Dual Licensing

by Stuart Yeates on 1 November 2004, last updated

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Introduction

Dual licensing is a business model for open source software exploitation. It occurs when a software vendor offers the very same software under two different licences. One licence is an open source licence, permitting the free modification, distribution and use of the software but usually requiring the release of any modifications under the same open source licence. The other licence is a non-open source licence which allows licensees to deploy and develop the software under standard commercial terms. Many widely known and well respected open source projects, including MySQL, Qt and OpenOffice use dual licensing as a key component of their business model.

With dual licensing, businesses are able to distribute their software as open source under one licence while generating revenue from commercial clients for it under the another licence. Many companies need the non-open source licence because they want to modify the software for competitive reasons and keep the source code of the modifications secret. The modifications could be user interface branding, porting the software to novel platforms, implementing secret protocols or integrating legacy applications on which they do not possess full copyright and therefore have licensing constraints.

The details of the proprietary licence will vary. In most cases it includes a change in the redistribution conditions of the software. This limits the ability of the proprietary version of the software to compete with software licensed under the open source licence.

Dual licensing is not the only option for vendors looking to profit from open source. Many generate revenue from installation, customisation, support and on-going mantainance of open source software. Some also generate revenue from the sale of the hardware to run the software on or from training those who use it. Some vendors, typically large existing computer companies such as Sun Microsystems and IBM, do all of these as well as dual licensing.

In the case of small vendors using dual licensing, such as MySQL with their database of the same name and TrollTech with Qt, the business model revolves around the open source version of the software serving as advertising for the proprietary version. Larger customers pay for extra features, documentation and customisations which are often initially released under the proprietary licence. Some of these may later be added to the version released under the open source licence. The proprietary versions thus help pay for the development of the open source versions.

Third party contributions to the open source development of dual licensed software require the contributor to sign over some rights to the vendor. Otherwise the vendor will not have the right to relicense that software code with a non-open source licence for use with commercial clients. In MySQL, for instance, most third party utilities are distributed not as part of the core software, but as add-on utilities which are solely licensed under an open source licence.

Finally, it should be noted that a number of other, less common, practices are sometimes referred to as dual licensing, including:

  • Licensing software and the supporting documentation separately to enable the documentation to be published as a conventional book as well as being distributed in electronic form. This often happens when, for example, free software released under the GNU General Public License is accompanied by a supporting book released under the GNU Free Documentation License. Where the support documentation is essential for sensible deployment of the software, it can make a difference whether the documentation is itself released under a free licence.
  • Licensing software and elements of the GUI separately to enable free modification and redistribution of the software but preventing the associated branding from being used with unofficial versions. Mozilla’s Firefox is the best-known example of this.
  • Cut-price licensing deals for dual-CPU computers, which under conventional proprietary licences require two operating system licences.

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