There’s been a fair amount of attention – both positive and negative – on dual licensing in recent weeks. A few days ago Brian Aker wrote: “The fact is, there are few, and growing fewer, opportunities to make money on dual licensing.”

It is a sweeping statement, but one that is worth further consideration, especially since, as Stephen O’Grady noted it is directly contradicted by Gartner’s prediction that: “By 2012, at least 70% of the revenue from commercial OSS will come from vendor-centric projects with dual-license business models.”

Success?

I remember reading this prediction back in December but dismissing it as being based on a fundamental error – the assumption that dual licensing and open source licensing are “essentially the same thing”. As Stephen argues, and we have previously clarified, they are not the same thing at all.

Dual licensing is the practice of selling exceptions to use an open source code base using a commercial license, while open core licensing is the practice of selling extensions to an open source code base. One of them is considered acceptable by Richard Stallman, and one isn’t (more on that in a minute).

As Stephen O’Grady notes, however, the Gartner prediction is further flawed. Even if we were to accept its definition of dual licensing, the prediction is undermined by mathematics. A couple of quick calculations suggest that Red Hat’s annual revenue this year will be easily be more than the rest of the top ten open source specialists combined.

Of course, this calculation very much depends on which vendors you choose to include, and it is quite possible that Gartner’s definition of dual licensing also includes vendors that sell proprietary software that includes or complements open source software. That would make the prediction more realistic in terms of revenue numbers, but would stretch the term “dual licensing” beyond the definition of most people.

It is safe to assume then that “dual licensing” as most people understand it is not going to be as successful as Gartner predicts. But what of Brian Aker’s prediction of its imminent failure? It probably goes without saying that reports of its demise have also been exaggerated.

Failure?

While it is undeniably true that dual licensing has diminished in popularity as a business strategy in recent years (as many commercial OSS specialists have opted for open core extensions as a quicker way to monetize community adoption and proprietary vendors have focused more on open source as a R&D cost-sharing exercise and avoided the community-limiting aspects of dual licensing) there is still a time and a place for dual licensing.

Dual licensing has got itself a bad name in some quarters (“MySQL != Free Software due to dual licensing“) but as mentioned above, it has the approval of Free Software Foundation president, Richard Stallman: “I consider selling exceptions an acceptable thing for a company to do, and I will suggest it where appropriate as a way to get programs freed.”

In fact, much of the criticism of dual licensing seen recently seems to be based on the view that it is used by commercial vendors to discourage users from adopting a free open source version. That is rarely, if ever, the case.

Where we do see dual licensing used, it is more often in enabling users that are unwilling or unable to use the GNU GPL to make use of the underlying code. In that way, dual licensing can be used to serve two different user groups, rather than attempting to cross- or up-sell open source users with a commercial version.

A good example of this is OpenNMS Group. The acquisition of copyright to the 1.0 code base in 2009 out the company in the position of being able to changing its licensing strategy beyong a pure open source approach. While the company is unlikely to go open core (Tarus Balog prefers to call it “fauxpen source”, OpenNMS has delivered Powered by OpenNMS – a commercial license program:

“While the OpenNMS Group encourages the adoption of open source software, some organizations, due to trade secrets, patents or other proprietary reasons, may not be able to use 100% open source software in their environment. The ‘Powered by OpenNMS’ program allows them to purchase the right to use OpenNMS under a more traditional license.”

That in itself does not guarantee the continued use of dual licensing. But it does demonstrate. along with the comments of Richard Stallman, that dual licensing remains a valid strategy for generating revenue from open source software that is compatible with the principles of free and open source software.