How do 3pds make money in the GPL'ed Joomla! world?

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How do 3pds make money in the GPL'ed Joomla! world?

Post by vscribe » Fri Jun 15, 2007 6:13 pm

Per MMMMEDIA - I have started a posting. SEE:  http://forum.joomla.org/index.php/topic ... #msg862788

In response to my question. SEE:  http://forum.joomla.org/index.php/topic ... #msg862772

Since Beer is NOT free and the open letter depending on how you read it threatens in some form 3pds NOT in compliance with GPL,

AND since there is so much talking out of two sides of the mouth here, my question is :

What models does THIS community see to make money in the now clarified policy of Joomla?

thank you
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by skOre » Fri Jun 15, 2007 6:19 pm

This is how my own business model works:

The Business Model is quite simple. It consists mainly of public passion - Once there are people who use your component as an integral part of their own business, they will be able to care about you. This is what happens with the AEC and I guess similarly with other Software - People see the work that is put into it and when it is, to their taste, sufficiently good, you have completed the first step - they like your software.

The second step is to let them know that it is hard work (as indeed it really is). This can only go through a lot of public discourse, like public forums, where you communicate that you work hard. If you were a farmer or somebody baking bread, the people would see you working hard and appreciate it. So we have to transfer this into the software world - drop some remarks on how you worked another night until 5 am or did your best to put customer wishes into the software. Once people get this, they are ready to give something back as appreciation of your work.

And now comes the presence of memberships - your work is continuous, as is your customers use of your software. Everybody will know that, so using memberships on a rather inexpensive level will be only natural. But you need your users to see that they can support you. This is why we have a one month free subscription (that they can always come back to of course) and several longer time memberships for payment. So each month, our users will come back to the point of having to decide whether they want to support us or not. If you made a little bit right in the previous steps, chances are that more and more users will feel
for your work and be inclined to get a membership, if it is not too costly of course ;)

The next step that I am currently preparing here is special service for subscribers, as there is currently no real benefit of being a subscriber. I am working on a way to provide on-component support that will create a direct contact from the customer to my desk without the need to go over forums or even email. This support will depend on the membership level of course - when there are more support requests at once, the ones with a higher membership level will get support first. Another thing that one can have are different forums for different priority, although I'm no fan of open separation. I'd rather have each user individually see that there is a lot of work (which is why the support queue list will be public, yet anonymized, so that users can see where they stand) that needs to be done. If there are developers interested in this, please contact me, I have started working on this and it will be Free Software and have various APIs that you will be able to integrate into other components - in other words, I need help :)

However, from that point, you have gotten yourself out of the proprietary loop and the number of users will culminate. On  globalnerd, we started off with about one new subscriber each week - that was last august - then at the end of last year, we had a new subscriber each day, currently we are between one and two subscribers each day. About 10% of our registered users (3,5k) are subscribers. And about 20% of them even use PayPal Subscriptions or regularly go to the paid plans, so users paying more than once is far more regular than one may think.

Apart from that, I don't have kids - this is always the thing that I have to admit later in such discussions. Quite on the contrary, I  spent some time in the middle of last year trying to figure out what kind of life I want to lead. I figured I'd rather live off the good will and appreciation of my customers. Of course, this is a tough position as anybody could come over and steal my job. But this is mainly a very good motivator ;) The recent developments show me in which direction it is leading me, and I hope that in the future, this will continue in this direction. I will have all benefits and all downsides of being an idealist so to speak. At least I'm  somewhat in control of that fate... It is a tough road anyways and it is even harder to introduce this way of doing business late in the game.

That was mine, how about yours? :)
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by skOre » Fri Jun 15, 2007 6:19 pm

There is also my thread on A voluntary Free Software Joomla+Extensions Poweruser Tax, although that is not of much help for single developers.
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by bigwaxer » Fri Jun 15, 2007 6:28 pm

just a ? but how have 3pd faired with a support model type fee structure ala Red Hat or for Joom something like Fabrik?

