This post is also available in: Français (French)
Since the internet arrived, it’s been increasingly easier and cheaper to share our work with others. But the other side of the coin is that it is also super easy and cheap for others to copy what we do.
If you’ve been attracted to give your ideas away and invite communities to work together, you’ve probably wondered:
“How can I make money if I give my ideas away for free?”
And this is a super important question, because if you can’t figure out how to make all of this openness and community building financially sustainable, you won’t be able to collaborate with others and deploy your impact for very long.
The good news it that, unless you are selling patents and licenses, you can keep selling the same things as you were doing before you planned on sharing your idea in the open. And on top of that, you’re going to unlock a few other ways of making money.
Let’s see what does this mean with a few examples:
Selling Physical Products
Even if your designs or blueprints are available, people who don’t have the machinery, the processes or the experienced employees you’ve hired, will still pay you to produce your idea for them. People will be paying you to ensure the product’s quality, warranty and shipping.
This is the easiest thing to sell if you’re doing hardware. Adafruit, Sparkfun or Arduino have been selling their electronic boards with huge success.
In 2016, Aleph Bots reached $21 million in revenue by selling their Lulzbot 3D printers and growing 1.166% over 3 years.
In 2011, the cards-based party game Cards Against Humanity which is available as a free PDF download or for $25 as a ready-made package, raised $15,000 during its kickstarter campaign. A few years later, the game has been downloaded millions of times from its website and has also become the no.1 card game sold on Amazon, grossing the founders millions of dollars in revenue without them working full-time on the project.
Cory Doctorow has been making money by charging for physical copies (book sales), pay-what-you-want, selling the rights to translate his books in other countries and paid speaking gigs. By doing that he has been selling millions of books despite making most of his books and the community translations available for free on his website.
The way he explains this success: “My problem isn’t piracy, it’s obscurity, and free ebooks generate more sales than they displace. Most people who download the book don’t end up buying it, but they wouldn’t have bought it in any event, so I haven’t lost any sales, I’ve just won an audience. A tiny minority of downloaders treat the free e-book as a substitute for the printed book–those are the lost sales. But a much larger minority treat the e-book as an enticement to buy the printed book. They’re gained sales.”
And organisations like OpenDesk or Stykka who are sharing their furniture designs, are being paid to get these designs made into custom physical products that can be used without the hassle of creating a factory.
- Do you have a physical product to sell? Is sharing its designs in open source risking your sales? Or could collaboration with interested communities power new use cases and innovation to keep you ahead of copycats? Make a list of the products that come to mind.
Selling the Service, Support, Training or Utility
Giving away something away in open source doesn’t mean it’s easy or cheap to set up for your audience. In fact many times it’s not, but getting to see how it works and makes it easier for many to trust the creator (you) and pay them to buy support for things like installing, operating, maintaining, upgrading or repairing what you’re offering.
For example Afforestt is an open source method to create forests 10 times faster by blending permaculture and toyotism. The method is open to all, but it requires to buy the right saplings, to rent a crane and to do a load of earth moving. For those who don’t have the money to pay for it but have the time and resources to learn and experiment how to do it, that’s great. But for those who don’t know where to start or have the money but not the time to do it, they can go pay Afforestt to train or create an urban forest for them.
Red Hat has made billions in revenues by selling its added services and support. And in 2019 they got bought by IBM for $34 bn. Even though what they create is open source, what was bought was the experience of their teams and the operational capacity to deploy the infrastructures they know how to put together.
If you are open sourcing software-as-a-service, people who don’t want to develop something from scratch or maintain the hosting of a plug-and-play service can buy a subscription to your service. This is what Discourse does, the most used online forum out there, or Docker, the open source unicorn selling containerization, or even Sharetribe, a service to create online marketplaces like Airbnb or Etsy.
Or if you are selling a utility, like energy, data collection, food growing or waste disposal produced, you can share your blueprints, processes, software or designs in open source and do something as unrevolutionary as every other utility company, which is to keep selling an electricity bill, a Terabyte of storage in the cloud or the vegetables you produce.
- Can you sell the installation and maintenance of your service? Or offer a subscription to your service? Or can you even sell the end product your open idea creates, like food, data or energy? Make a list of the products that come to mind.
