parallels. As well as having the nags and donation drives in place, people also need to think the Guardian is worth donating to. And they do, not just because it provides a valuable service to them, but also because the Guardian has a very recognisable name, and because it has been successfully sold to them as a reliable, stable entity they can trust. Obviously something of the scale of The Guardian is not the ideal comparison to most small FOSS projects, but the general ideas hold true - you have to invest in somehow developing in people an emotional attachment to the idea of your product if they're going to click donate. [0] https://news.ycombinator.com/item?id=15786802 https://news.ycombinator.com/item?id=15786802 [1] https://github.com/guardian https://github.com/guardian
unabst 9y ago
I'm not everyone, but many probably feel how I feel about browser extensions. The browser is free, and so are their extensions... I'm fairly certain that upselling is the best approach to monetizing browser extensions... Provide a freemium service, and have paid features. Much like apps I guess. But you really have to be providing a service. So it's more like the browser extension or app is just another marketing channel. Lastpass is a good example. Distill Web Monitor is another. I believe the latter was acquired to be monetized.

rplnt 9y ago

One more I don't think is covered, a trademarked product. You sell your GPL'd product, you deliver sources as is required, but only those who paid can build full functional product because it includes components that you can't redistribute (logos, etc). Probably only works for very complex software, or software where non-code assets would be important (a game). If I am not mistaken this is what RedHat does with RHEL.

bluGill 9y ago
Most open source projects taking that path have eventually been forked when someone created new assets under a free (as in beer) license and changed the name. The original project is now nothing while the fork is big. RHEL continues not because of assets but because Red Hat has people who staff who know the ins and outs of RHEL and will fix it. Red Hat employs many kernel developers because when a customer has a problem the customer knows an expert will get on the problem right away. The guy they talk to on the phone is useful, and can solve the vast majority of problems (as could any well trained system admin), but when you get to those rare special cases Red Hat is better able to handle them quick.

s73ver_ 9y ago

I feel that, if you're going to put a bunch of work into setting up donations and bugging people to get them to donate and all that, just charge for your work. There is absolutely nothing wrong with charging for your time, or with asking for what you believe your labor is worth.

cavneb 9y ago

True sustainable, scalable funding for open source will never come from donations. It must be approached as a marketing win for companies. This is the only way they can (and will) scale their funding paving the path for true financial sustainability.

scottmotte 9y ago

I'm pioneering a futuristic alternative. The user donates their CPU cycles -> to generate hashes -> to mine crypto currency on behalf of the open source project. http://opensourcecitizen.org http://opensourcecitizen.org If you need a way to accept donations worldwide - without a merchant account and without the donor even needing a credit card or bank account - it might be worth a look.