Subject: Re: Revenue and business models
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Tue, 13 Jun 2006 17:11:40 +0900

>>>>> "g" == DV Henkel-Wallace <gumby@henkel-wallace.org> writes:

    g> Thanks guys for speculating for what I might or might not have
    g> said.

You're welcome!  I'd much rather hear from you, but you've been rather
busy of late.

    g> So sure, you're thinking of various cool things, licensing
    g> models, whatever else.  Maybe your customer thinks about this
    g> stuff in her spare time.  But it ain't likely.

I think that's a bit unfair.  The whole point of the market is so that
the customer can worry about *her* business while you worry about
*yours*.  Of course you're going to think about different things.

    g> So perhaps it's time to stop pissing around about the morality
    g> of patents or some magnitude 10^-6 aspect of some licensing
    g> model.

Most of the posters who have mentioned actually starting a business,
whether recently, planned near future, or hypothetical, are talking
about small businesses where a submarine patent is, at least in
principle, a threat to the viability of the business.  Granted, the
frustration that often gets expressed as moral outrage is not very
useful in the conduct of such a business.  Nonetheless, I think the
questions:

1.  Are submarine patents a real threat, at least comparable to having
    your lead programmer get hit by a bus?

2.  If so, is it worth going into business anyway?

3.  If so, what are good risk-reduction strategies?

are quite relevant and deserve better responses than to be belittled
as "pissing around".

As for "magnitude 10^-6 aspects," I'm not sure what you're talking
about.  The thread that you are commenting on is too oriented to
defining buzzwords like "value-based pricing" and "royalty", I agree,
and I'm certainly guilty of that reduced charge.  But the substance
comes down to finding ways to deal with the mismatch between the loss
of power to influence future revenues from a customer that an open
source license entails, and customers' need to spread costs out over
time, and tie them to ability to pay.  That suggests two more
questions:

4.  How does one go about mitigating the lower power to generate
    future revenue?  By bundling the software with services?  What
    kind of services are attractive to customers?

5.  Is it better to simply avoid businesses that involve open source
    software as the "headline" product, and concentrate on businesses
    that require you to produce software as a side effect?  If so,
    what kinds of business fit into the latter category?  Of those,
    which are most effective?

And there's always the perennial question:

6.  How does an open source programmer morph herself into an
    entrepreneur?  Is it generally possible to start with your
    favorite software and find customers for it, or does that only
    work if you're lucky?

I don't have good concrete answers to any of the above.  I'd really
like to hear from people who do, or who have better-focused, more
concrete, questions.

-- 
Graduate School of Systems and Information Engineering   University of Tsukuba
http://turnbull.sk.tsukuba.ac.jp/        Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
        Economics of Information Communication and Computation Systems
          Experimental Economics, Microeconomic Theory, Game Theory