If the free content you make available through open source attracts a large qualified audience, you can then sell ads or sponsorships.
Unsplash has gathered billions of views around their high-quality and free photographs. This large audience has enabled the creation of partnerships with brands like Timberland and selling photo campaigns around a keyword viewed by millions of people.
Timberland commissions an image campaign to the Unsplash community of photographers (which gets paid), and they then get high-quality imagery they can feature across all of Timberland’s channels: stores, print, web, video, and digital profiles.
The shoe company then contributes these images back on Unsplash so anyone can re-use them freely. Timberland finds skillful photographers from worldwide locations. Photographers get a commissioned contract with a world-class brand. Unsplash visitors get quality imagery to create with. And Timberland and the photographers reach more people with their photography than ever before.
This is great for every party. Photographers get paid. Unsplash also gets paid, but they also gets more free high-quality images and views on their platform. And Timberland gets an incredible campaign
Read the Docs, an open source documentation tool read by 7 million people monthly, has built a part of its revenue model around ethical advertising to recruit talent or promote a product or service among developers. They don’t track, sell user data or allow third-party scripts to track you around the web, and despite all of that they have large software companies advertising on the site, like Digital Ocean or Rollbar.
TED has attracted hundreds of millions of people with its free videos and the content and awareness generated by its independent TEDx organizers. Thanks to these huge audience, they’ve been able to sell big sponsorships to very large brands like Marriot, BMW or Samsung that pay them millions of dollars every year.
- Do you have a large audience? If so, can you offer companies aligned with your values and your audience to sponsor your platform and get exposure to your large and qualified audience in return?
Creating a Marketplace
If you have a large audience interested in your product, and you have an active community creating new things on top of your product, you can create a marketplace where they can sell their own enhancements of your open source idea, and you take a commission on those sales.
WordPress hasn’t taken advantage of this, but there is a company called Envato who hosts WordPress themes, templates and plugins developed by thousands of developers and sells them to millions of people who want to create their blogs and websites. In May 2019, their community had sold over $700 million in digital products.
When Twitter shared its Bootstrap design framework in Open Source, it didn’t expect anything in return. But the project became one of the most popular front-end libraries out there. So they decided to create the Bootstrap Theme marketplace where they curated a selection of Bootstrap developers among their community. Now they sell the themes to other developers who’d rather pay $50 for a crafty design rather than spend time fiddling with the code themselves.
OpenDesk and Wikihouse are marketplaces that sells furniture or houses produced out of digital files share in creative commons. These platforms go even further than the previous ones. OpenDesk puts in touch designers who create or customize furniture designs, makers who have the machinery and resources to produce the furniture, and customers who pay for it all. The designer is paid a design fee every time his design is used, the manufacturer sets his own price for materials and labour, and OpenDesk takes a percentage fee on all that.
There are other interesting hardware marketplaces. Sparkfun and Adafruit sell electronic to their fans, and they offer to resell or pay a royalty to other electronic designers who would want to get their widgets resold or manufactured and distributed to a qualified audience. Sparkfun and Adafruit get a new product to offer, and the electronic designer gets to be exposed to an audience that he hasn’t had to gather or market to.
- Have you built a large audience and community of creators with your open source idea? If so, could you set up a marketplace to invite and promote the creations from other members of your community who would like to get access to your audience? They get to sell their products and services to an audience they didn’t have access to, and you get to take a commission to run your open business.
Selling the live Events
If you are into hosting conferences, workshops, theater, Live Music, Live Sport events, Live Radio Shows and Live Video Game Meetings, you can open source the way you organize them and get others to make your movement even larger, and build more awareness towards your own flag event.
TED talks, despite sharing its content for free, keeps selling thousands of tickets per year at over $6000 per seat to those who want to live the experience live and connect with like-minded people. Since open sourcing the brand and their event organisation processes, the ticket prices of the original TED events has kept increasing from $4000 to $6000.
Ouishare, a collaborative economy collective, used to organize small grass roots events called Drinks, and it eventually created awareness to its larger Ouishare Fest event that ran for 5 years from 2013 to 2017 and attracted thousands of attendees. And these Fests made enough money to provide funding to other internal projects. It has since morphed into new versions that have developed in Egypt, Canada and South America thanks to the open documentation of how to organize Fest-like events.