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by ivo.apostolov » Fri Jun 15, 2007 6:29 pm

Well, another good idea for GPL business model is a target donation. How it should work? Here is the flow:
- You create your portfolio web site.
- You have ideas for several extensions.
- You put some kind of survey in order to see, which is the most desired by the community and for which the community has the biggest willingness to pay.
- You analyze the results and you see, which will have best and faster return.
- You develop the extension and put target donation and announce that, the extension will be released after the target donation is achieved.
- You get your target donation (during this time you already develop the next extension) and publish it under GPL
- You can hereafter offer commercial support for the published extensions

And that how it will go.

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by vscribe » Fri Jun 15, 2007 6:30 pm

@Ivo

Actually...kind of intriguing.

:pop
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by ivo.apostolov » Fri Jun 15, 2007 6:34 pm

Well, you can repeat the whole staff with each new version (avoiding to do that for bug fix releases).

Another thing is: Release something that WORKS. If you publish something that doesn't the risk to be kicked out of the market is too high.

So, what you can do during the development process is to ask your lets say first financial contributors to become beta testers (they usually should be in best interest for ASAP release). This way you can have a bug free extension with happy people that pay to be involved in solving your mistakes. Isn't this going to be a really happy customer?

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by Jenny » Fri Jun 15, 2007 6:36 pm

There are some other software projects that use the model that ivo is talking about.  They ask their users what they would like to see next, then they calculate how much time in coding it would take, they then set a target goal for donations, and when that goal is met, the software is coded.  This way if donations aren't met it shows that maybe it wasn't something that was needed as much as was first thought. 

I think this is good in a number of ways.  People get what they want.  Developers are creating what people want and are being compensated.  Time isn't wasted on unneeded projects.
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by cozimek » Fri Jun 15, 2007 6:41 pm

Hey everyone,

I'm really trying to get some rest, I swear, but I keep getting pulled into this wonderful conversation.  One man who I highly respect in our community is Ryan Demmer, the creator of JCE.  He faced this exact problem many of the commercial devs are talking about today, check this out this post from mid 2006:

http://www.cellardoor.za.net/index.php? ... view&id=13

I think he summed up his position nicely:

"This sort of sucks. So, I guess my options are: Continue to release JCE as GPL or LGPL, but slow down the development. The amount of time and effort put into JCE with no financial return is becoming less and less appealing. Provide two identical versions of JCE, both licenced under GPL, but one for sale and one for free, in the hope that commercial users of JCE would 'buy' the one."

What did he decide to do?  A membership-based add-on path.

http://www.cellardoor.za.net/index.php? ... &Itemid=27

Now, I know he's a little bit of a quiet guy, but I bet if someone could ping him, maybe he can tell us how it's been treating him.

Just one example of someone committed to creating GPL code who found a commercial venue.  Check out those encouraging posts from his users!

Best,
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by ivo.apostolov » Fri Jun 15, 2007 6:44 pm

Well, it is interesting model as well.
I know that this thread would become more positive in comparison to the "deathread"

Another ideas are also welcome :)

Edit:
I just reviewed the JCE site and found out there a comment:
You can just fix the avaliable bugs and not adding new features. Make a nice 'list of new features' and add a pricetag to every feature. Let people donate on a specific feature.
This could go further with my previous posts, you offer to receive donations for several extensions and the one that has the biggest donations is release first :)

In this way, the people interested in your development would gladly pay for you to work on the extension "he wants" in comparison to other extension that "someone else wants"

Smart a?
Last edited by ivo.apostolov on Fri Jun 15, 2007 6:53 pm, edited 1 time in total.

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by vscribe » Fri Jun 15, 2007 6:57 pm

Interesting ideas, I would debate the merit of "donations". Example - check with anyone who has posted a donate button.

