Can You Charge for Open-Source Software?
Making Money from Open-Source Projects

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The use of the term "free software" to describe software that is published under open-source licenses has often led to confusion over whether or not developers can actually charge money for their work.

Indeed, this confusion came up in one of the few litigated court cases in the United States involving open-source licenses. In 2006, a federal appeals court in Chicago dismissed a lawsuit brought by a developer -- Williams v. International Business Machines Corp. -- who alleged that various companies and entities responsible for developing Linux had engaged in a massive antitrust conspiracy to "eliminate competition in the operating system market by making Linux available at an unbeatable price," i.e., for nothing.

Frank Easterbrook, the judge who authored the appeals court's decision, explained that the GNU General Public License (GPL) "sets a price of zero" for covered works but that did not qualify as an illegal "price fixing" agreement under U.S. antitrust law. The flaw in Easterbrook's reasoning, however, was that the GPL says nothing of the sort. To the contrary, Section 4 of version 3 of the GPL expressly states:

You may charge any price or no price for each copy that you convey, and you may offer support or warranty protection for a fee. (Source)

So why did Easterbrook say the GPL sets a price of "zero"? The likely explanation was that in the context of a U.S. appeals court proceeding, Easterbrook took the allegations of the person who filed the lawsuit at face value. The developer who alleged the GPL violated antitrust law claimed the GPL mandated a zero-price, and the courts held that even assuming that was true, there was no antitrust violation since there was no harm to consumers.

Still, the fact that a judicial opinion authored by a prominent U.S. jurist stated the price of GPL-covered works is zero by design reflects an ongoing misunderstanding of how open-source licenses actually work. As we discussed in a prior article, the main goal of reciprocal open-source licenses like the GPL is to ensure that source code remains free and available to all users. But that isn't the same thing as saying an individual developer must provide their code--or modifications to existing code--without charging for it.

Applying Old Rules to Modern Software

It is important to note that the original GPL was published back in 1989. The software market back then was quite different than it is now. For one thing, most software was distributed on physical media like floppy disks and later optical discs or compact discs (CD). Most of that software only contained pre-compiled binary files without any source code. This included a lot of software that was distributed free of charge. Today, of course, most of our software comes from Internet sources.

One thing that may have been lost in this transition is an understanding of charging for open-source software as a normal business practice. To illustrate my point, a few years ago I was at a sale of used books held by my local public library. There was a small section of the sale dedicated to old computer books and media. It turned out that I found a sealed, boxed copy of Corel Linux, a long-forgotten Linux distribution first published in 1999. In addition to a hefty user's manual, the box contained two CD-ROMs. The first contained the pre-compiled version of Corel Linux to install on a computer. The second was the source code for all the files on the first CD-ROM.

This was not an uncommon practice back in the day when you would actually buy Linux distributions at a store. To comply with GPL or similar licensing requirements, the distributor would simply publish a separate CD-ROM with all of the source code. And if you look at section 6 of the current GPL, it states compliance may still be accomplished by distributing object code on a physical medium "accompanied by the Corresponding Source fixed on a durable physical medium customarily used for software interchange." But for most modern developers, it is far more practical to offer access to source code through an online repository on Github, Gitlab, or any other source code hosting service than to provide physical media.

Charging for Software Under the GPL and Other Open-Source Licenses

So what does the GPL actually allow -- or prohibit -- with respect to charging for software? Here is a brief rundown of some key provisions:

  • You can charge any price you wish -- including zero -- for any copy of a licensed work that you convey in either source or binary form.
  • You can charge for providing support for licensed code.
  • You can charge for providing a warranty for licensed code.
  • You may not charge a separate licensing fee or royalty to anyone who exercises their rights to use or convey GPL-licensed code, nor can you require them to collect such fees or royalties on your behalf.
  • You must still provide access to the accompanying source code if you convey GPL-licensed code in binary form.
  • You can charge for the "reasonable cost" of preparing and distributing a physical media if you provide source code in this kind of format.
  • You can not charge to allow access to the source code on an online server -- i.e., on the Internet --

Now, all of these provisions are specific to the GPL. What about non-reciprocal open-source licenses? In general, those licenses contain no restrictions on the sale or distribution of code. For example, the Python Software Foundation License says nothing about when you can and can not charge for software developed with Python. You are free to develop an application using Python and charge for it without even needing to provide access to your source code. The flip side of that, however, is that if you "mix" GPL and non-GPL code, the GPL's provisions will likely still apply to the entire work.

Another thing to consider when developing a commercial application is that while open-source licenses typically address issues related to copyrights in the underlying source code, they often do not cover other intellectual property rights attached to an application such as trademarks, which will be the subject of my next article.

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Can You Charge for Open-Source Software? was written by S.M. Oliva with contributions from Leo Well and Martin Fitzpatrick .

S.M. Oliva is a freelance writer with over 25 years experience authoring original content for the web. He also spent over a decade working as a paralegal in probate, trusts, and estate planning.