Series of Interviews with GPL Developers

[alledia]

For those of you interested in the experience of people working a commercial GPL business model, we have a series of interviews this week.

First up, David Deutsch from GlobalNerd.org:

http://www.alledia.com/blog/interviews/ ... lnerd.org/

[infograf768]

Very interesting. Thanks.

[LorenzoG]

I agree, it was an interesting interview and I'm seeing forward to read the others.

I want to comment a part of the article there David disclouse (thanks David!) the share of the total registered users that have signed for a paid subscription.

I guess this business model is dependent on the total user base. For example I think it's more difficult to get enough revenue with a smaller proprietary CMS with.. lets say a total user base of 10.000 users. Then a small percentage of the users needs the developers extension and an even smaller share sign up for a paid subscription and at the end you only get a few members that pay a subscription for the extra service the developer provide.

What I think it's so interesting with Joomla! is the userbase is so huge! and gets bigger for each day. If just a fraction of all total users are interested in an extension then it's still a lot! .. and if only a part of those decide to sign up, it still can be a considerable number of members.

[alledia]

Yep - quite a few of the other developers we've interviewed have also been kind enough to give us an idea of their subscriptions levels.

I think its fair to say that subscriptions provide a much better business model than donations (which average between 0.1 and 0.3%. I've even heard of people being sent 10 cents as donations via PayPal, which means that they actually lose money from each donation.)

[alledia]

http://www.alledia.com/blog/interviews/ ... rikar.com/

Today: Rob Clayburn from Fabrikar.com

[mcsmom]

Wow, his 28% subscription rate is really impressive. Both interviews are very interesting.

[alledia]

Wow, his 28% subscription rate is really impressive. Both interviews are very interesting.

Sure is - many of us would love to have 28% conversion for regularly sold products.

[alledia]

#3 is with Andrew Eddie:

http://www.alledia.com/blog/interviews/ ... einit.com/

[alledia]

Number Four:

http://www.alledia.com/blog/interviews/ ... mster.com/

MCSMom - interestingly the person we interview for the final interview tomorrow also reports a subscription rate of around 25%

[mcsmom]

I think the reason a subscription model can work and get a higher conversion is that at least in the US, you can treat it as a business expense--which it is. You can tell your accountant, this is how much it cost and this is what I got. With donations, how do you figure that into your finances. Also, I think people prefer a fixed amount for a certain item or service rather than having to decide what amount they want to pay, as in donations. 

[AmyStephen]

I think the reason a subscription model can work and get a higher conversion is that at least in the US, you can treat it as a business expense--which it is. You can tell your accountant, this is how much it cost and this is what I got. With donations, how do you figure that into your finances. Also, I think people prefer a fixed amount for a certain item or service rather than having to decide what amount they want to pay, as in donations. 

Just to chime in and agree with mcsmom...

Not only businesses, either. For those of us who work in government or universities, subscriptions allow us to participate. We can't "donate" money for software. That means, individuals have to dip into their own salaries to donate or it simply doesn't happen.

Steve -  - your daily blog is ALWAYS great - but this series is really very helpful, thanks!

Amy

[mcsmom]

Amy, you are right. I really meant organizations.

[alledia]

Final interview is with Ryan Demmer who develops the JCE Editor:

http://www.alledia.com/blog/interviews/ ... or.za.net/

[mcsmom]

This has been an excellent series.

What it points out to me is that people are willing to pay for service and attention. It is the same as in all businesses. There is always downward pressure on the price of products. But people will pay a premium for well designed, highly functional products with good service. They will pay a premium for a known and trusted brand name. All of the people you interviewed have or are building successful brands and are trusted names in the community.

The marginal cost of software is essentially 0. That is, distributing one additional copy doesn't cost anything above your hosting fixed costs. So, long term, service, support, better and more attractive features are what all vendors need to focus on. Even when you go to a store like Best Buy, they are always pushing the service contract because in reality that is where they make the most money because the price pressure for individual items pushes the profit margin lower and lower.

[alledia]

Thanks to all of the developers who were interviewed and took the time to provide such detailed answers.

One thing gave me pause - we don't currently have anyone making a full-time living from the GPL, except for David who is a student.

Will we get that proof of concept? Possibly, but I think that long-term there might not be many people making a full-time living just from the GPL. Andrew's plan seems more realistic:

I'm looking at a combination of subscription sales, project work and general consulting to provide a well-rounded base for economic viability.

In the long run, that may be a good thing. Diverse incomes streams produce more stable businesses.

[mcsmom]

PICNet is an interesting case, though. That is another approach, which is to provide services and development that target specific categories of users. For a lot of organizations, it is less money to hire a company to set up a specific array of applications and do any needed customization than it is to attempt to do the work themselves. 

In truth, most start up businesses are not immediately profitable. It takes time to build a customer base and a sufficient product line as well as a good reputation.

[alledia]

In truth, most start up businesses are not immediately profitable. It takes time to build a customer base and a sufficient product line as well as a good reputation.

Agreed. I think some of the problems came about because some developers felt that they'd put in 2/3 years (or longer) of slog to build a customer base and product line, but that they would have to start over again.

However, hopefully these interviews show that it is not neccesarily correct. It is possible, albeit tricky and time-consuming, to move to a subscription base.

[Asphyx]

Alledia - Just want to say thank you not only for this contribution your site is making to the Joomla Community but to the GPL world as a whole! What your showing has wide ranging benefits that is not limited to the Joomla sphere of influence but to all of Open source.
These GPL Business Models and demonstrations of how they work are sorely needed in the FOSS community!

IT's nice to know that Ideology and RENT don't have to be in conflict when you use the creativity normally used to program to also create business!