Monetizing Open Source Software in 2024

Many major tech companies built their empires by giving away their software for free. Now, the bill is coming due. Throughout 2024, popular platforms are aggressively shifting away from traditional open-source models to turn a profit and protect their revenue from major cloud providers.

The Cloud Giant Problem

For years, a clear pattern dominated the software industry. A startup would create a brilliant open-source tool, offer it for free, and build a massive community of developers. As the tool became an industry standard, cloud giants like Amazon Web Services (AWS) or Google Cloud would step in.

These cloud providers would take the free open-source code, package it as a convenient managed service on their platform, and sell it to their enterprise customers. AWS and Google collected massive monthly fees from this setup. The original creators of the software received nothing.

To survive and satisfy their investors, the original creators are now fighting back by changing their software licenses. They are moving from true open-source models to “source-available” models. This means you can still see the code, but you cannot legally use it to build a competing commercial product.

The HashiCorp License Shockwave

One of the most significant shifts happened with HashiCorp, the company behind the massively popular infrastructure tool Terraform.

In August 2023, HashiCorp announced it was moving Terraform and its other core products away from the Mozilla Public License v2.0. They adopted the Business Source License (BSL). Under the BSL, end users can still copy, modify, and use the code for their own internal projects. However, businesses are strictly forbidden from using Terraform to build competitive managed services.

This controversial move was a direct strike at competitors who were making money off HashiCorp’s hard work. The financial motivation became even clearer in April 2024. IBM announced it would acquire HashiCorp for $6.4 billion in cash. By locking down their license, HashiCorp successfully protected their intellectual property and proved their immense financial value to a major enterprise buyer.

The Redis Rebellion in 2024

The trend accelerated significantly in early 2024. Redis is an in-memory database used by millions of developers for high-speed caching. For over a decade, Redis operated under the highly permissive Berkeley Software Distribution (BSD) license.

In March 2024, the company changed its rules. Redis dropped the BSD license and transitioned to a dual-license model: the Redis Source Available License (RSALv2) and the Server Side Public License (SSPLv1).

The exact terms are highly restrictive. If you are a cloud service provider trying to offer Redis as a managed service, you must buy a commercial license from the company. Redis explicitly stated this change was necessary to fund their ongoing development and stop other companies from freeloading off their engineering efforts.

The Community Response and the Rise of Forks

When a beloved tool changes its license, the developer community rarely accepts it quietly. The immediate reaction to these monetization efforts is usually a “fork.” A fork happens when developers take the last legally open version of the code, rename it, and continue building it themselves under a traditional open-source license.

We are seeing heavy investments in these alternative projects in 2024:

• OpenTofu: After HashiCorp locked down Terraform, a coalition of developers created OpenTofu. The Linux Foundation now backs OpenTofu, guaranteeing it will remain truly open-source and free of corporate licensing traps.
• Valkey: Just days after Redis announced its licensing change, a new fork named Valkey appeared. Valkey is financially backed by AWS, Google Cloud, and Oracle. These massive companies prefer to fund a free alternative rather than pay Redis for commercial licenses.
• OpenSearch: This trend started earlier when Elastic changed the license for Elasticsearch. AWS responded by creating OpenSearch, which remains a highly popular, completely free alternative today.

Modern Monetization Strategies

Licensing changes are just one piece of the puzzle. Open-source companies in 2024 rely on a few specific business models to generate actual cash flow.

Managed Cloud Hosting

The most successful strategy is offering a premium hosted version of the free product. MongoDB does this perfectly with MongoDB Atlas. Anyone can download MongoDB for free, but setting up servers, handling security, and managing backups is difficult. MongoDB Atlas handles all that infrastructure for a monthly fee.

Enterprise Features

Companies often release the core software for free while holding back specific features for paying customers. This is called the open-core model. A standard user gets the basic database, but a large bank might have to pay $100,000 a year for advanced security protocols, single sign-on integrations, and ²⁴⁄₇ technical support.

Dual Licensing

As seen with Redis, companies let users choose. You can use the software for free under a highly restrictive license (like the SSPL), which forces you to make your own code public. If you want to keep your proprietary software secret, you must buy a standard commercial license.

Frequently Asked Questions

What is the difference between open-source and source-available?

True open-source software adheres to the Open Source Initiative (OSI) definition. It allows anyone to use, modify, and distribute the code for any purpose, including commercial competition. Source-available software lets you view and modify the code, but it includes strict legal limitations on how you can use it to make money.

Why do companies choose the Server Side Public License (SSPL)?

The SSPL was created by MongoDB in 2018. It is designed specifically to target cloud providers. If a company offers SSPL-licensed software as a cloud service, they are legally required to publicly release the source code of their entire managing platform. Cloud providers refuse to do this, forcing them to negotiate a paid commercial deal instead.

Is open-source software dying?

No. Independent developers and major foundations (like the Apache Software Foundation and the Linux Foundation) continue to produce incredible free software. However, the business model of venture-backed startups giving away enterprise-grade cloud tools for free is rapidly disappearing.