@Ivo - I DO like the idea of when my Jar fills up I'll release it. :)

I wonder, though, is gnu/gpl's nature inherintly unfriendly towards a commercial endveour?
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by bigwaxer » Fri Jun 15, 2007 7:22 pm

vscribe wrote:
I wonder, though, is gnu/gpl's nature inherintly unfriendly towards a commercial endveour?

Excellent question and as a user / 4pd as someone called it. Also someone that trys my best to contribute when I can (ala suck at programming) so I donate when I can and this is a good issue to bring up.

I pay on donate buttons but I would be out of the norm, just thinking from a users perspective I really like the goal thing mentioned above but as a biz wonder how long that would last. Also think 3PD will just have to expand theservices. Support, install, Config'n all will require a fee. To many to name but many open source projects thrive on the GPL. If you make an extension that is usefull, you will get paid. ALA a real estate one I saw a comment in the end of the world thread.

It may takes a new way of thinking, if your product is good then I would think you have nothing to worry about just have to rethink how you sell it.

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by Jenny » Fri Jun 15, 2007 7:23 pm

I think you misunderstood, or I didn't make myself clear.  I used the word donation because it was the word that was logical to me, but you could exchange that word with funding if it makes better sense to you.

Developers say it costs this to make this and set the funding goal.  When that goal is reached they code the software.  If the funding isn't reached then those funds are put aside to go into the next project, which means funds aren't wasted, they go into the next thing, and time isn't wasted.

Make better sense?
vscribe wrote: Interesting ideas, I would debate the merit of "donations". Example - check with anyone who has posted a donate button.

@Ivo - I DO like the idea of when my Jar fills up I'll release it. :)

I wonder, though, is gnu/gpl's nature inherintly unfriendly towards a commercial endveour?

Edited:  changed an are to aren't.  Aren't is what I meant
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by Danayel » Fri Jun 15, 2007 7:29 pm

vscribe wrote: Interesting ideas, I would debate the merit of "donations". Example - check with anyone who has posted a donate button.

@Ivo - I DO like the idea of when my Jar fills up I'll release it. :)

I wonder, though, is gnu/gpl's nature inherintly unfriendly towards a commercial endveour?

GPL isn't but human nature is. Just take a look at the dozens of 'can I post every commercial product on my site for download with google ads and get rich now?' posts that have just started popping up.

In the perfect world GPL is the perfect system. People donate what they do best for the betterment of all, and all benefit. However there are those that just want to take from that eco system. And I am not necessarily referring to non GPL devs here. Most of them have released many free extensions or give to the community in many other ways.

However I  will be keeping my eyes on this thread. I started a similar one in a discussion with some of the 3pd guys so I am up for new ideas.

Most importantly I am interested in how low demand Niche extensions will fare.

High demand fast turnover items like templates are easy to support on a club model for example, but something like a reservations component or affiliate marketing module that has -some- appeal but not a huge amount needs a different model.
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by vscribe » Fri Jun 15, 2007 7:33 pm

I think though, the 'tip' jar idea would not fly very far in America (my frame of reference) due to our particular culture. I do not know if I would drop a coin (so to speak) in hopes of seeing it as there isn't any transparancy. (anyone rememeber savetoby.com - give me money or I will eat the rabbit - no joke).

the more I think about it this is an interesting concept if votes were the currency, but then again, businesses that needed something couldn't stop their operations to wait for development. - hence the commercial aspect.

That leaves us with the following options:

1) optimization strategy
2) duel license strategy
3) consulting strategy
4) patronage strategy
5) hosted strategy
6) embedded strategy

I would say that Ivo, your suggestion may fall into 4.

note to reader: these are from http://www.itmanagersjournal.com/feature/314? - SEven open source business strateges for competitive advantage.

I am interested to hear from some more of purists (the folks who want pure gpl - so please don't be thin skinned) about how to make money, because the way I see it is since this drug on too long, it has damaged the desire of the 3prd's.

perhaps an olive branch is to show support now that you have the upper hand on some ideas for these folks in this thread.

thank you
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by thomasW » Fri Jun 15, 2007 7:35 pm

This whole "swear jar" for programs thing opens up another world of questions...

