On The Business Of Software Communities

This entry was inspired by a delightful email conversation a short while ago with my peers, Rich Sands and Chris Andres.

The last number of years, communities seem all the rage (together with app stores actually). If a company develops software then it shall create a community. Already the term “community” is overloaded. While not daring to give a strict definition, I do want to attempt some delineation. The thing is not a community if it doesn’t:

• enable bidirectional, or rather multi-directional communication, and
• enable active and meaningful participation by those outside your organization, and
• foster some common activity.

In short, a mailing list or a newsletter is not a community. Yes, I have been in meetings where those were being argued as such.

Onto the topic at hand. Can the business of software communities be a commercially successful one? And then especially open source ones?

Well, yes, but you need to know why you’re doing it. Many communities, or rather the efforts of companies behind them, show signs that the goal of community has overtaken the purpose; a scenario so beautifully captured by the Underwear Gnomes episode of the South Park tv-show. Go look it up, it applies to very many situations. Creating an open source software community for the apparent sake of creating one, while possibly giving the company nice press headlines for a while, will not be an enjoyable experience over the long term. It creates confusion inside the organization and very likely causes the company to compete with the community or at least to view the community as a threat to its business.

This perception of competition, especially in the case of open source software, is often caused by the temptation to see the community as a self-standing business and then applying a P&L to that business, comparing it to other lines of business the company may be in leading to debates whether the community business positively or negatively impacts the existing, traditional business. While it can be true that the community really is the business, in most cases a company starts a community in support of its commercial prospects. In other words to expand the business overall rather than the community being the commercial prospect itself.

Meaning that the community is a marketing tool. And thus any return on investment should be evaluated by the company in much the same way it assesses its ROI on other marketing and PR strategies.

I am curious how many readers I lost at this point with declaring open source software communities as mere marketing tools of corporations…

Certainly in the context of free and open source software there are strong ideological currents streaming around: software wants to be free (like information), and the participants free of corporate manipulation. These are powerful currents that can represent significant execution power and thus companies need to be conscious and attentive. At the same time many open source software communities and projects are enabled by the investments – either monetary or in resources – of commercial interests. I don’t see anything wrong with this as long as it is clear to both sides of the coin why the other side is in it for. In other words, transparency is key.

Earlier I said you need to know why you’re doing it. One immediate aspect of open sourcing one’s software that must be recognized and dealt with is that regardless of the license you choose you are allowing others to compete with you on your own code base. The different open source licenses enable you to steer that potential competition in a certain direction but nonetheless you are enabling competition where there wasn’t before. You should have good reasons for helping the competition.

If your main business model prior to the open sourcing is specifically centered on the IP in that software then, unless you address this head on, you’re in for a tough time: you give away that which you want to live off of. This can be limited by choosing an GPL-style license over an BSD-style license but this easily leads to a situation where potential contributors perceive the commercial opportunity to be too one-sided making it hard to build an ecosystem around your open sourced software; a difficulty inherent in most dual-licensing approaches.

More promising models look at the open sourcing of software and the community to form around it as a means of giving leverage.

One such model can be open sourcing what is the platform and then commercialize around it. In this scenario the open sourced code helps build the market which then provides the company with commercial opportunity thus making the business of community and the business of business complementary and supportive of each other. Provided your company understands well what opportunities it wants to pursue around or on top of the commons then it is not damaging that others find commercial opportunities of their own from the commons. Actually, it is beneficial as those efforts help legitimize your market (not so dissimilar to so-called furniture boulevards, auto boulevards in cities).