My recent post on the Effects of Open Source, which I reproduced on the Ecademy networking site (link) has evolved into an interesting discussion of the long-term viability of the OS model. It has been pointed out, quite rightly, that a significant amount of OS development is either carried out by developers in their spare time, or by teams that receive funding from universities, or philantropists. So, should the use of OSS continue to rise, will we reach a point where future development within the OS/GPL model will not be possible because the companies employing or funding the developers have gone out of business ?
To answer this, I think we need to look at the real reason why people are happy to spend money to purchase software. In my opinion, the reason is because people (not companies, because ultimately this decision boils down to individuals making decisions) believe that paying a company some money for their software obliges the supplier to deal with any issues that occur. You could argue that the customer is paying for development, but only indirectly. The customer couldn’t give two hoots as to home much time and effort went into getting the software where it is, their considerations are – will it do what I need it to do now; and will it carry on working for the foreseeable future (or for a specific time period if it has a pre-defined life-span).
The first of those considerations applies regardless of the licence that the software is distributed under. If it’s not fit for purpose then it won’t be used, free or not. If it is used, then the customer’s a fool who shouldn’t be let out in charge of a budget. So it’s the obligation to provide support that’s a key difference between the two licence models. And some OSS providers, particularly those of the more popular and business-oriented Linux distros, are quite happy to charge you for that support, in terms of documentation, training, and an obligation to actively investigate and resolve any bugs that you identify, as long as those updates are fed back into the OS community (whilst they don’t have to be fed back as part of the GPL, it is common practice).
Ultimately, there are opportunities for the creators of OSS to make money without charging for licences. Currently, many of the commercial organisations in this space act in a way similar to charities, asking for donations and for public bodies (universities, etc.) to fund their work. I don’t believe this is sustainable should the OSS market grow significantly, and there does seem to be growing public acceptance of the quality and applicability of OSS applications. So the challenge will be to make money in other ways.
An interesting model right now is the OSDL, the current employer of Linus Torvalds and the overseer of ongoing Linux kernel development, who are funded by a consortium of large commercial organisations who already have a commitment to using Linux and see the benefit of having a say in the development of a constantly-improving, freely available operating system.
However, my suspicion is that, while OSS usage will continue to grow, there will always be room for commercially licenced software in the marketplace. OSS has a history of re-engineering software that already exists rather than being truly innovative, and I think this will continue. Commercial software developers may well find that their product lifespan comes down to 2 or 3 years because of OSS imitators, but this is no bad thing for the customer. Bloated organisations, mentioning no-one in particluar 
, tend to become lazy and concentrate on where the next dollar is coming from rather than looking 5 or 10 years down the road at where the market is heading.
Of course, there is another way to make money, and that is by hosting your application centrally and charging for continued use. There is currently a lot of innovation in the Web 2.0 sphere, and I can see this growing. The ironic thing, though, is that much of the underlying technology is OSS 
So will the software companies developing the Web 2.0 (or Web 3.0) applications use commercial or open source software ? I know where my money would be long term.
Your thoughts are welcome.