If someone donates money how long would they realistically be expected to wait for the software to be released?

On the opposite side, if I am programming something how long should I be expected to wait for the swear jar to fill up before saying "Oh Well" and walking away from the project since the needed funding is not coming in.

To further complicate matters, what happens to the money that was donated, does it go back to the people or would the programmer be allowed to keep it for their initial coding efforts?

Obviously these are hypothetical situations (and I expect no real answer), but you know these questions/problems would come up.

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by ivo.apostolov » Fri Jun 15, 2007 7:39 pm

thomasW wrote: This whole "swear jar" for programs thing opens up another world of questions...

If someone donates money how long would they realistically be expected to wait for the software to be released?
Well, that is why they call it donation, you should realistically expect nothing. Otherwise hire the developer and he will do whatever you want.
On the opposite side, if I am programming something how long should I be expected to wait for the swear jar to fill up before saying "Oh Well" and walking away from the project since the needed funding is not coming in.
Well, this one really depends on the person, his self evaluation and other available options.
To further complicate matters, what happens to the money that was donated, does it go back to the people or would the programmer be allowed to keep it for their initial coding efforts?
Well, I said donation right? Have you heard about donation with "Money back guaranteed"? At least in Bulgaria there is nothing like this. When you donate, you donate and that's it.

Obviously these are hypothetical situations (and I expect no real answer), but you know these questions/problems would come up.
That's the difference between the GPL based model and the property software. The problems usually do not exist.

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by Jenny » Fri Jun 15, 2007 7:42 pm

thomasW wrote: This whole "swear jar" for programs thing opens up another world of questions...

If someone donates money how long would they realistically be expected to wait for the software to be released?

On the opposite side, if I am programming something how long should I be expected to wait for the swear jar to fill up before saying "Oh Well" and walking away from the project since the needed funding is not coming in.

To further complicate matters, what happens to the money that was donated, does it go back to the people or would the programmer be allowed to keep it for their initial coding efforts?

Obviously these are hypothetical situations (and I expect no real answer), but you know these questions/problems would come up.

All those questions would depend on the individuals involved.

Examples:  Ask your clients how long they will wait.  As yourself how long you will wait for the funding for that project to materialize.  If it doesn't have another project on backup, and transfer that funding to that one.  Give your clients a list of three projects, have them pick which one they want next, but knowing if the funding doesn't happen for the one project it will be put into the next project.

There are all sorts of ways you can make it work, just like there are 10 different ways you can run a grocery store, or any business.

Edit: Quoted the post I was referring to.
Last edited by Jenny on Fri Jun 15, 2007 8:10 pm, edited 1 time in total.
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by vscribe » Fri Jun 15, 2007 8:08 pm

hence my question...

what does the community (both 3pds and purists) see as viable means to allow 3pds to make money (i.e. business models) and comply with the gnu?
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by samlewis » Fri Jun 15, 2007 8:10 pm

In regards to the tip jar/request jar issue, anyone seen http://www.fundable.org? This is a working model of what is being discussed. I just used it for the first time (in process) so we'll see how well it works but the concept would be quite easy to implement I believe. The key portion is that Fundable.org controls (escrows) the money.

Personally I could easily see Joomla/OSM stepping in and creating this environment. Joomla is the key player here so let them stand as the trusted identity.

i.e.,
3PD sets up a Fund for a new component requiring 10 users pledging $10 each

User pledges $10, 2nd ---> 10th pledges

All money is held in trust (actually with fundable they simply put a hold on the money in your paypal account but don't withdraw anything until the project is completely funded)

Once the goal is reached, Joomla/OSM takes charge of the money and in exchange for the distributed component, the developer is "paid". I would go so far as to say that I would be willing for a percentage of the fund to go straight to Joomla/OSM.

