Fair Source: A New Software Licensing Model

Open Source Software (OSS) emerged in the late 1970s and early 1980s as a counterpoint to commercial software. From the outset, OSS was founded on principles of transparency, collaboration, and sharing in software development. In 1983, Richard Stallman initiated the GNU Project, and in 1989, the first General Public License (GPL) was released, catalyzing significant advancements in OSS development.

The primary allure of open source lies in its cost-free access and transparency. Developers can access the source code, modify it, and redistribute it freely. This model has spurred technological innovation and enabled ongoing improvements through community collaboration. However, it also faces challenges, particularly in providing developers and companies with avenues for sustainable profit in commercial contexts.

The rise of OSS has accelerated innovation by fostering transparency, cooperation, and sharing. Yet, with the increasing commercial use of OSS, securing sustainable profits has become increasingly challenging for developers and companies. To tackle this issue, a new licensing model called "Fair Source" has been proposed.

What is Fair Source?

Fair Source is a licensing model designed to safeguard the business interests of rights holders while making software accessible to the public. This model employs a mechanism known as Delayed Open Source Publication (DOSP), where software is initially released under a proprietary license—restricting use, modification, and distribution by the copyright holder—and is later made available as open source. This allows companies to provide their code to commercial users for a limited period, generating revenue before releasing it to the broader community.

Fair Source occupies a unique space between OSS and commercial licensing, combining the benefits of both. A defining feature of Fair Source is that software can be used free of charge until it reaches a specified number of users or revenue threshold. After crossing that threshold, users are required to pay a fee. This structure enables companies and developers to recover development costs while continuing to provide the software and invest in further enhancements.

For instance, if a software application is offered under a Fair Source license, it might be used free of charge by up to 100 users. However, once the user count exceeds 100, a usage fee is triggered. These conditions can be established by the license provider and are designed to be flexible and customizable.

Traditional OSS licenses (e.g., MIT, GPL) permit free use, modification, and redistribution of software without restrictions on commercial use. In contrast, Fair Source limits the extent of free usage and mandates a fee from commercial users, ensuring that developers receive compensation. Conversely, commercial licenses (e.g., Proprietary, BSL) set explicit fees for software use and impose restrictions on users.

Unlike commercial licenses, Fair Source adopts a hybrid model that allows for free use while charging fees only to commercial users. This feature enables companies to reach a wider audience.

Fair Source Case Study

Sentry is an error monitoring and performance management tool that has gained widespread recognition within the OSS community. In 2018, it transitioned from a BSD-3 license to a Business Source License (BSL), and starting in 2024, it will adopt the Functional Source License (FSL) under Fair Source. The decision to implement Fair Source was influenced by long-standing tensions between the open source community and commercial entities. Sentry's classification of its acquisition of Codecov as "open source" ignited vigorous discussions within the community, underscoring the need to clarify values and rights concerning software licensing.

Sentry's newly adopted Functional Source License (FSL) is tailored for SaaS companies, emphasizing user freedom and developer sustainability. The primary features of the FSL include:

1. Two-year non-compete period from publication: A two-year period is established during which use for competitive commercial purposes is restricted. This duration aims to balance the protection of businesses with contributions to the community.

2. Transition to Apache 2.0: Following the non-compete period, the software will be re-released as open source under Apache 2.0. This allows users to benefit from patent protections and other advantages.

3. Elimination of additional permissions: There are no convoluted additional licensing terms; the permitted purposes are clearly defined as non-competitive uses.

Moreover, companies such as CodeCrafters and GitButler have also embraced the FSL and plan to transition to the MIT license in the future. Shifting to the MIT license signifies broader access for OSS users, potentially allowing all users to freely utilize the software.

[List of Fair Source Companies] (Created by the author on 2024/8/14)

Advantages and Disadvantages of Fair Source

The Fair Source license presents several significant opportunities and risks as a new monetization model for software developers and companies. Understanding these factors is essential for the successful implementation of Fair Source.

