I have written about this before:

if you are a producer, how do you profit by giving away your product for free? At the moment you stop charging, you lose the revenue from product sales. So you only benefit by making more money via other means than you have lost by forgoing direct sales.

JetBrains may be betting on the scenario that there will be a greater adoption of the free product over Eclipse, which, in turn, drives the sales of the commercial product upwards. This may have been more likely if only the Community Edition had come without many features disabled.

It gets mind-boggling as you go down the comparison list. Almost all the features that would entice someone to ditch Eclipse for IDEA have been removed. Remember people, the biggest problem in Eclipse is not the editor, it is the senseless ability  to configure anything and everything that makes it so difficult to do something simple. So why in the world would you remove (from IDEA) debugging, language support for HTML and environment support for Spring and Hibernate, not to mention any application server? (The blog post mentions debugging, but the feature list has it as missing.)

It almost seems that there was an internal argument inside the company with some people arguing for open source and the other side worrying about cannibalization of sales. Finally, they struck a compromise by releasing a barebones version as open source, which doesn’t help either side of the argument.

The other possibility for JetBrains is that IDEA will attract developers working on Eclipse. Once again, with many important features removed, why should anyone bother? Re-invent the wheels that both Eclipse and IDEA (in the proprietary version) have already invented? I just cannot see it.

Cedric has similar thoughts:

I still see the move from commercial to open source as a sign that the business is struggling. A lot of companies have gone down that path in the past and all of them have tried to make it pass as a selfless action meant to help the community, but the truth is that they were just having a harder time selling their software, so making it open source is usually a last ditch effort to regain mindshare while trying to make money somewhere else.

I can’t think of a single example where a struggling commercial software suddenly started regaining market share when they went open source. Can you? [...]

Whatever side of the fence you stand on, one thing is clear about this move: it means less revenue for JetBrains for the foreseeable future. And what this means is that they will have less means to compete against Eclipse and less power to add features to either of the editions (the Community one or the Ultimate one).

And this is where a lot of companies make a fatal mistake: they think that making their software open source will automatically generate a ground swell of patches and additions from the community that will float them back to the top.

And in my experience, this never happens.

I think those of use who have GPL’ed our themes are more saddened by the fact that certain individuals are completely exploiting hundreds or in my case thousands of hours worth of development time and purposely trying to use the GPL for their immediate personal/monetary gain.

The problem, though, is that the GPL is exactly meant to do that. You can take any GPL code and redistribute it for free or even sell it, the only condition being that you pass on to the recipients the same freedoms that you received. This is what the GPL Preamble states:

The licenses for most software and other practical works are designed to take away your freedom to share and change the works. By contrast, the GNU General Public License is intended to guarantee your freedom to share and change all versions of a program–to make sure it remains free software for all its users. [...]

To protect your rights, we need to prevent others from denying you these rights or asking you to surrender the rights. Therefore, you have certain responsibilities if you distribute copies of the software, or if you modify it: responsibilities to respect the freedom of others.

The GPL is about protecting freedom, not about protecting profits or intellectual property. It also makes it easier for developers to use code (as long as they share equally) and for users to distribute code without having to worry about the fine print or royalties.

Secondly, as one of the commentators stated, the producer of a GPL product like a WordPress theme has already benefited from the work of other GPL authors:

If I were to release all of your themes for free on my site, you claimed I’d be “completely exploiting thousands of hours worth of development time and purposely trying to use the GPL for their immediate personal/monetary gain.”

How is that different than the fact that you’re using thousands of hours developing the platform of WordPress for your own monetary gain?

I suppose many people are confused by the fact that money has been made on open source products, especially the big few like mySQL, Linux and WordPress. Part of this is because the GPL made no restriction on charging for free software. In theory, selling a copyable item for free doesn’t seem viable because why would you pay for something you can get for free once the first copy has been sold?

In practice, the “code” is always “free” as in zero dollars. What you really pay for is the service and the brand behind the code even if you seem to be paying for the code. Businesses have paid for separate commercial licenses for GPL products to avoid legal problems. But some assume that you can make money by simply selling GPL products, but without any service offering, that is a risky business strategy.

This kind of attitude is not restricted to the GPL. Seth Godin had a similar confusion sometime back about the Creative Commons license he was using. To his credit, he updated his post to clarify his intent, though it would have been better served if he had changed the title heading and deleted what he had written.

This is all very ironic. Many people seem to use the copyleft licenses because it apparently is cool, like supporting environmental causes, to have your code or work published under an open source license. Or they wish to benefit from the open source community. In other words, they use open source because they gain something. But God forbid, if someone else gained something by taking advantage of what the license allows them to do.

To end these double standards, people need to educate themselves about software licensing and intellectual property rights. If they cannot tolerate the freedoms that the GPL or Creative Commons gives to their users, they have the right not to use those licenses. They have the full freedom to write or pick a tighter license that explictly states what they allow. Using plain old copyright is simple enough. Or hire a lawyer.

My answer is: In terms of direct business benefit, generally “No” and sometimes “Yes”. The main beneficiaries of “Free” are consumers. Instead of paying for something, they get it for free now, the cost being subsidized by advertisers or other products of the vendor. In some cases, the cost is written off by the investors. “Free” only means no cost to one party in the transaction, it doesn’t mean that there are no costs per se. Somebody is incurring them and is either profiting via other means or losing money.

So, the question is, if you are a producer, how do you profit by giving away your product for free? At the moment you stop charging, you lose the revenue from product sales. So you only benefit by making more money via other means than you have lost by forgoing direct sales. GPL introduces a different complexity – you can still continue to charge for your products, but there is nothing stopping anyone from making unlimited copies of your software and re-distributing them for free or for a fee, perhaps not sporting, but legal under the GPL. Once again, can you make up for the reduction in revenues?

It is possible. The idea is that by making your content free, you reduce friction for your consumers and buyers. There will be more consumers of your content if it is not hidden behind a subscription wall. A GPL-based product is more attractive to users who can modify it for their needs without depending on you. You will gain more publicity and can drive traffic to sell other products that are not free.

But what if everyone does the same? What if all news were free? What if every software product was under the GPL? Suddenly, there is no special advantage being free. “Free” is therefore only a marketing tactic. And other free competition can erode that advantage.

The other rules of the marketplace also apply in “free”. “Free” removes the problem of cost from consumer consideration, but it does not solve time constraints, inertia, network effects, etc. For example, we often hear about the GPL success stories of Linux and mySQL. But there are other GPL operating systems and database applications. Why are they not successful? The reason is that the success of Linux has ensured that other free operating systems do not find the same success.

Take a look at WordPress. It has been extremely successful under the GPL. But no other blogging engine licensed under the GPL can replicate WordPress’s success. WordPress has built a huge eco-system (themes, plugins, etc.) around it that no other GPL blogging product can replicate. This is not to trash WordPress in any way (it is a great product).

Essentially, what this means is that the products in any space that benefit from a GPL license will drive out other GPL products in the same space. Similarly, the websites that benefit from giving away their products/information for free will drive out other such free sites. “Free” can allow you to gain a competitive advantage only for so long, because it can be imitated, so you must drive home your advantage while you can.

In some industries (such as news), there is no alternative to free. But it doesn’t mean that every news outlet which becomes free will be successful. Likewise, giving away your products for free or open-sourcing your product doesn’t guarantee success. It is generally beneficial to consumers, but not necessarily the producers.