Daniel Foré is the founder of elementary OS, a boutique Linux distribution developed by a small startup that scraped by on user donations and merchandise sales. Then, inspired by an established business tactic in the gaming space, Foré and his team flipped a somewhat controversial switch that led to a massive increase in the company's income: they simply started charging money for it.
That just makes sense when you look at the potential audience elementary OS wants to serve: anyone.
"We started out with a donation thing, but you know, donations are such a small scale that it doesn't match what we need in order to serve all the people who are interested in using elementary OS," Foré says in the latest episode of Linux For Everyone. "Even Patreon is a small portion of what we bring in."
Donating Versus Purchasing: A Success Story
For the majority of Linux distributions and open source apps, generous donations are the sole source of income.
Foré tells me that for elementary OS, donations -- while greatly appreciated -- simply aren't enough to meet the expanding needs of a growing user-base.
"As we gain more users, we need a lot more servers," he says. "We need a CDN [content delivery network] to distribute downloads of the operating system itself, and now we have servers for building applications and serving those downloads and updates. In addition to the infrastructure costs, we also have a payroll now because we have full-time employees."
The challenge thus became how to bring in enough revenue to properly scale up operations.
"How do we arrive at a model that we can raise enough revenue to support all the people interested in using elementary OS, but we don't price out people who can't afford it, or who live in a country where one US dollar is a lot of money," Foré explains. "After a lot of discussion -- and seeing the success of things like Humble Indie Bundle in the gaming space -- we decided to try this 'pay what you want' thing out. And we made the price floor zero so people can still go in and get it for free."
Here's where this story takes two unexpected turns.
"When we switched over from having a 'Donate' button right next to the download button, to having that 'pay what you want including $0' format, the amount of revenue we were making increased by 10x," Foré shares. "That small design change increased revenue a ton."
Foré didn't divulge exact numbers, but he doesn't need to. This practice -- and its outcome -- seems to contradict a belief many Linux and FOSS advocates cling to: that donations to their favorite Linux distribution or open source projects do matter, but paying for them up front is a line that shouldn't be crossed.
But what if I told you this rather unconventional thinking (in the open source world, anyway) also applies to the indie developers creating apps for the elementary OS AppCenter?
"When we looked at AppCenter, we wanted to make sure developers had a revenue model built in as well," says Foré. "We knew that since users would be familiar with that from downloading the operating system, it would translate there. We have developers telling us they've made more money through AppCenter than they have through donations anywhere else."
Most Linux distribution software stores lack any kind of payment model. Now, consider that these developers are creating apps with elementary OS in mind, but are free to distribute them across any other distribution, including through widely available Snap or Flatpak methods. It's a fair assumption that they stand to receive much more exposure across all of those distributions, versus what they gain on just elementary OS.
And yet -- at least in the cases Foré alludes to -- these developers are making more money by charging (including $0, of course) versus receiving donations from a potential audience that spans the entire Linux desktop ecosystem.
Though this may not shake out to be a popular opinion among my readership, this all makes logical sense. A product with a price tag attached to it can have a higher perceived value. And an app store model that both developers and users have grown accustomed to over the last decade across a variety of devices and operating systems? That just makes sense, too.
You can listen to the entire interview with elementary OS founder Daniel Foré here or by searching "Linux For Everyone" in your favorite podcast player.
You can check out elementary OS at https://elementary.io.
