Monetizing Open Source Platforms — Something New?

Sharing software code via free open source has been around since the 1980s and has enjoyed much success. Open source has been applied to content, websites, technological parts, and other materials. Can and should an open source platform be monetized?

On GitHub, anyone with an account can share improvements of existing code by downloading it from public repositories (online storage spaces for code) on that website, modifying this downloaded copy, and submitting his or her modifications to the original owner for approval. If the original owner likes the modification, the originator can combine it with the original code and share this updated version with others, and the modifier will get credit for his or her contribution.

GitHub uses a source code management system called Git, but with a twist—users can make contributions through a web-based graphical interface (instead of the command line tool of regular Git), control who has access to their code with a paid account, and collaborate with an unlimited number of users.

Since its launch in 2008, GitHub has been funded through paid subscriptions, which range from $7 to $200 per month for individual subscribers and start at $5,000 per year for bigger businesses. That is, until recently. In June 2012, GitHub accepted $100 million investment funding from the venture capital firm Andreeson Horowitz. Reportedly this funding will be used to hire more employees, expand to new platforms such as mobile, develop new features and improve existing ones, and in general make GitHub more user-friendly for a broader range of clients from individual hackers to large enterprises, thereby expanding its subscription base.

But how and why monetize open source code? The open source movement itself promotes free redistribution and access to source code, and started as a collaborative effort by members in the technological community in response to proprietary software. Monetization of open source is not entirely new. Red Hat, Inc. has been since 1993 “monetizing” subscriptions for support, training, consultation, and integration services to help customers in using open source code available via its company. Still, GitHub’s financing and business models are notable. GitHub gives free subscriptions to users who keep their repositories public, but it also offers private repositories for a fee.

In addition to making it easier for users to network and collaborate, because the website keeps track of a user’s contributions through his or her profile, corporate users can easily find examples of code work someone has done. Therefore, a person’s profile functions as a resume and may lead to paid assignments. In fact, Forbes magazine has referred to it as “a one-stop shop for people looking for talent” because of its popularity among recruiters.

Under GitHub’sTerms of Service a user, by enabling the user’s pages to be public, allows others to “fork your repositories,” i.e., gives others a license to copy his or her code and modify it. Although GitHub claims no intellectual property rights over the material uploaded by users, who owns the modifications of the code? Also, even if the modifications of a forked repository belong to the user making the modifications, do the IP rights of the modifier transfer to the original owner upon merging the modifications?

The answer lies in the license under which the repository owner distributes his or her software code. For example, the Apache Software Foundation open source license (version 2.0) states that a modifier may add his or her own copyright statement to modifications of their code and provide additional or different license terms for use, reproduction, or distribution of those modifications, provided that the statement complies with the conditions of the original Apache license. The key step is to check the applicable open source license agreement of the original owner, for GitHub only provides a meeting place for collaboration—the code is still subject to the applicable licensing agreement, and any negotiations for using the code can be established between the collaborators themselves.

Code from GitHub has been used for mobile, web, desktop, and browser apps, among other things. Both Facebook and Etsy use GitHub. The German federal government has even published federal law through GitHub. By allowing citizens to make suggested changes to the law, the German government is able to hear suggestions from everyday people. In this case, it could give brand new depth to the meaning of a government “for the people, by the people.” Open source, which is an undoubted success, may become bigger still.

In February 2015, our colleague and friend, partner Mark Fischer, passed away. We have made his blog posts available in honor of both his nuanced and wide-ranging knowledge of intellectual property, new media and entertainment law and of his entertaining style. Please read our tribute to Mark in the firm’s Alumni Spotlight publication and his obituary in the Boston Globe.