1.3 Open Source Software and Licensing
1.3 Open Source Software and Licensing
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Description: Open communities and licensing Open Source Software for business.
Key Knowledge Areas:
Open source philosophy
Open source licensing
Free Software Foundation (FSF), Open Source Initiative (OSI)
The following is a partial list of the used files, terms and utilities:
Copyleft, Permissive
GPL, BSD, Creative Commons
Free Software, Open Source Software, FOSS, FLOSS
Open source business models
Open source software:
Open source software (OSS) is software that is distributed with its source code, making it available for use, modification, and distribution with its original rights. Source code is the part of software that most computer users don’t ever see; it’s the code computer programmers manipulate to control how a program or application behaves. Programmers who have access to source code can change a program by adding to it, changing it, or fixing parts of it that aren’t working properly. OSS typically includes a license that allows programmers to modify the software to best fit their needs and control how the software can be distributed.
A Brief History of Open Source
Open source dates back to the 1950s and 1960s when software was often shared freely, with source code included to allow for improvements and bug fixes. The A-2 system, developed by Remington Rand in 1953, is one of the earliest examples of this. The creation of ARPANET in 1969 helped further the sharing of software across academic and government institutions.
The 1980s were a pivotal time for free software:
In 1983, Richard Stallman launched the GNU Project to create a free operating system alternative to Unix.
In 1985, the Free Software Foundation was established to provide legal and organizational support for the development and use of free software.
In 1991, Linus Torvalds released the Linux kernel, which combined with the GNU system, resulted in a completely free software operating system.
The term “open source” came about in 1998 as a way to make the concept more business-friendly. This period also saw the publication of Eric S. Raymond’s influential essay, “The Cathedral and the Bazaar,” contrasting the closed, top-down approach of proprietary software development with the open, collaborative model of open source. This work played a pivotal role in convincing Netscape to release its browser code, further legitimizing the open source movement.
As open source grew, notable projects like the Debian GNU/Linux adhered strictly to the principles of free software, helping shape the open source world we know today.
Open Source Licenses
Any company that creates software almost certainly includes code created by others. This code can be libraries, code snippets, functions, frameworks, and sometimes even an entire application. Use of this software code comes with both rights of use and obligations. The specifics detailing the rights of use and obligations are called a license.
Most of these third-party components are open source, meaning they are free of cost. But it’s important to not assume that “free” code and software is free from license restrictions; it is simply controlled by a different sort of license than commercial or proprietary code.
Depending on the type of open source license, you may even be allowed to modify the original source code to tailor it to your needs or fix any issues you find. The license will determine whether this is possible, and under what terms. For example, you may be required to make any modifications publicly available.
Types of Open Source Licenses
Open source licenses define how software can be used, modified and distributed. There are over 80 different types of open source licenses, which can be broadly categorized into permissive and copyleft licenses.
Permissive licenses (such as the BSD and MIT licenses) allow modifications and redistribution under different terms without the need to openly share the source code. They are popular for projects that want to encourage widespread use and adaptation.
Copyleft licenses (such as the GNU General Public License )require modified versions to be shared under the same licenses. It ensures that the software remains free and open while creating legally enforceable restrictions on how the code can be used. Other examples of copyleft licenses include the MPL and EPL licenses.
Permissive licenses
The most popular permissive open source licenses are: Apache, MIT, BSD and Unlicense.
The Apache License requires license notifications and copyrights on the distributed code and/or as a notice in the software. However, derivative works, larger projects, or modifications are allowed to carry different licensing terms when distributed and are not required to provide source code. Apache licenses contain a patent grant.
The MIT License, which bears the name of the famous university where it originated, is perhaps the most used open source license in the world, perhaps because it is very short and clear and easy to understand. Iit allows anyone to do whatever they wish with the original code, as long as the original copyright and license notice is included either in the distributed source code or software. It removes any liability from authors and does not explicitly contain a patent grant.
The Berkeley Source Distribution (BSD) License is another permissive open source license that preserves license notices and copyrights but allows larger or licensed works to be distributed without source code and under different license terms. The 2- clause BSD License is very similar to the MIT open source license, while the 3-clause and 4-clause BSD licenses add more requirements or restrictions related to reuse and other terms.
Unlicense: As its name indicates, this is the least restrictive of open source licenses because it amounts to making the open source open to the public domain. No conditions apply, meaning these unlicensed works can be distributed without source code and under different terms.
