Software Company Pays The Community To Contribute

As some of you (anyone that has read the about me section) know, I am a web developer and as such I have become involved in open source projects (the PHP that runs this website for starters). One of the most frustrating things about open source is finding a way to monetize it.

So far I have seen most services offered around an open source project to make money for the creators. These services usually include tutorials, customizations, hosting, technical support, and other offerings that usually require a lot of extra work on the creators part that is above and beyond the making and upgrading of the software that they created in the first place. Thus they have to do double the work to earn money. Obviously there are exceptions to this rule. Sometimes the developing groups can pair up with other companies or projects and share profits or get advertising profits, but those models are hit or miss.

Most programmers have a favorite text editor or IDE to use to develop their application(s). Mine happens to be an editor for Windows called E Text Editor. It is an application that was inspired by my favorite Mac OS-based text editor TextMate. I have been using this editor for about a year and a half and I absolutely love it. So when the owner/creator decided to make his product open source using a new business model that will not only still monetize it for himself, but also for others, I was thrilled and excited.

Alexander, the creator, is testing a brand new business model that will open source most of his code except the core, which includes his licensing system (to discourage pirating). It allows others to contribute and earn based on a trust metric. As they earn more trust and contribute more they will gain access to more and more code. Eventually even gaining access to the core.

This is great for several reasons. The first and foremost is that the development has been stagnating because of a new addition to his family. This would allow others to pickup where he left off and improve what they want to improve. This means that the community a large will see more frequent bug fixes and improvements because many more people will be contributing on a regular basis. Secondly it will allow those people to get paid for their work. Which should encourage even more contributions. Third, this experiment could possibly applied to other software applications and if successful could change the way the open source community operates. Fourth, not only could this model be applied to software, but also in other industries such as the failing newspaper industry that has been whining about the internet changing things from the way they used to be in the “good’ol days”.

I welcome new ideas for business models, especially those that allow the community around a business to interact with it closely. Years ago I heard many clamorings about how open source could never work in a business model and that it would eventually fail. These clamorings have died down quiet a bit since the 90′s, especially since Linux has proven itself such a strong survivor of this. Unfortunately I am having trouble finding any links to such stories.

So far the open sourcing of the text editor has led to a Linux version of the application as well as several bug fixes. I am curious to see where this goes, especially since Alexander put his business on the line to test out this new model. I hope that other businesses take notes and try to learn something useful from this experiment.

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Tags: business models, Economics, open source, programming, the internet