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Licensing and Business Models

Author

Listed:
  • Onetti Alberto

    (Department of Economics, University of Insubria, Italy)

  • Verma Sameer

    (Associate Professor in Information Systems – San Francisco State University – College of Business)

Abstract

License affects software companies’ business activities. While proprietary software vendors create custom licenses, open source companies have less flexibility. The Open Source Initiative (OSI) defines a list of 72 licenses as open source (“OSI approved”). For a project to follow open source licensing, it has to pick licenses from this set. Logically, we expect that an open source company defines its business model around the license that it selects. Thus, we can assume that business model decisions follow license choice. In our research we find that in some cases open source companies remove these license constraints for business reasons. We observed cases of open source companies moving from one OSI-approved license to another or companies innovating by adding additional terms. In all these cases, the decision of change is based on the license being a poor fit with their business goals. Not all open source companies are entitled to change the license because this option is available only to companies that own intellectual property. If they do not, they can try to reshape their business model, but that remains a suboptimal option. Whether cognizant of it or not, organizations are implicitly choosing a business model when they select a license. Therefore, it is very important to address licensing and business model decisions as one system instead of a disjointed two-step process. For this purpose we introduce (1) an evolutionary model where license selection and business model impact each other and (2) a taxonomy that addresses both licensing and business models. Our approach helps practitioners include revenue considerations in the licensing choice and researchers to more accurately study the antecedents and consequences of license choice.

Suggested Citation

  • Onetti Alberto & Verma Sameer, 2008. "Licensing and Business Models," Economics and Quantitative Methods qf0806, Department of Economics, University of Insubria.
    • Handle: RePEc:ins:quaeco:qf0806
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    File URL: https://www.eco.uninsubria.it/RePEc/pdf/QF2008_6.pdf
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    References listed on IDEAS

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