Armin Ronacher's Thoughts and Writings

Open Source Financing

written on Monday, August 27, 2012

It still feels unreal in a way how much my life has changed around in the last seven years thanks to the Python community and the concept of Open Source in general. I think I learned most of what I use on a day to day basis from talking to people in the community through IRC and I will always be in debt to many of them.

That said: I would not bet my live on Open Source software. I help people on IRC on a daily basis as a form of repaying and I strongly believe that we need it and that we need more of it, but in my personal opinion there is a limit to it. Everybody needs a business model and I have not yet found one that would be compatible with doing Open Source libraries as a one man shop for a living.

However that does not mean it cannot be done but it would need enablers.

Without doubt you can have your company do open source development and be successful but there are very few companies that actually do that. The majority produce Open Source as a byproduct of their day to day operations. Google is a good example there. Their business is not the technology so they don't have any problems supporting Open Source.

Does that mean there is no future in running Open Source as a one man business? Not necessarily. There are a few platforms showing up that might enable Open Source development as a viable means for income.

The most obvious one is probably Kickstarter but it also comes with some problems. The main one is the overhead. Getting 250.000 into your account at once is not a trivial thing to do. The low hanging fruits are that successful Kickstarter campaigns come with rewards and you have to either pay for them or invest time into them which ultimately is an expense again. I did some scraping on Kickstarter projects a while ago and the most successful have many individual and high priced rewards.

However there is more to that. A one time payment of a lot of money involves a lot of paperwork and knowledge about the tax system as well. If I would be handed 250.000 euro the first thing I would do was getting a good tax lawyer / accountant to ensure the money is handled properly and in the most efficient way possible.

Another project that I learned about a few months ago is gittip which I believe has a much higher chance on being a viable platform for Open Source financing. Now if you look at the numbers it's not doing super amazing currently but I believe that's because not enough people back it at the moment and for a while that was mostly because getting money out of there was not yet easy enough. It still is not if you're outside of the United States but that's not gittip's fault as much as the complexities involving international money transfer.

Gittip basically works by setting up recurring weekly payments (tips) to individuals on the website. Currently this is limited to github accounts but there is no reason this could not be expanded. What makes it more interesting is that the payments come on a weekly basis. As an open source developer this could be much more interesting because it's easier to deal with. I'm not going to lie: gittip could be doing better, but I don't know how it could improve on the short term. I guess what it needs is some high profile backing from people that want to give the concept a shot. I don't think anything in the actual concept is wrong.

I understand that many people don't like the concept of recurring payments and that might stop them from supporting it, but if you want to make your living of Open Source that would be the only way forward. I guess this could be mitigated somewhat by setting up a date where gittip stops charging you and sends you a mail instead if you want to continue with the payments.

The third project is I assume flattr which has been around for a while. However flattr is too easy to game and tailored towards content providers and scales with the number of things you're creating more than the amount of time you invest into a single project. On top of that I dislike the general idea that you have to put money into the system to get money out of it.

Out of the currently existing options gittip looks like the most interesting one, but it will need support from both developers and users to be successful.

This entry was tagged finance and thoughts