Software As A Service Takes The “Free Beer” Out of Open Source

Free software means that computer users have the freedom to cooperate with whom they choose, and to control the software they use. To summarize this into a remark distinguishing libre (freedom) software from gratis (zero price) software, Richard Stallman said: “Free software is a matter of liberty, not price. To understand the concept, you should think of ‘free’ as in ‘free speech’, not as in ‘free beer’.1

The reality is quite different from this philosophy. Up until now open source software was, for most people, free beer rather than free speech. Well, the beer party is over, and cooperate companies have a new business model strategy called SAAS.

But let’s start with the basics:

Why does software cost money?

Up until now the modern business model around proprietary software was to sell a license for a software product. Clients bought Windows, Office, Photoshop and many other software products and paid for the license to use them.

These licenses clearly stated that you are the only beneficiary of this product and cannot pass the privilege to use this product to someone else – in other words each person has to pay for his own license and no sharing, please.

In a proprietary world, software is owned by the copyright owner and only he can change and distribute the software. Don’t even think about modifying and redistributing the product you bought, that is truly illegal.

How did open source change the proprietary software module?

Open source licenses made software more democratic (for lack of a better word) by mandating in its licenses that the software and any derivatives of it should be freely distributed and modifiable:

Software is free software if people who receive a copy of the software have the following four freedoms-

  • Freedom 0: The freedom to run the program for any purpose.
  • Freedom 1: The freedom to study and modify the program.
  • Freedom 2: The freedom to copy the program so you can help your neighbour.
  • Freedom 3: The freedom to improve the program, and release your improvements to the public, so that the whole community benefits.


The fact that you cannot modify and redistribute proprietary software is what caused many free thinking developers to rebel. They did not like the notion that they cannot control, study and modify their software product. They saw it as something that impaired their right for free speech. It was not their intent to create a world with cost-free software. But intent is quite different than reality.

The fact that you can give a free copy of the software to anyone without paying royalties really takes the sting out of licence-based-revenue models. It is the “happy hour, every hour” of software, if we stick to bar terminology.

Why do people see open source software as free beer?

First and foremost, because it is free (as in no licensing fees).
It is a fact of life that most people are not developers and even fewer are geek open source developers like myself. For most people open source software like Filezilla or Gimp / are free substitutes of proprietary and costly software products.

Even if you are an open source developer, ask yourself this – of the open source products you have used over the years, in how many have you looked at the actual source code or modified it to improve it and redistribute it. For me it would be five out of hundreds.

You have to admit – cost-free software is good and is certainly better than expensive software.

How does software as a service change the rules of the game?

Software as a service reintroduces the cost aspect of software but in a slightly different way. You do not pay for license to use the software product because you do not “need” any software products any more. There is a shiny new term called Software Service and guess what – it costs.
You now have to pay for a subscription fee for a Software Service.
Here are some examples:

  • You do not need to buy a CRM in order to manage your clients- you buy a hosted service that enables you to do that via the web.
  • You do not need to buy an exchange server – you buy enterprise emails and calendars services from an email service vendor.
  • You do not need to buy hardware and software for an IVR – you rent an IVR from a telephony service provider.
  • The vision is that all your software, including the operating system would be service based.

The problem is that we are back in square one in terms of controlling, modifying, learning from the implementation and redistributing. Even if the software behind the service is open source the service does don’t have to be free (speech or beer). Service providers are not bound by open source software licences because they do not distribute software at all.

Do you know what that means?  It means you have to pay!

Some services would be provided freely to gain market traction and market share. Other services would be provided based on ads-support or any other “semi-free” means. Some service providers would even release their service API as open source. Moreover, some open source project now offer free software services. While these are definitely a step in the right direction, it is still not even close to the revolution that open source made on the proprietary software world.

Free services do not take the sting out of SAAS like FOSS takes the sting out of proprietary software licenses – it is now much harder to modify and freely redistribute. This is because you would use services and not products- products can be easily modified and redistributed, making a copy of a CD is relatively cheap and easy – it is quite more expensive and complex to redistribute a service.

To conclude

SAAS offers advantages in many aspects such as TCO reduction and try-before-you-buy consumer methodologies. But SAAS also introduces some disadvantages – As service consumers we have less control over the software we use, less ability to share our software and less control over the data in our application which is an entirely different debate.
The interesting question is what would be open source next move. What workaround can we offer to mitigate the disadvantages Software As A Service introduces into the software world.

You might also read these articles:
Does the open source professional services business model suck?
How to make money from open source / open source revenue models

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Amir Shevat

Amir Shevat is the global Startup Outreach lead in Google Developer Relations ( Previously, Amir Led Google Campus Tel Aviv and was the co founder of several startups.

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