Matching Open Source Software Licenses with Corresponding Business Models

Scores of software producers have turned toward open source licenses to improve service for their customers. For these companies, choosing the correct license determines business success. When the available open source stack and licensing options grow, so does the need to understand the interplay among licensing, sourcing decisions, and business goals. A model of license choice emphasizes different licenses and rationalizes the choice of an open source software (OSS) license. This is crucial for smaller companies and start-ups that don't have the tools and knowledge to perform a thorough investigation of all the consequences of their license choice every time they employ OSS.

License Choices

OSS development has special legal characteristics. Under normal working conditions, a software company has an employment contract with its employees designed to benefit both parties. In traditional software development, the relationship between employee and company is quite formal, and the contract transfers certain rights to the employer. Intellectual property law often protects these rights, and contracts usually include detailed explanations about who gains what software rights. When the company owns these intellectual property rights, it can license the product for a defined price. Figure 1a illustrates this traditional situation. Figure 1.

Transformation of the legal relation. Changes in juridical relationship when comparing (a) a closed source development community and (b) an open source software (OSS) community.