Maximizing Monetization with a Modules Marketplace

For Open Source projects whose software architecture allows it, inviting developers to extend the core product through add-on modules and plug-ins is a great way to raise interest and awareness and thus kickstart or foster an adoption/contribution cycle. In such a setting, Open Source vendors and their business partners should consider building and maintaining an online marketplace or exchange for add-ons, which will serve as a highly effective distribution and sales channel.

Distribution and Sales Channel

Such a modules marketplace allows business partners and community developers to showcase their work, maximize its visibility and earn money by selling custom modules to end-users.

Typically, you’d find all or some of the following offerings in a modules marketplace:

  • Open Source core product (e.g. Community Edition)
  • Commercial core product (e.g. Enterprise Edition)
  • Open Source modules
  • Free proprietary modules
  • Commercial proprietary modules

Benefits

Distributing a product and its extensions through an online marketplace offers significant benefits:

  • Ease of access: By definition, the online marketplace is available 24/7/365, allowing a global audience of users and developers to access it at times that are most convenient to them. This has the potential to increase direct sales volume.
  • Brand building: The marketplace helps strengthen the vendor’s brand, by collecting all (or at least the most important) extensions in a single place, rather than having them scattered over multiple third-party sites.
  • Reduced dependence on third-party distributors: The vendor exerts final control over the marketplace and its actors. This allows it to verify and certify modules and developers, and also reduces its dependence on partners and third-party distribution channels.
  • Better customer information and analytics: By routing all interactions with end-users through the marketplace, the vendor is able to build a better database of its end-users and thereby extract useful analytical information from it (eg. most popular modules, most high-value users, etc.)

An online marketplace is not only good for developers; it’s also good for end-users:

  • Central directory of add-ons: Users now have a central, vendor-endorsed directory of modules and extensions that they can use to enhance the product’s core functionality. Instead of having to search multiple sources, they can look in a single location (which saves them time and effort) and they might also be able to read comments and reviews from other users  (which guides them to an appropriate solution).
  • Access to specialists: The online marketplace is also a good place to connect with developers who have specialist experience in that product – which is handy when there is a need for special customization or system integration.
  • Ease of use: If the marketplace is tightly integrated with the core product, end users can directly try, buy and upgrade extensions through a simple one- or two-click process within the application itself, without needing to fire up a separate Web browser window (Irakli Nadareishvili recently wrote an interesting blog post on the benefits of this approach in a Drupal context).
  • Lower software cost: The online marketplace allows the vendor to deliver its product over the Internet in a secure manner, thus saving on shipping, printing and CD/DVD mastering costs. These benefits are passed on the end-user in the form of a lower price. The marketplace also serves as a central “memory”, allowing users to re-download the product at a later date if required

Case in Point: The Android Market

As an example, consider Google’s Android Market, which is exactly the kind of exchange platform I’m talking about above. Google provides and maintains the Android Market infrastructure, allowing developers to freely list their custom apps for users to download or buy. Any Android-based handset can access the Android Market free of charge (it comes pre-installed on most Android phones). In effect, Google has created a giant exchange platform for developers and users to connect and transact with each other, increasing revenue potential (which makes developers happy) and spurring innovation (which makes users happy).

That isn’t all, though. The Android Market, which offers an app for almost anything you can think of, is a key driver for Google’s “product”: the Android operating system. The more apps there are, the more interesting Android becomes for end-users, and the more end-users there are, the more likely developers are to build apps for Android. It’s a virtuous cycle with tremendous potential to drive adoption, and it has benefits for all actors in the ecosystem.

Additional Source of Revenue

Creating a marketplace for business partners and community developers to distribute and sell their custom modules and extensions is an important step in driving community adoption and to monetize on top of it for every member of an Open Source ecosystem. It offers time and efficiency benefits for end-users and revenue potential for commercial entities.

But perhaps the biggest beneficiary is the vendor at the center, who now has a self-sustaining distribution and sales channel charged by the community around its product, plus some additional revenue such as:

  • Commission: The marketplace also becomes a new indirect revenue stream for vendors once they ask for a commission for each module sold.
  • Certification: Raise visibility of certified extensions in the modules marketplace to provide an incentive to buy training and certification services from the vendor.

Ingridient Branding in Open Source Communities – Interview with Eclipse's Ian Skerrett

Back at Eclipse Summit 2010, I had the chance to interview Ian Skerrett, Director, Marketing at Eclipse Foundation on all things marketing Eclipse.

