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FOSS Business model - give FOSS developers stock in their customers?

Submitted by Roland on Sun, 2006-04-02 19:01

Interesting idea for a sustainable model for Free and Open Source Software. Not sure it would work!

From i repeat myself when under stress (free software business model solved) (longer form):


When commercial software is free software -- publicly licensed -- the customer for that software can always get what they want by working with a coop or NPO. This means that the customer can always get their software by paying a fair share of the cost of development.

It's very fine that the customer can always get the free software they need by paying a fair share of the cost of development but that is a problem for developers who want access to investment capital. A developer who wants access to investment capital must have a good chance of returning a profit -- not merely breaking even on cost of development.

So my proposal is that some developers can be paid in shares of their customer's stock instead of cash.

If you issue stock, it is usually easy to grant someone else some of your stock in a way that costs you less in cash than it would cost to buy that same stock.

Now if a developer, paid in stock, immediately sells that stock for cash -- they earn just the cost of production but no profit on top of that.

On the other hand, if a developer paid in stock holds on to that stock, and the customer of the developer's program flourishes, the stock will rise in value. Later in time, the developer can sell the stock and get back the cost of development, plus interest, *plus a profit*.

A free software developer who can make a profit that way has access to investment capital. Such a developer is truly on an equal footing with proprietary developers, from an economic perspective.



Very awesome post , i am really impressed with it a lot

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