Copyleft Licenses
The most popular copyleft open source licenses, in order of restrictiveness, are AGPL, GPL, LGPL, EPL, and Mozilla:
The GNU General Public License (GPL)preserves license notifications and copyright terms and is suitable for commercial, patent, and private use. Any software that uses GPL code must distribute all its source code under the same license. So if you use GPL code in your software (e.g., by using a GPL library), and distribute your application, all your source code must be made available under the same GPL license. This restriction makes the GPL a strong copyleft license.
The Affero GPL (AGPL) only adds only one clause, but an important one for some software. Because the GPL license is only triggered when software is distributed, there is a loophole for software that is made available over the network only, i.e., not explicitly “distributed”. The AGPL license closes this loophole by including a remote network interaction clause that triggers the GPL license for any software used over a network.
The Lesser General Public License (LGPL) provides the same level of terms as the AGPL and GPL copyleft open source licenses, including preserving copyright and license notifications. The prime variation is that smaller projects or objects accessed through larger licensed works do not require distribution of the larger project. Moreover, the modified source does not have to be distributed under the same terms that apply to the larger code project.
The Eclipse Public License (EPL)is commonly used for business software.With EPL, software developed using EPL, non-EPL, and even proprietary code can be combined and sub-licensed – provided any non-EPL elements reside independently as separate modules or objects. Modifications can be made under the EPL license, but they must be released under the same terms.
The Mozilla Public License (MPL) is the least restrictive copyleft open source software license. They make it easy to modify and use their code in closed-source and/or proprietary software, as long as any code licensed under the MPL is kept in separate files and these files are distributed with the software. The MPL also includes patent grants and enforces that copyright notices be retained.
Creative Commons licenses
Creative Commons licenses can be copyleft, permissive, or neither, depending on which one you choose. Here’s the simple breakdown:
Permissive CC licenses
These allow reuse with very few restrictions:
CC-BY → You must give credit, but you can do almost anything else.
CC0 → Public domain (no restrictions at all).
These are the most permissive.
Copyleft CC licenses
These require that modified works be shared under the same license:
CC-BY-SA → Attribution + ShareAlike (This is the Creative Commons version of a copyleft license.)
This is similar to GPL for software.
More restrictive CC licenses (not permissive and not copyleft)
CC-BY-NC → Attribution + NonCommercial
CC-BY-ND → Attribution + NoDerivatives
CC-BY-NC-SA → NonCommercial + ShareAlike
CC-BY-NC-ND → Most restrictive (no commercial use, no changes)
These are not permissive because they limit use, and not fully copyleft because NC/ND conditions block some freedoms. Simple summary:
CC0
✔️ Yes
❌ No
CC-BY
✔️ Yes
❌ No
CC-BY-SA
❌ Not permissive
✔️ Yes (ShareAlike)
CC-BY-NC
❌ No
❌ No
CC-BY-ND
❌ No
❌ No
CC-BY-NC-SA
❌ No
✔️ Partially (but restricted by NC)
CC-BY-NC-ND
❌ No
❌ No
Free Software
The term "free software" was created by Richard Stallman the creator of the GNU project and the Free Software Foundation. Free in "free software" is not about price, but freedom. Freedom to use and modify the software you use. According to the GNU Project, the four essential freedoms are:
Freedom 0: freedom to run the program as you wish, for any purpose.
Freedom 1: freedom to study how the program works, and change it so it does your computing as you wish. Access to the source code is a precondition for this.
Freedom 2: freedom to redistribute copies so you can help others.
Freedom 3: freedom to distribute copies of your modified versions to others. By doing this you can give the whole community a chance to benefit from your changes. Access to the source code is a precondition for this.
In summary, free software is about freedom, not price.
What is FOSS?
Free and Open Source Software (FOSS), also known as Free/Libre/Open Source Software (FLOSS), represents a class of software that is both free and open-source. Richard M. Stallman is a prominent figure in the FOSS movement, initiating the GNU Project, which laid the groundwork for free software development. The term “free” in FOSS emphasizes the freedom to modify and redistribute the software under the original license terms, while “open” underscores the accessibility of the source code.
FOSS is made available to the general public with relaxed or non-existent intellectual property restrictions. This openness fosters a collaborative environment where developers from around the world can contribute to software projects, enhancing innovation and diversity.
LibreDue to the ambiguity of the word free in the English language meaning both "for free" and "freedom", libre (which in French means "free" as in freedom) was chosen given its equivalency to freedom. Today Libre is frequently (and correctly) used as a synonym/alternative for "free" as per Stallman's original definition.
