Alfresco Software says freeloading corporations led them to closed-source strategy

Alfresco Software said Tuesday it will not release certain new enterprise features of the Alfresco content management products, such as high-availability clustering, as open source as a way to persuade freeloading companies to pay up. John Newton, CTO and co-founder of Alfresco Software Inc., posted notice of this new business strategy in a blog entry that effectively says Fortune 50 users of the free version of Alfresco are cheapskates. He reassures everyone in his blog that core components of Alfresco will remain open source and free. Alfresco thus joins other commercial open source projects, such as MySQL, in bifurcating their source code into a core version licensed as open source, and a version with features important to large businesses (the ones with money) available for a fee.

In a blog last August, Andrew Lampitt called this division an "open-core licensing" model. This division is now officially reflected in Alfresco Software's release Tuesday of Alfresco Enterprise 3.1.

Newton implied in his blog that Alfresco Software was pushed to close-source enterprise features of Alfresco for financial reasons. Many "world-class companies" with "household brands" are using Alfresco's free and open source Labs version, he wrote, and not paying the annual Enterprise subscription. Enterprise subscriptions are a source of revenue for Alfresco Software. Subscribing customers receive a more stable "Enterprise Edition" of the Alfresco content management suite, dedicated support, and optional training and consulting. By releasing enterprise features of Alfresco only to paying customers, Newton said, he hopes Alfresco's largest users will see the benefit of paying Alfresco an annual subscription rather than paying their own developers to figure out how to deploy Alfresco in a high-availability environment or writing their own management tools.

If indeed Alfresco Software won't be able to survive (or at least thrive) without finding a more sustainable revenue source, this move sounds like a good strategy. It will allow Alfresco to continue to improve its already excellent enterprise content management system while allowing smaller companies to use Alfresco's core products for free. If, however, this bifurcated source code strategy is merely a way to return higher profits to Alfresco's founders and funders, the change might negatively impact how Alfresco Software is perceived by developers writing useful extensions and integrations and releasing them as free, open source. Open source developers release their code for the community's benefit as a whole, but might hesitate to do so when a corporation profits indirectly from their work.

There is nothing wrong with a corporation out to make money, and adopting the "open core" model might be the best move for Alfresco's future -- as a product and as a company. I don't know whether much or any of the Alfresco "core" code base was written by non-Alfresco employees. If not, the risk of Alfresco losing contributions from external open source developers is small. Other "community" contributions, like free technical support offered by fellow users on the Alfresco forums, likely will continue unaffected by the licensing change because much of that free exchange of information is among users of the free Labs version.

From what the privately held Alfresco Software says publicly, it isn't hurting for money. Alfresco employees I spoke with last year say the company is profitable. Matt Asay, Alfresco's vice president of business development, said in a CMS Wire story Tuesday by Barb Mosher that sales have been increasing recently by more than 27% from the quarter before. On Monday, Alfresco Software released limited financial information for its fiscal year ended Feb. 28. The news release says Alfresco Software Inc. closed the 2008 fiscal year with a 103% year-over-year revenue growth and a 92% increase in revenue from the fourth quarter of 2008 compared to the same quarter in 2007. It also added 270 paying customers during the 2008 fiscal year.

Newton wrote in his blog that Alfresco Software looked at options other than close-sourcing enterprise features. Alfresco considered "crippling" the open source version, he said, or letting the open source branch become so cutting-edge that it fell "into a destabilized state." But going that route "would make it difficult for certain governments to use our product," he said, and could cause the open source community to create competing forks to fix the crippleware.

Newton said Alfresco's new software model will adhere to these six principals:
  1. Alfresco extensions to create high-availability, clustered systems and provide better monitoring and and administration will be developed as closed source.
  2. The core system and interfaces will remain 100% open source.
  3. Bugs fixed for Enterprise customers will be folded into the next open source Labs release.
  4. Code that Alfresco Software writes for paying customers to integrate Alfresco with proprietary systems will remain closed source.
  5. Integrations to "ubiquitous" proprietary systems, like SharePoint, will remain open source.
  6. Alfresco will continue to support paying customers to the levels of their SLAs.


One thought on “Alfresco Software says freeloading corporations led them to closed-source strategy

  1. There is a lot of give and take when there is an open source project. The users of the code try new things, express frustration, contribute code etc. which in part makes the product better. I will assume that there is monetary value in the community’s efforts.
    The Alfresco product also uses open source products for its own product, (eg Apache Lucene) so there must be some monetary value given these contributions from other open source products. How well would Alfresco work without Lucene?
    There is my two bits.
    I like the Alfresco product, my problem is that in the solutions where I would like to use it (very not enterprise), the cost is too expensive and I have to use Sharepoint.

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