1.3 Open Source Software and Licensing (Weight: 1)

📘Linux Essentials (LPI 010-160)

This section explains how companies earn money from open source software.

Many beginners think that “open source” means “no business” or “no money.”
That is not true.

Open source software can be free to use, but companies can still build successful commercial businesses around it.

For the LPI 010-160 exam, you must understand:

How companies make money using open source
The difference between open source and proprietary business models
Different commercial models used in open source
How support, services, and subscriptions work
The idea of dual licensing
The role of companies in open source development

1. Is Open Source Software Always Free?

Open source software means:

The source code is available
Users can study, modify, and share it
It follows an open source license

However:

It does not mean companies cannot charge money
It does not mean there is no commercial use

Example in IT:
A company may download a Linux distribution for free, but they may pay for professional support, updates, and security patches.

Open source refers to freedom, not price.

2. How Do Companies Make Money from Open Source?

Companies use different business models. These models focus on:

Support
Services
Hosting
Customization
Training
Enterprise features

Let’s explain the most important models.

3. Support and Subscription Model

This is one of the most common models.

The software itself is open source and may be free to download.

The company earns money by offering:

Technical support
Security updates
Certified updates
Long-term maintenance
Service Level Agreements (SLAs)

IT Example:

A company installs a Linux server in its data center.
Instead of managing everything alone, they buy a support subscription from a vendor.

They pay for:

Official updates
Security patches
Phone/email support
Guaranteed response time

The software is open source, but support is paid.

This model is used by companies like:

Red Hat
SUSE

They do not sell Linux itself.
They sell enterprise-grade support and services.

For the exam:
Remember that open source companies often sell subscriptions, not software licenses.

4. Open Core Model

In the open core model:

The core software is open source
Advanced or enterprise features are proprietary (closed source)

This means:

Free version:

Basic features
Community support

Paid version:

Advanced features
Extra tools
Enterprise integration
Priority support

IT Example:

A database system may offer:

Free open source version
Paid enterprise version with advanced backup tools and monitoring features

This model allows companies to:

Grow a large user community
Offer premium features to businesses

For the exam:
Know that open core = part open source + part proprietary.

5. Dual Licensing Model

Dual licensing means the same software is released under:

One open source license
One commercial license

Users choose which license to follow.

How it works:

Option 1:
Use it under an open source license (for example, a copyleft license).
You must follow open source rules.

Option 2:
Buy a commercial license.
This allows you to use the software in proprietary products without open source obligations.

IT Example:

A software company wants to include an open source library in its closed-source application.

Instead of releasing their application as open source, they buy a commercial license from the original developer.

This model allows:

Community usage (open source)
Commercial flexibility (paid license)

For the exam:
Dual licensing = two different licenses for the same software.

6. Software as a Service (SaaS) Model

Open source software is often used in cloud environments.

Companies may:

Take open source software
Host it on their servers
Offer it as an online service
Charge customers for access

Customers do not install the software.
They access it through a web browser.

IT Example:

An organization uses an open source project management system.

Instead of installing it themselves, they pay a company to:

Host it in the cloud
Manage updates
Handle backups
Ensure uptime

The company earns money from:

Monthly subscription fees
Managed services

The value is in convenience and management, not the software itself.

7. Consulting and Custom Development

Another business model is:

Customization
Integration
Consulting services

Companies may:

Install open source software for clients
Customize it for specific needs
Integrate it with other systems
Provide security hardening

IT Example:

A company wants a custom Linux-based server setup with:

Web server
Database server
Firewall
Backup system

An IT service company builds and configures the system using open source tools and charges for their work.

Revenue comes from:

Expertise
Implementation
Ongoing maintenance

8. Training and Certification

Some companies earn money through:

Training programs
Certification exams
Official learning materials

IT Example:

IT professionals may take certification exams for enterprise Linux systems.

Training providers charge for:

Courses
Lab access
Exam preparation

Companies value certified professionals, so this becomes a business model.

9. Donations and Sponsorship

Some open source projects are funded by:

Donations
Corporate sponsorship
Crowdfunding
Foundation support

Large organizations may sponsor open source projects to:

Ensure long-term stability
Influence development direction
Support tools they depend on

10. Advantages of Open Source Business Models

Open source business models offer:

1. Lower Entry Barrier

Users can try the software without paying.

2. Large Community

Community users help:

Find bugs
Suggest improvements
Test features

3. Faster Innovation

Open collaboration speeds up development.

4. Trust and Transparency

Anyone can inspect the code for:

Security issues
Hidden functions

11. Comparison: Proprietary vs Open Source Business Model

Feature	Proprietary Software	Open Source Software
Source Code	Closed	Open
Revenue Model	License sales	Support, services, subscriptions
Modification	Restricted	Allowed
Community Contribution	Usually limited	Encouraged

Proprietary companies sell licenses to use the software.

Open source companies sell:

Support
Services
Customization
Enterprise features

12. Role of Companies in Open Source

Many open source projects are supported by companies.

Companies may:

Employ developers
Contribute code
Maintain projects
Provide infrastructure

For example:

IBM supports open source projects.
Canonical develops and supports Ubuntu Linux.

This shows that open source and business work together.

13. Key Exam Points to Remember

For the LPI Linux Essentials exam, make sure you understand:

✔ Open source does NOT mean no money
✔ Companies can charge for support and services
✔ Subscription model is very common
✔ Open core = open base + proprietary features
✔ Dual licensing = two licenses for same software
✔ SaaS = hosting open source software as a service
✔ Consulting and training are business models
✔ Companies actively support open source projects

14. Final Summary

Open source software allows users to:

View source code
Modify software
Share improvements

But companies can still build strong businesses by selling:

Support
Subscriptions
Enterprise tools
Cloud hosting
Consulting
Training

Open source business models focus on services and value, not just selling software copies.

Understanding these models is important for:

Working in Linux environments
Understanding IT company strategies
Passing the LPI 010-160 exam