Difference between FOSS and FLOSS
With all that said let's discuss the difference between FOSS and FLOSS: one L. As seen above, because Libre and Free are synonyms (as per the author's original intention however on different languages), FOSS and FLOSS are equivalents.
However, some people view FLOSS as more inclusive than FOSS which we totally disagree. Whoever created the expression FLOSS, didn't understand that F stands for freedom (not "for free" as in costs zero dollars).
Free Software Foundation (FSF)
Philosophy: Based on the ethical principle of user freedom. The FSF, founded by Richard Stallman, champions the idea that users must have the freedom to run, study, modify, and redistribute software.
Key Principle: Software is "free" in the sense of liberty, not just price. This is tied to the "four freedoms".
Focus: Advocacy for user rights, maintaining the GNU project, and promoting licenses like the GNU General Public License (GPL) that preserve these freedoms.
Open Source Initiative (OSI)
Philosophy: Focuses on the practical and technical benefits of open-source software, such as collaborative development, innovation, and cost-effectiveness.
Key Principle: Emphasizes the "open-source" development model and its advantages for businesses.
Focus: Promoting the term "open source" and maintaining a list of licenses that meet the Open Source Definition. The term was coined to make the concept more palatable to the business world.
The world without Free/Open software
The world we live today would be drastically different if we didn't have these initiatives by Richard Stallman, Linux Torvalds, the others previously mentioned and millions of anonymous contributors worldwide.
Below, some of the ways in which free/open-source software changed the world:
the Internet: pretty much all the infrastructure of the internet today (routers, switches, firewalls, etc) runs Linux or open-source software. Not to mention the web servers (Apache, Nginx), databases (PostgreSQL, Redis, MySQL) and even most of the programming languages and libraries used to develop the tools and services you use are open-source.
Services: cloud services are built on top of the above list and use container technologies such as Docker, Kubernetes, containerd, KVM, QEMU which are also open-source.
Faster time to market: open-source also fosters and is essential for a faster time to market, critical to business today.
Reduced development cost: it's probable that Google, Spotify, Tesla and even Amazon wouldn't exist today without open-source. It's impossible to imagine how to develop so complex products and services without the broad diversity of open tools available today.
IoT: the next age of computing will reach virtually every digital device around us. And Linux/open-source software is the
Robotics: robotics also heavily utilizes open-source technologies (including hardware).
Supercomputers: all of the supercomputers today run Linux. These computers are used for researches and are critical to the evolution of humankind.
And everything else: from agriculture to rockets, spaceships and nuclear plants, open-source runs everywhere.
Famous open-source initiatives
Today, there are many, many initiatives and projects that are extremely successful and follow the open-source. Some of the most biggest projects today are:
Software projects: Linux Kernel, GNU operating system
Software foundations: today we have huge organizations such as the Apache Software Foundation which has more than 300 projects under its umbrella and the Free Software Foundation that collaborate under the open-source model.
How companies make millions on Open Source?
Open Source software refers to code that anyone can inspect, modify, and distribute, e.g. you can use it to create your own programs and distribute them then. The signature characteristic of this type of software is that anyone can see what technology it has “under the hood” and observe the Open Source project as it evolves (or even take part in developing it).
However, the fact that your code is publicly available does not mean you, as its original author, can’t profit from it. Many companies are building their businesses around OSS. Some are large software developers making hundreds of millions a year and are valued in the billions. Here are notable examples of such (among publicly traded companies):
* Based on data compiled by Companies Market Cap. The data is current as of December 2022.
These companies share three things in common:
They offer products in high demand among a large community of developers and engineers.
They are engaged in software development. The financial potential of this sector is estimated at more than 1 trillion dollars (which is several times higher than, for example, the estimated value of the global gaming industry).
They use the suitable monetisation model.
The third point is the most important one: the business model or some combination thereof determines the commercial success of the Open Source company.
Open Source business models
The most popular models for monetising Open Source products are open core (offering a “core” or feature-limited version of a product as Open Source software), hosting (a cloud service), professional services, and marketplaces.
Open core
Open core is a business model for monetising Open Source software in which the “core” code of the software product is open to all. Anyone can download the code or a ready-to-use build for free and use it as they wish. Anyone can even potentially influence the product’s development – provided, of course, that the core developers accept the proposed code changes.