This could be a workable plan but I'm not sure I would bet my entire career/workload on it  ;)
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by vscribe » Fri Jun 15, 2007 8:14 pm

intersting app / idea [possibly a non-profit i.e. joomla? or other charities?], however once the app is developed (using a sample of $100.00 as the threshold for instance) which then theory would have the 'managment' fees removed. Let's say 10% - the dev get's $90

He release the app.

how does he/she further themselves financially ? How do they CONTINUE to make money?
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by ivo.apostolov » Fri Jun 15, 2007 8:17 pm

By new applications (extensions) or support for the current or new versions (excluding bug fixes)

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by samlewis » Fri Jun 15, 2007 8:18 pm

I guess that is the rub.

The only thing I've come up with so far is that the original Fund amount would need to be the base amount you would have expected to sell in your initial development. i.e., I develop a new component and to make it profitable I know I need to sell 50 copies at $50 or $2500 (purely hypothetical). So maybe I set my initial Fund at $3500. The problem is just dividing the pie a bit different but no longer can you count on the residual income from your past development. Going forward it's only update, support, and customizations  :(
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by vscribe » Fri Jun 15, 2007 8:20 pm

ok.

how? if you build up a threashold of what? $1000.00 the development takes X time, then the support you will ultimatly have to give.

Not to fight with you at all Ivo, cause I understand where you're coming from. I just am missing the real world viablity to this.

@Sam - this came in while i was posting. Agreed. however, would a business put their business on hold ? probably not.
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by samlewis » Fri Jun 15, 2007 8:40 pm

vscribe wrote: @Sam - this came in while i was posting. Agreed. however, would a business put their business on hold ? probably not.
The developer or user? I assume you mean would the developer put his business on hold until the project was funded? Absolutely not, thus my comment that I wouldn't bet my entire workload on it.

Actually, one way to approach it would be to build a rough draft of the component and use the funding approach to garner interest with a semi-working demo. Then and only when funding is available complete the project?

I don't know.

Still thinking, waiting, watching, pondering.... :pop
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by skOre » Fri Jun 15, 2007 9:20 pm

I think there are two things that are generally underestimated:

4th party users
We still lack a good term for this, but every person offering to create a joomla site for somebody else (and for money) will have a stock of components that are often reused. This is what I hinted at in my first post here - if you develop a component that they use, you are suddenly vital to their business - granted that you do your job well. Collect a couple of these as supporters and you may have a steady stream of income. The important point is that its kind of a healthy dependency.

long tail and niches
There may be a few big hits on the extensions directory, but there are also a lot of specialized components. This is why it can also be lucrative to have a grip on a few well placed niches, possibly connected, and have a lot of little.

This also goes for payments - In fact, it does not matter in the end, whether you make 1000$ by getting 100$ from 10 people or 10$ from a hundred.

If you place a price tag on your software, its always best to start at zero, because that means that you are out of competition on that sector. If people who have used your stuff think that it is worth something, ask them for a little. If you do it right, a lot of people giving a little will still mean a lot of money in the end. Its all about the how - and that is the part that most proprietary vendors are scared of, because you have to spend a lot of thinking and planning on how to communicate and plan your moves.


Another thing that has been completely ignored here is:
The perks of being in a healthy environment
Its not as if I was flooded with requests, but showing people that you do a good job will get you a place in a corner of their head. The next time they try to figure out where to get "a software guy" to do something special for them, you are on their list and maybe they make you an offer for custom development that will well fund your FOSS business. As for me, these jobs make up about 1/4 of my income and I'm in a position where I can pick the projects that I want to participate in.

This is of course nothing that is only available to FOSS developers. Yet on one hand people forget this in their computation and think that the money you get from donations or memberships is the only thing that will happen on the money part; and on the other hand, you are more likely to be asked as proprietary business is more often associated with not caring about
a new piece of software that you need but in fact concentrated only on the products that they sell.

