Truth in Open Source Advertising

"Open core" has attracted a bit of controversy recently. Commentators have questioned the viability of open core as a meaningful product strategy and whether it differs from traditional product strategies. Regardless of how this debate is resolved, the discussion illustrates why software vendors employing any type of open source model need to pay particular attention to the way they market open source. The impact of using terms like "open" and "open source" could soon extend beyond the development community to include legal ramifications.

A. What is Open Core and Why the Debate?

Open core is a product delivery strategy that combines a core set of open source functionality with an added set of proprietary functionality. This strategy has been widely discussed over the last 2 years both to define what it is, and whether it has any value to software vendors and customers. Most recently, the discussion has shifted to a debate between two points of view:

(1) Open core is meaningful because it allows software vendors to develop software at a lower cost.

(2) Open core is nothing more than a twist on the traditional freemium model used by software vendors for years, and even if it lowers vendor costs it does not create additional value for customers. In addition, the open core strategy might be weakening as the industry evolves.

B. Vendors Must Use the Term "Open" With Care

While the debate over the viability of the open core strategy is interesting, it points to a larger issue that software vendors should be clear on how and why they use terms like "open" and "open source. Failure to do so could squander goodwill with the development and open source communities, and even make them more susceptible to risks like false advertising claims.

The terms "open" and "open source" have evolved from a set of almost religious principles espoused by non-profit organizations like the Free Software Foundation and the Open Source Initiative, to marketing buzz words, and the result is that these terms mean different things to different people. For example, Matthew Aslett recently noted that "[a]s more and more proprietary software vendors, and software service providers have engaged with open source development, the concept of an 'open source vendor' has become meaningless." Brian Prentice of Gartner recently explained another example of this change - open core providers are including end users and resellers in their definition of "community," which traditionally consisted only of developers who might participate in an open source project.

Questions on the meaning of these terms extend beyond the open core context to the open source world at large. Even GNU/Linux users are beginning to wonder what "open" means given that many versions of the open source operating system contain a significant amount of non-free software both in the kernel and in surrounding component.

C. Becoming a Substantive Legal Issue?

Traditionally, software vendors that abused the use of terms like "open" and "open source" only had to fear backlash from the very community they were attempting to leverage. The open source development community would punish these vendors by notifying the world of these vendors' non-open practices on blogs and message boards, which would result in lower community participation in sponsored projects.

Now, however, more proprietary vendors are vested in the open source business and are looking for ways to look more open and advertise their openness more aggressively. Software vendors clearly see a marketing advantage to using terms like "open" and "open source." With more money at stake, the competitive nature of this marketing could bring more scrutiny from competitors.

Competitors in the technology industry have long uses fair advertising laws to raise doubt over marketing claims as an indirect means of competition. In the United States, for example, they use rules and policies of the Federal Trade Commission, which which might now be more easily applied to the open source context. At a basic level, these rules and policies set forth the principle that advertising must be true, non-deceptive and fair, and claims must be backed by evidence.

At issue is whether a software vendor can and should use the terms "open" and "open source" in contexts where the definitions of these terms have different meanings in different communities, and whether vendors use them in a way that properly indicates the actual value that customers are seeking. Some of the common false advertising theories that a competitor might raise are: deceptive advertising; bait and switch; unfair comparative advertising; misleading endorsements and testimonials; and unfair price comparisons. For example, is it deceptive or unfair under advertising laws to advertise a free and open source product, or use such a product in a competitive comparison, when the vendor knows that the target customers will only be interested in the paid-for version of the product that has different features?

I raise these points not to trigger fear of a FTC crackdown. Instead, the concern is that competitors in a highly competitive environment might be willing raise seemingly insignificant violations as a way to slow down their rivals by interfering with their marketing campaigns. The real risk from these concerns is hard to predict when we consider that the term "open" is not tied to an objective standard and is ambiguous outside the traditional open source community.

D. Bottom Line

As in all customer relationships, fairness and honesty are the best policies both in direct communications and in marketing. Don't emphasize the terms "open" and "open source" in your marketing materials and messaging unless your open source offerings actually provide value to the customer. Also, be mindful of the changing perception of "open" in the industry as a whole, not just the traditional open source community, and adjust your marketing accordingly. These are good practices both for the health of your business and for minimizing legal risks.

[Note: Non-substantive editorial modifications were made within hours after the initial post.]

