Freeware? Shareware? Open Source Development and the Economic Distribution Model

Over at Doc Searls' IT Garage [1], in a piece called Applying Freedom [2], Doc began a conversation about "Freedom Zero." Mark Pilgrim had originated the Freedom Zero discussion on his blog [3].

An abundance of passionate discussion was prompted by Six Apart's
decision to introduce a pricing matrix for Movable Type. Prior to this
matrix, MT had been freely distributed to the majority of its users.
The discussion can be broadened to Open Source as a model for both
development and pricing. I experienced some technical glitch attempting
to post an earlier version of the following over at IT Garage. That's
been reported and will be repaired. So here it is at BillableOurs,
rewritten, expanded a bit, and offered for further discussion.



The give-it-away-and-then-later-charge-for-it model is a flawed
concept. Once users have it for free, they perceive the
product/application as a free entity.



"What," some may say, "a price tag on what was available at no cost?"



This speaks more to the issue of product development, marketing, and
the ability to communicate and establish a dialogue with the user base
than to the concept of charging a price for their product. Timing and
presentation are the essential elements in making such a change.



Once the target group is sensitized to a free environment, getting them
accustomed to a pay-for basis is a completely separate marketing
initiative. This task is in a different perceptual sphere, one that is
separate and apart from their experiences, history or usage [with the
application, the product, the software, whatever one chooses to call
it].



There are tiered offering methods which accommodate both the seller and
the users. Properly executed, the tiered method manages to both
sensitize and differentiate, and enables the vendor/provider to
maintain both an open source, freely distributed product while
concurrently making other levels of standard sale, premium, and extreme
high-end products available to the market.



The concept of not charging for a basic (read: limited) version, not so
feature rich or advanced, can be an effective method of introduction,
allure, and base-building. Simultaneously (or subsequently) charging
for the more professional or corporate, advanced or more powerful
version can be justified. The developer offers the thin version for
free, but with limited or little support beyond a simple FAQ and
rudimentary How-To manual. The freely distributed product will garner
support via user-group-based means, i.e., newsgroups, user groups,
e-mail, chat, etc. The more robust version will offer degrees of
provided support as a bundled feature, in some way also justifying the
price. The idea that a simple version is freely available, and a more
sophisticated and supported version is offered for purchase is neither
complicated nor should it or does it necessarily need to foment mass
user negativity.



Perhaps the people at MT were too free with their product, distributing
a feature-rich application for so long to so many. They never made any
claims that they were not a for-profit endeavor. But the rancor, I
suspect, comes more from a user base accustomed to getting the
application, plus support and access to the developers on a gratis
basis.



Add to this the fact that 6A has been known for support,
user-friendliness, and as a partnering and consulting sort of supplier.
But therein may lie the problem. 6A may have been perceived as a supplier, not as a vendor. The product was supplied for free to the majority of the user base. 6A had built much goodwill as a perceived freeware vendor. Not shareware, but freeware. The perception was that other
users ("the big guys") had to pay, but not those who, over time, had
rightfully (in their minds) come to consider themselves the
beneficiaries of freeware.



Much shareware is offered on a trial basis. Some of it works
indefinitely, some come with an expiration date. The honor system is
the key to many of the products -- users who are satisfied and continue
to use the apps that do not have a "perish date" are honor bound to
contribute, or to pay a suggested amount.



Some shareware products offer only a thin glimpse into what could or
would be a more robust application, were one to purchase the full[er]
product.



Many open source developers have used this model, to great success. The
thin version is like providing a sample taste at the ice cream shop or
a deli. This is an age-old concept: Try a little sample, see if it
pleases you. And if so, the vendor welcomes the potential client to
decide to buy the product. In some cases the specific product (as in
the case of MT, which has a few variations in product and pricing) can
be bought in different degrees...by the pound, by the gallon, by the
liter. Whatever "poundage" fits the user's needs or desires can be
supplied in the transaction.



It can be the continuous use of the freebie, or any number of other variations on the priced offerings.



Again, the perception of a "sudden change to a charge-for basis" and
the conversion from a free-to-all supplier to a for-profit operation
may have been more the fundamental problem among the users than
anything else. MT is not a public utility, but to many it may have
seemed that way.



One of the more specific concerns may actually be the server space
required for the free or low-cost applications. Server space, when the
user doesn't pay for it, is totally invisible. Once again, this gives
the impression of something for nothing, and the shock comes when a
charge is applied.



Much of this is a cultural shift, following behind the embracing of the
new paradigm, in which the users had become comfortable. The freedom of
expression (publishing, occupying server space, for little or no cost)
became the norm. Hidden from [user] view were the costs and
underpinnings. Now that this is evident, change and varying degrees of
anger or disappointment have emerged.



It will die down. Users will get accustomed to the degree and method
that suits their needs. Or they will go elsewhere. Watch out for a
strong backlash -- those who return to MT because they are comfortable
with it, have come to like it, or discover after testing other apps
that they actually prefer the MT offering. Perceived value will rise,
and some of the ill will, after a cooling period, will simply dissipate.



Thus in the long run I suspect the application will survive, and the
new tableau of offerred services will become the accepted norm. It will
take some getting used to. To MT, the good news is that blogging is
still in its infancy. Millions of potential users have yet to even
consider the concept, much less come to blogging with a preconceived
notion of how the application might be acquired, priced, or distributed.



And the existing "big guy" power users of MT are most likely the ones
in a position to pay the fees without great pain or complaint. This is
similar to the Open Source movement, in which large enterprise clients
purchase full product and support, while the tinkerers and those not in
the "power user" or corporate category either stay with the freeware,
or buy components on an as-needed (or desired) basis.



Dean Landsman

LANDSMAN COMMUNICATIONS GROUP