Dual Licensing in Open Source

You can have your cake and eat it too, and share it as well. That's what dual
licensing is in a nutshell. Most of the successful Open Source companies have
one thing in common - their licensing pattern. If you're a developer, then "dual
licensing" is something that allows you to earn from your work and at the same
time give back to the community.

The Dual Licensing model

Simply put, Dual Licensing is the practice of distributing identical
software under two different sets of terms and conditions, with or without
monetary benefits. When a software is dual licensed, its recipient is free to
choose either of the two sets of 'terms of use' offered by the software company.

Besides license compatibility and market segregation, the biggest motivation
for software developers to offer their software under the “Dual Licensing” model
is to make money by monetizing their intellectual property. After all the
developer also has the right to earn money.

The software developer may offer the same software at different prices (or
even free)-to a single user for personal use, and to a group of users or
corporates. However, the software continues to remain open, ie the source is
still available to the end user. Thus the dual licensing model helps both free
software community as well as the commercial software licensee.

The Dual Licensing policy sustains innovation as well as growth. The open
availability of code lets the software to be improved by those who have the
right to change it under an Open Source license. The proceeds from commercial
licensing help fund additional development.

Success stories

Several companies have made a fortune by adopting dual licenses. The best
known example is MySQL AB-the most popular Open Source data base. MySQL has two
license options: commercial license and a modified GPL license, which allows the
licensee to distribute MySQL code under GPL along with other Free and Open
Source Software licenses.

Trolltech is another company that provides a cross platform toolkit called
Qt, which is used to develop GUIs for applications. This company makes use of
Dual Licensing for its product. Its GPL version is used by KDE, while its
commercial version is used by Skype, Google Earth, etc. Trolltech's commercial
license allows its users to develop and distribute their applications under
standard commercial terms. Its Open Source versions are available under the
terms of GPL.

Concerns and restrictions

So is dual license truly a great license to work with? Do you really get to
keep your code and sell it too? Or do you end up getting flak? Well it depends
on the who and the what-Who is offering the product and what that product is.

As is the case with all Open Source software projects, the only person (or
group of persons) who can decide on the kind of license to use, are creators of
the software. A successful software does get a lot of contributor inputs from
its GPL'd licensee, while it gets to earn money from corporates to strengthen
its financial base. Also, once a software has been given an open license,
changing it for future versions to a different or a closed license is very
difficult if not impossible.

The premise of Dual Licensing is community contribution to the product's code
base and a continuous cycle of revisions and improvisations. Managing the
contributions from the GPL'd branch as well as from the commercial branch can be
a tricky business and may involve not just community but legal issues as well.

Many startups love the idea of Dual Licensing and jump on to it without
giving much of a thought or considering the legal implications. The success of a
few big names can drive smaller entities into thinking of potential publicity as
well quick money-which though not impossible, is not so easy to achieve.

A startup may also find a potential investor or acquirer for his company who
loves the software product, but who may or may not like the idea of investing in
a company that uses dual licenses.

Does it really work?

Dual Licensing is not a new practice. Software companies have traditionally
used versions of their products as shareware or freeware for the customers, and
have done well for themselves commercially. Note that most shareware or freeware
are not Open Source products. However, companies like Red Hat have successfully
sponsored communities while continuing with their commercial line of Open Source
products.

The biggest non monetary benefit for the company in using a Dual License
software, is the continuous product development cycle it brings along, So yes,
it does work if the business involved has a product that is strong and both
licenses are well etched out.

The license has served the companies using it very well not only financially
but also in terms of popularity as can be judged from the popularity of MySQL
and Qt.