The important point in any case, as ivo has pointed at, is that you create something that will rock the socks off your competition. If you add being nice to your customers, you are already on your way.
Last edited by skOre on Fri Jun 15, 2007 9:30 pm, edited 1 time in total.
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by kdevine » Fri Jun 15, 2007 9:51 pm

In regards to the tip jar/request jar issue, anyone seen http://www.fundable.org? This is a working model of what is being discussed. I just used it for the first time (in process) so we'll see how well it works but the concept would be quite easy to implement I believe. The key portion is that Fundable.org controls (escrows) the money.

Personally I could easily see Joomla/OSM stepping in and creating this environment. Joomla is the key player here so let them stand as the trusted identity.

i.e.,
3PD sets up a Fund for a new component requiring 10 users pledging $10 each

User pledges $10, 2nd ---> 10th pledges

All money is held in trust (actually with fundable they simply put a hold on the money in your paypal account but don't withdraw anything until the project is completely funded)

Once the goal is reached, Joomla/OSM takes charge of the money and in exchange for the distributed component, the developer is "paid". I would go so far as to say that I would be willing for a percentage of the fund to go straight to Joomla/OSM.

This could be a workable plan but I'm not sure I would bet my entire career/workload on it 

The first problem I see here is that none of the core developers are paid for their work. It wouldn't make sense to then have the Joomla Foundation a controller of funds intended to pay for the development of extensions.

I believe if the funding model is implemented it's going to be a free for all. Meaning, a developer is more than welcome to solicit funding for the development of an extension but if another developer wants to 'under bid' or is even willing to do it for free, then so be it. We shouldn't be dependent on a market and attempting to structure a market framework within an environment meant to be simply collaborative is contradictory.

Having said that though I believe making money while working within this GPL is possible but will be highly based on reputation. If you as a developer are capable of producing quality extensions with solid support and you have built a name for yourself by being active in the community then people will contract with you and pay you for development work.

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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by skOre » Fri Jun 15, 2007 11:05 pm

Using a method like fundable.org may be a nice way to get a project finished, but it is not really something that you want to do over and over again.

Especially if you have to make a living, you rather want to depend on an unsteady stream of donations or membership payments than on a payment pool that might not come together at all.
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by masterchief » Sat Jun 16, 2007 12:01 am

Hi guys.  I've set notification to on, and I'd really like to contribute here but I've got some client work that needs attention because of all the activity in the last week :)

I want to just throw one caution in very quickly.  Do not get caught up in any talk of forks.  It's nuts from a couple of points of view:

1. Your market goes from millions of installs to zero
2. Your potential client base goes from millions to zero
3. The resources you can draw on goes form *.joomla.org to zero
4. The people involved goes from many hundreds to just a few with no backing (under-capitalised)
5. The resources your clients can draw on goes from "a lot" to zero
6. Think about how you are going to sell the notion of "support XYZ fork" to your client particularly if Joomla! isn't slowing down
7. Think about how long it will take for a fork to garner enough trust and reputation to be taken seriously
8. There are only a handful of people who know how 1.5 works inside out and know how to finish it.  Trying to fork off some pre-Beta2 is just nuts.
9. There's no guarantee that the fork will maintain compatibility with Joomla!

Anyway, I just wanted to throw that in because I can see some people making some silly decisions.  It makes a "lot" of sense for the commercial developer community to stick together if for no other reason than it helps maintain a strong brand.  More Joomla! users means a need for more commercial support and customisation (vendors).  More vendors means more confidence in Joomla! and growth.  More growth in Joomla! means a need for even more vendors.

This is a chance to spin the fly-wheel faster and achieve great things.  I recommend you read "Good to Great" by Jim Collins if you are or looking at becoming a commercial developer.

I've got a few more things I want to share but I have to get my projects back on track over the next week :)
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Re: How do 3pds make money in the GPL'ed Joomla! world?

Post by ivo.apostolov » Sat Jun 16, 2007 12:16 am

Andrew,
I read your posts over another site and was very interested in "what you will offer". Basically this will be a huge experiment, but I am more then convenient that it will work out. :)


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