Red Hat charges for their Enterprise Linux, but releases it as open source. I forget the names, but there are now 3rd-party Linux distros that basically just re

Red Hat charges for their Enterprise Linux, but releases it as open source. I forget the names, but there are now 3rd-party Linux distros that basically just redistribute RHEL freely to whoever wants them. If someone openly pirates your proprietary software, you have legal recourse. If someone openly redistributes your open source software, they are acting within their rights to do so. In fact, a third party repackager of RHEL even has the option of charging to provide service, at a discount from Red Hat's price, and they can do this perfectly legally. Short version of the economics: if you can charge for services, you can make money on open source, but only client by client -- you don't become more efficient the more services you sell, unlike with products (especially low-marginal-cost products like software). You have to add employees for each new hour of services you provide. So if you have a potentially popular product, all other things being equal, you have a higher potential for growth if you sell the product rather than the service. Of course, all other things aren't equal, which is why the desktop software market has been in decline since its heyday in the 90s. Because the marginal cost of each unit you ship is so low, when there's plenty of competition, you tend to see a race to the bottom on price (unless you can convince people to buy your product because it is the standard, as Microsoft has done). Many enterprise markets are small enough niches that (1) there are a limited number of competitors, and (2) if you give away your product, you may not easily be able to make up the revenue in any other way. On the other hand, if you have technically savvy clients, you may find it worth your while to offer them your source under a non-redistributable license. They still have to buy your product from you, but they can debug against the source, integration test, etc. This isn't free software (obviously), but it may be a happy medium for both you and your clients. And yes, when the option of selling (or monetizing in some other way) access to your server presents itself, that can be far more profitable than selling a client-side product. That's why World of Warcraft is ridiculously profitable, and it's why Google makes so much money. But it seems clear that this works better for some markets than others. I say all of this as someone who believes in free software wherever it is practical, but also as someone who makes a living writing software and wants to continue to do so. And, as Eric Raymond argued over a decade ago, for something like an operating system that is used by large numbers of people, there will be no shortage of free labor to produce an open source product. But people will probably only work on software for managing a multinational mineral extraction business if you pay them. So open source is a great idea for many, many things, but probably not for everything.