MakeSense is a global community of 40.000+ engaged citizens across the globe working on social change initiatives in 45 cities, run by 2500 community volunteers with a staff of 80 people in 8 offices across the globe. And this started with, Christian Vanizette, the movement founder, while travelling across the world to meet other social entrepreneurs.
He organized a workshop that followed a simple format: during 3 hours he would bring together citizens eager to work on local social and use a design thinking process to come up with solutions for the concrete challenge of a local social entrepreneur.
He then wrote a 5 page pdf explaining how to organize one of these workshops to encourage others to do the same, leading to this huge movement. Fast forward to 2019 and while they keep organizing grassroots events, they are now also paid by large organisations to organize these kinds of events and solve social innovation challenges with the help of their community.
- If what you are into face-to-face events, like conferences, workshops, theater, Live Music, Live Sport events, Live Radio Shows and Live Video Game Meetings, can you open source the way you run it and increase the awareness towards the change you’re trying to make and attract more people to your live event as well? And could you sell tickets to your more official event?
If many projects depend on your open source technology, they might want to join and fund a non-profit consortium that will be responsible of maintaining the technology.
For example, Linux has created a technology that is used by project as different as:
- Aerospace company SpaceX,
- Most car companies,
- Thousands of drone companies
- or software companies and communities like Android, Red Hat, Canonical or Debian
They all depend on Linux to power their onboard computer or servers, and are thus paying the Linux Foundation hundreds of millions of dollars to develop and maintain their open Operating System. The collective value of the code in the Linux Foundation projects is estimated at roughly $16 billion.
Autosar is another consortium that gathers vehicle manufacturers, suppliers, service providers and companies from the automotive electronics, semiconductor and software industry, who depend on standardized open protocols for intelligent mobility.
The Open Source Imaging Consortium is a cooperative effort between academia, industry and philanthropy to enable rapid advances in the fight against lung diseases.
Or the Open Source Education Consortium represents open education institutions and organizations providing advocacy and leadership to develop open, inclusive and qualitative education resources to all learners around the world.
- Is your open project a keystone to other projects development? If so, could you gather the different actors that depend on your idea and get them to create a common pool to fund its development?
This is pretty straightforward and won’t get out of fashion even if everything became open source. If you are a freelancer or a company dedicated to personalization, like professional architects, audio engineers, photographers, software developers, pharmacologists, craftsmen, coaches, and so on… you can give your audience access to what you are creating freely. But if they want it customised to their needs, they will pay for it.
For example, Cocolabs, one of the most powerful open source marketplace solutions out there, has shared its solution in open source. But those who want to get it fitted to their particular needs by the expert who created it, they will order a custom made marketplace to Cocolabs.
If you are a sound engineer, music lovers can pay you to get a generic version of a concert recording tweaked to sound acoustically perfect in their living room—as if it were being performed in their room.
If you are film editor, you could sell movies accessed for free that people want to be cut and made apt for kid viewing (no violence, no sex…).
Or if you are a business coach, you can sell the tailoring of generic business tips and templates you’ve given for free on the internet, to fit your customer’s business.
- What generic designs, templates or contents can you find out there or create to help your audience? Could you customize them to fit the needs of your clients?
As you’ve seen, there is no shortage of options to make money as an open source business, which is pretty good news.
To recap, make a list of the things you can sell.:
- Physical Products
- A marketplace for your community’s products and services
Concentrate on making the advantages of open source work for you, and combine them with means to generate income. Figure out the best mix and strategy for your individual case. Keep an eye on other projects, and learn about the business models followed by other open organisations.
Open source businesses, in software and outside of software, are still in their early stages, so there is a lot of room for improvement and a lot of things worth trying.
Thank you for coming this far. I’d love to hear from you and from what you might be wondering on how to gather communities to make change happen. To ask a question just write in the comments below or hit me up in the contact section. Every week I’ll pick one or two questions and will do my best to answer them.
And if you want to get more articles on how to make change happen by working with communities, you can subscribe below:
- How 3D Prusa became one of the most likable and fastest growing startups in the world - January 7, 2022
- On avoiding working on the wrong thing - February 25, 2021
- 3 skills leaders need to develop to avoid losing their communities - February 11, 2021