Back to Basics

Open source business models are a hot topic these days. Blogs are filled with in depth discussions on open source topics such as choosing the right license, building a strong community, and deciding which software should be open and which should be closed. This blog is no stranger to open source business models. While it's easy to jump right into the intricacies of open source (for an example of the level of minutia that arises in the open source business model conversation, see this link with a "simple" chart summarizing the different types), the truth is that open source means nothing unless is fits within a good business strategy. That's why I say it's time to get back to basics.

The most basic question for any business is, "how will we make money?" The answer is never as simple as "use open source." In the software industry, like any other business, a good business strategy starts with at least three fundamental elements: developing a product, attracting attention, and delivering value. Open source is simply a new spin on traditional approaches to implementing a good strategy and it can play a role in each of these ares.

Developing a Product: Regardless of whether a software product is open or closed source, it still goes through the same types of development milestones from concept phase to general availability. Throughout this process, the developer must decide how to allocate resources for quality testing, bug fixing and feature inclusion. One of the great virtues of open source as a development model is that it can speed development time and product quality by leveraging the community's input particularly in identifying and fixing bugs, but also in identifying high-priority features.

Attracting Attention: A great product isn't worth much unless people know about it. The mere mention of "open source" attracts attention, which makes it a fantastic marketing tool. The freedom that comes with open source software ... freedom to try it, modify it, play with it ... makes it easy for users to choose your software over the competitors' offerings. Even better, open source freedom includes the freedom to distribute, which means users can deliver your software to even more potential customers.

Delivering Value: Finally, it's not enough to develop a product and attract attention. Ultimately the product must provide users with something valuable... something worth paying for. Having a strong relationship with an open source community means that a software developer has a clear view into what users deem important. The open source development model allows developers to deliver products that address customer needs directly, which makes those products more valuable to users.

Adopting an open source business model is not a guarantee of success, but its disruptive power can complement a traditional business strategy and improve chances for success. For lawyers advising clients on open source strategies, it's very important to avoid the paralysis of legal analysis that comes with open source. Lawyers need to understand the fundamental business strategies of their clients and the industry as a whole. In short, never forget the basics.

Speak to the Government in Language it Understands

Last week Matt Asay explored the downside of governments legislating open source use, and the theme was extended by Dana Blankenhorn who pointed out that the migration to open source must be evolutionary rather than something stipulated to occur at a point in time. Matt went further this week by highlighting the EU's recent message to its member countries urging them to use more open source, with the very astute observation that the tactics of advocacy and persuasion are likely to be more effective than legislation. The time is right to explore strategies for accelerated government adoption of open source.

In essence, the debate on how best to accelerate government adoption of open source has boiled down to whether to dictate use through legislation, or persuade governments through the same grass roots persuasion used for years by the open source community. In my opinion, we should not discount the value of the right kind of legislation, which can accentuate the positive aspects of the types of community persuasion that have been so effective. An ideal approach would be to create legislation that encourages the government to make procurement decisions based on criteria indicative of high-quality open source products and projects.

To explain what I mean, think of Section 508. Section 508 is a US federal law requiring government agencies to consider accessibility factors when purchasing IT products. Federal procurement rules implementing the law provide more details on the specific types of factors to be considered. In short, the government is not permitted to purchase software or hardware that does not meet its minimum accessibility standards (such as for use by blind or motion impaired workers or members of the public who access government information) unless choosing a fully accessible product over a less accessible product would create an undue burden.

Applying this idea to open source, we should start by identifying the procurement criteria that are the most advantageous to open source products and projects. Lower cost is clearly a primary factor for enterprises in determining when to convert from proprietary to open source. After a recent tour of several Fortune 100 comanies, Zack Urlocker of Sun/MySQL noted that the current weakness in the economy appears to be enhancing the effectiveness of the "cost savings" sales pitch.

While the same economic benefits will be attractive to governments, the unique nature of government services means that other factors will be at least as important if not moreso. Fortunately, the conventional wisdom is that the open source development model, as compared to the standard proprietary model, results in quicker development times, higher-quality features, features more relevant to end users, better scalability, more customizable products and more secure products (which is particularly important to agencies like the US Department of Defense). This is something that open source companies already do in their data sheets, white papers and savings calculators to convince commercial customers that purchasing open source is a good idea.

In order to make this kind of legislation happen, the open source community would have to muster its resources and undertake a significant lobbying effort. Even if it's not successful in creating new procurement rules or legislation, this type of unified effort would possibly be the best marketing campaign in the history of open source. In any case, an emphasis on the right kind of legislation could accelerate the typical grass roots marketing efforts and sales pitches.