Typically, the open-core model involves selling an Enterprise or Premium version based on publicly available core code. The Enterprise edition can include, e.g., technical support, advanced security features, improved availability, different options for integration with third-party software, and compliance with industry and other standards, such as FIPS 140-2.
A company that adheres to the open-core model must ensure that the basic free product has enough features to render it attractive to a broad community of users and developers.
Here are some well-known companies that use the open-core model:
Confluent develops automated, real-time big data processing solutions. These solutions are based on the third-party Open Source Apache Kafka distributed streaming platform. The company adds several additional features and releases the resulting bundle as a free Community edition. The Confluent Platform, on the other hand, is distributed under a commercial license.
GitLab Inc. is responsible for the eponymous “DevOps platform,” which provides many features for developers, including source code management, CI/CD pipeline, Web IDE, issue tracking, wiki, etc. It comes in two editions, CE (Community Edition) and EE (Enterprise Edition). The CE version is free but has limited functionality.
MongoDB develops the eponymous NoSQL database management system (DBMS). The Stack Overflow’s Developer Survey 2022 found it to be the fourth most popular DBMS among developers. The MongoDB Community Server plays the role of a free core software product. Of course, some premium paid options (e.g., MongoDB Enterprise Server) also exist. UPDATED (09/12/2022): However, it would be more accurate to classify MongoDB as an ex-Open Source company and solution since they changed the license for its core product from an Open Source one to SSPL in October 2018. SSPL is a source-available software license which is not Open Source.
Elastic is another ex-Open Source example. This company offers a variety of logging, search, security, and analytics tools. Its main search and analytics engine, Elasticsearch RESTful, is originally Open Source and based on the Apache Lucene library. However, later, in January 2021, it changed the license to a source-available (but not Open Source) SSPL as MongoDB did earlier.
Hosting (cloud solutions)
Some companies offer Open Source products as managed cloud services (hosting). Their main advantage is that users don’t have to worry about the product’s infrastructure since the company is responsible for supporting it.
However, the hosting model has a significant drawback for an Open Source company: competition from large public cloud providers, such as AWS, Azure, and GCP. They offer Open Source products in their clouds. Thus, it makes sense for existing cloud provider customers to use the service the cloud provider offers rather than subscribe to the developer company’s service.
For this reason, to protect their commercial interests, Open Source companies sometimes change their product licensing format to one that prohibits selling their software as a service without paying royalties. This already happened to MongoDB and Elastic mentioned before. CockroachDB is another example of a vendor who changed its Open Source license.
The hosting model is used by such companies as:
Databricks. It develops a cloud-based lakehouse platform for processing semi-structured data based on the Apache Spark Open Source framework. The company offers a free Databricks Community Edition and a fee-based service in major cloud providers.
WP Engine is a developer of a cloud-based WordPress platform. In the free WP Engine version, you cannot, for example, use your own themes, download plug-ins, run your own ads, or enable Google Analytics. However, these options and more are available in WP Engine business plans.
Professional services
The professional services model involves selling extended technical support, consulting, and training for Open Source software.
The professional services model is often used as an additional income source for the open-core model. This is how, e.g., HashiCorp and Confluent work.
Red Hat is probably the most well-known Open Source company that started with the professional services model. Eventually, Red Hat incorporated technical support into its product lineup and focused on the open core. It also happens to be the most successful of all the Open Source companies: it was the first to go public (back in 1999) and the first to make $1 billion (in 2012). In 2019, Red Hat became a part of IBM.
Here are some other companies that follow the professional services model:
Cloudera develops distributions based on the Apache Hadoop framework. The framework allows for the creation of distributed Big Data-focused search systems. Cloudera offers paid support, training, and other professional services, as well as products – in essence, a hybrid model.
Percona began as a professional MySQL support provider. Later, the company also started to develop its own solutions based on MySQL and several other Open Source DBMS.
CYBERTEC specialises in supporting the popular PostgreSQL DBMS.
Marketplace
The Android app store is a classic example of a marketplace based on an Open Source solution (in this case, an Open Source operating system). This marketplace offers paid and free software for Android smartphones and profits from commissions charged to software developers. Google Play, Samsung Galaxy Store, and Huawei AppGallery are examples of popular marketplaces for Android and related systems.
Android itself is an excellent example of an open core from Google. The operating system is based on the Android Open Source Project, which, as the name suggests, is publicly accessible — anyone can see, modify, and distribute its code as they see fit. Various vendors enhance this core with their own add-ons and extensions, turning the Open Source project into a commercial one to make money on.
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