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Matt Assay, for whom I have the greatest respect, is at it again - predicting the demise
of the free Open Source model. He is backed by no less an
organization than the
Economist. At least he is honest about it. Matt always clearly
declares his interest as an employee of Alfresco, a commercial Open
Source project, but in the positions he is taking about our industry,
he is starting to look more and more like the public relations
department of a typical commercial software company.
This darkness and doom is box-standard
paranoia for the Silicon Valley set when the business cycle passes
through the shadow of the moon and things start to cool in sunny
California. This is the dawning of the Age of Aquarius and even
Commercial Open Source companies are not exempt – they also feel
the revenue pinch and have to scratch pencil lines though staff
organograms. However dimming of the lights is not the future of all Open Source
projects, and those that avoid the pitfalls of commercial Open Source
do not suffer this fate.
The problem that Matt and
Alfresco have, is that they are taking on the same financial
structure of the commercial companies, namely outside shareholders
and monthly payroll bills. The need for revenues is now been driven
by the cost push inflation underlying their income statement. If you
have followed my blogs you will see that I have always said that we
Open Source projects are in the same industry as the proprietary
software companies. “Open Source” is a development methodology,
not a business model. However, in a business sense we have also come
to use Open Source as a marketing tool. We certainly use “Free”
as a marketing tool. Even the esteemed thinkers of The Economists cannot get their heads around a zero revenue model. Their thinking is distorted by their own limitations that free content must be accompanied by advertsising in order to exist.
“Whodat say dey
gonna give away da software and stil gedda foldin stuf?”
Just Google “Free
Accounting Software” and look who comes up.
On the table is the
recurring issue that still stalks the restless dreams of Open
Source project leaders. Should users of Open Source software be made
to pay for the product? TurboCASH users,
see our poll, have a clear opinion. 60% want their software free
and 40% are prepared to pay for the delivery of the software and
surrounding services. This leaves us with two distinctive markets to
deal with. How do we continue to provide our freeloaders with the
stuff they desire, and make it good enough to get them to keep
telling their friends about it. In parallel, how do we give the specialized
attention to the customers that do want to pay us for it. In
particular, how do we offer our paying customers a deal they can't
refuse, when they can simply download it for free!
The deal is simply this:
1)
Single users get TurboCASH for free - Open Source. This
creates a massive marketing vehicle that brings in new users. We
could do better by having a team dedicated to SEO and user
acquisition, but in reality the users come in faster than we can deal
with them. I would like to service them better, but there is no need.
The voluntary forum, the documentation that we provide and that is financed by
the sales of "Accounting Made Easy" and TurboCASH CD sales is
sufficient. It is the great Accounting
Support Myth to believe that single user accounting is support
intensive. Any users needing more than this can easily engage an
army of consultants, now stretched across multiple countries. The
only limitation is that the users must desire to pay the consultant.
2) Would we get more users by feeding them free support ? -
Yes, but costs would climb rapidly. We would also get more users by
offering them free sushi, but without a commercial model we would
soon run out of tuna. We do provide voluntary free support, but
sometimes consutlants just simply want to be paid to handle mundane
logistical problems. Users who demand free support from these
volunteers should not get upset when this is not forth coming. If the
users is not willing to pay to have a problem fixed, presumably
because it is not that important, then they should not be surprised
that a volunteer support person should feel the same lack of
importance in solving the problem. Consultants are themselves simple
profit maximizing agents like all business users of TurboCASH.
We are focused on running a development organization. That said, I
personally do everything else but the development. ie the total sales
and marketing structure is all me. That is why our cost structure is
so low and why we are able to ship at zero price.
3) The
TurboCASH project runs very lean. As the project leader, I am
a one man business, and firmly dedicated to continuing with that
strategy. You may regard this as a little ecentric, but most of the
core developers and consultants have similar or only slightly bigger
structures. What makes us powerful is not the size of the individual
components, but the size of the combined network, which is now
stretched over 80 countries and in over 25 languages. TurboCASH would survive even if a Pakisani cricket team came to play us, stayed overnight and our guards fell asleep.
4)
TurboCASH does not have an oppressive central system looking
for licensing fees or support fees. On the contrary rather than
looking for licensing fees, I am always looking for ways to outsource
the revenue collection! So yes we keep our revenue down, but we also
keep our costs down. If you do pay money into the TurboCASH
project, we want it to go to our developers and consultants. The developers and consultants are all
self employed and the corollary is that it is very difficult to force
something to get done for free by the TurboCASH network. Download and
use the standard product, call fro voluntary help, but this does not extend to free customer services or
free modifications. That said it is a lot harder to get a commercial
company to make a change than to get us to make a change!
5)
For the paying customer and for the working consultant this project is an
ideal working environment. The software is licence free and can be
copied and distributed without recourse or payment of royalties. This
makes it easy for the consultant to quote on delivery and
logistically easy to deploy. The consultants always have TurboCASH
in stock! No sales lunches, no freight, no delivery expenses, no stock control, no debtors department, no cashbook
reconciliations, no legal action for bad debts. All these are the
costs that Matt and the Commercial Open Source products keep adding
to their mix and push up their cost of doing business.
6) To deal with the 40% customers who do
want to pay us, we do have a commercial arm, albeit distributed. We see multi user systems as
a separate market in the accounting industry. Developers develop
plugins and we release a multi user commercial version. In the multi
user version we spend the effort on development and testing to make
sure that the multi user version is a bullet proof app for mission
critical apps. By charging this out to a club of commercial users we
are able to provide them this service and use the spill over
technology to boost the offering to our single user systems. So in a
commercial sense, the multi user customers end up financing the
single user customers.
7) Is this still Open Source? Purists
may feel that we are “forcing” the multi user users to pay us and
that this is against the spirit of the Open Source movement. Not so
Blackadder. Nothing in the GPL says that any party may or may not
sell the software. If a customer is willing to buy the software, then
anyone may supply the software at a mutually agreed price. No seller
may breach the GPL, the software must always be supplied under the
GPL Licence. To make sure that this is so, we regularly post the full
source code on the web available for download. Anyone is welcome to
download the TurboCASH source, compile it and begin
distributin. This of course would be pointless. The TurboCASH
project provides a commercial licence at $100 per year. This is way
below the $ 50 000 plus that it costs to maintain a multi user
version and is priced at a cost to the individual users way below the
cost of commercial multiuser software. Simply put, if you can't
afford $100 a year for a multi user accounting package, its not our
business model, but your own that you should be worried about.
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