He very nicely describes how he utilizes ingridient branding to leverage the marketing resources of Eclipse members to not only push their own solutions, but to also raise the visibility of the Eclipse brand:

I keep on coming back to ingredient branding. The most famous would be the “Intel Inside”, and Intel certainly paid a lot of money to create that, but they also used their partners to take Intel out to the end-users. [At Eclipse] it is really about working with the projects to make sure that they are good communicators, and they’re communicating a solution. To me the interesting thing is how do you get the wider community to understand that Eclipse is a place for doing collaboration.

Watch the video or read the transcript of the Interview with Ian Skerrett about Marketing Eclipse at Initmarketing.tv.

Video Interview with Matt Aslett

http://blip.tv/play/gu9HgoX7GQA%2Em4v

The wait is over! Finally, I found some time to revitalize Initmarketing.tv and a new video after a long time is up.

It’s a great video interview with Matt Aslett, one of the best analysts regarding Open Source.

There are more video interviews in the pipeline, ready to be published, and I’ll record new ones at upcoming events I’ll attend. As you can see, I found a way how to squeeze out some time again besides having a growing business and 2 little kids. Yes, it’s possible – it only takes 18 months and someone who helps with editing the videos 🙂

Session at Open World Forum: Does Open Source Need Marketing?

Open World Forum 2010 In case you’ll attend the Open World Forum in Paris next week, make sure you join me and my team mate Rory MacDonald for our session Does Open Source Need Marketing?.

During this 1h session, we’ll testify some of the common misconceptions of marketing open-source software. We’ll also discuss major trends in marketing communications for open source vendors.

For example, one slide we prepared shares the mantra “It’s not about the code, it’s about conversations, stupid”. Furthermore, we’ll provide some recommendations regarding Marketing 1.0 vs. Marketing 2.0 and how your brand will work for customers and the community alike.

The session is part of a full-day Think Tank on open source marketing entitled “All Change Please”, which features one more workshop presented by Simon Phipps, Carlo Piana, Charles H. Schultz. Patrice Bertrand, CEO of SMILE, will also take part in the Think Tank.

‘Nough said: Learn more about the bleeding edge of open source marketing and join our session October 1st, 14:00-15:00.

BTW: I’ll attend the 2010 Paris Open Source Think Tank as well, which takes place prior to OWF.

Terri Molini, Former Open Source PR Manager at Sun, Joins Initmarketing

I am extremely happy to welcome Terri Molini on board of the Initmarketing team. She can certainly add a lot of value to Initmarketing’s Open Source corporate communications services, given her vast experience. Most notably, Terri was 13 years with Sun Microsystems where she lead all world-wide PR efforts related to Open Source. In July 2009, Terri launched the Open Source for America coalition. Good to have you on board Terri, this will be fun!

LinuxTag 2010 With Many More and Great Talks

I am honestly proud of what the LinuxTag Program Committee achieved. The soon-to-be-announced program for this year’s event will have 25% more talks and even very interesting ones as well.

Keynote speakers such as Larry Augustin (CEO SugarCRM, Angel Investor) and Dirk Riehle (Germany’s first professor of Open Source Software) have already been announced. There are some more who have just confirmed their attendance, but I am not allowed to name them yet (surprise, surprise).

The committee has invested a lot of time pro-bono in directly contacting OSS projects and speakers and in evaluating talk proposals. Our goal was to make sure the program will feature some of the key projects and persons, providing a mix of introductory as well as advanced topics, technical as well as business-related talks. I am sure you will appreciate the program once it has been published at www.linuxtag.org within the next couple of days.

Kudos to my fellows at the program committee and thanks for bringing me in, it’s just so much fun! Many thanks also to everyone who proposed a talk!

Initmarketing Expands in France: Annie Blandel Joins Our Team

Annie BlandelI am very happy to welcome Annie Blandel on board. She lives in Southern France and is a senior-level marketing manager with a bunch of experience and expertise.

Entrepreneurship, recognizing and driving forward innovative new products and services, and powering international expansion, have been the cornerstones of Annie’s 25 year career in technology marketing. She has successfully delivered international marketing and business development campaigns for numerous established leaders in their fields, including Nortel, Intel, Cisco, HP.

She is furthermore a professor in Marketing for Master’s in IT & Project Management at the University of Nice Sophia-Antipolis (France).

Read more about Annie on the Initmarkteing team page.

Bienvenue Annie!