Opportunities

1. Building a sustainable monetization model: The Fair Source license enables developers and companies to secure sustainable revenue. By establishing a scope for free usage, software can be offered at no cost to small-scale users while appropriate fees are charged to commercial users. This approach preserves the ethos of the OSS community while ensuring fair compensation for developers.

2. Flexible licensing terms: Fair Source provides a competitive edge over traditional OSS and commercial licenses by allowing flexible licensing terms based on user count and revenue. Companies can set a maximum number of users permitted to utilize the software for free or determine usage fees based on revenue. This flexibility allows for the design of licensing conditions that align with specific business models.

3. Promoting innovation and community growth: The Fair Source license encourages innovation while upholding the principles of transparency and cooperation inherent in OSS. Developers can share their technology while generating revenue from commercial users, facilitating the coexistence of community growth and sustainable development.

Risks

1. Backlash from the open source community: Fair Source may be viewed as a departure from the traditional "free use" philosophy of OSS. As a result, companies and developers adopting Fair Source might face criticism and resistance from within the community. There is particular concern regarding distrust from some developers and users who feel that Fair Source undermines the essence of OSS.

2. Technical and legal challenges: From a technical standpoint, establishing a mechanism to accurately track fee collection is vital. Legally, it is crucial to coordinate how licenses apply to international users and adapt to diverse national legal frameworks. These challenges can pose significant risks, particularly for global enterprises.

3. Heightened market competition: The Fair Source model may catalyze competition with companies employing alternative monetization strategies. Specifically, companies adopting Fair Source may encounter difficulties in gaining market share when competing against existing OSS projects or commercially licensed software. Additionally, there is a risk that other companies may implement similar licensing models, complicating differentiation.

Fair Source has the potential to be an attractive option for many companies and developers seeking to secure the sustainability and monetization of OSS. However, its implementation requires careful management of relationships with the open source community and addressing both technical and legal challenges. For Fair Source to achieve widespread acceptance and success, developers and companies must understand its potential risks and adopt appropriate strategies.

The Future of Open Source and the Potential of Fair Source

Open source has played a pivotal role in driving technological innovation. In the future, many companies and developers are expected to adopt OSS, facilitating ongoing community-driven development. Within this evolving landscape, new licensing models such as Fair Source may further advance OSS while ensuring its sustainability.

Fair Source is gaining traction as a novel approach to safeguarding the sustainability of OSS, but its success relies on community acceptance and proper implementation. If Fair Source is widely embraced, it could lead to a healthier and more sustainable OSS ecosystem overall.

Nevertheless, the success of Fair Source hinges on how developers and companies adopt the model and cultivate relationships with the community. It is also essential to consider how this model will impact the fundamental principles of OSS.

As Fair Source becomes more prevalent, it may enable the introduction of new business models within the OSS ecosystem, fostering sustainable software development. This could herald a brighter future for OSS.

Conclusion and Future Prospects

Fair Source is emerging as a promising approach to ensuring the sustainability of OSS. This licensing model addresses the challenges posed by traditional OSS frameworks and provides a means to offer equitable compensation to developers.

As Fair Source gains broader acceptance, the entire OSS ecosystem is poised for evolution, with more companies and developers likely to adopt this model. However, for Fair Source to thrive, maintaining positive relationships with the community and establishing appropriate licensing terms will be vital. Fair Source should be regarded as one of the viable options in the ongoing evolution of OSS.

References

• About Fair Source
• Fair Source Licenses
• Functional Source License (FSL)
• The Historical Case for Fair Source
• The Future of Open Source
• GitButler is now Fair Source
• Introducing the Functional Source License: Freedom without Free-riding
• Sentry is now Fair Source
• Sentry/Functional Source License, Version 1.1, Apache 2.0 Future License
• Fair License
• Meet the Fair Core License
• MariaDB Business Source License (BSL)
• What is Open Source? What is the definition? - Open Source Group Japan - Open Source Group Japan
• Licensing Options for OSS Startups

Disclaimer

This article aims to provide general information regarding Fair Source and open source licensing and does not constitute legal advice. The information contained within is based on a general understanding at the time of writing, but laws and circumstances may change. For specific legal questions or issues, please consult a qualified attorney.