A conflict between Open Source and Business

[gianfranco]

Dear community members

I´d like to take the opportunity of the insolvency to speak a bit about projects like Blokas/MODEP, Zynthian and other possible projects that use our software as they use.

This is a sensitive topic and it had serious impacts in our business.

Before going into it, I´d like to stress that what I am writing below is NOT an attack on open source nor it a wish to move into closed source.

But there are business issues related to this topic that are still a big question mark for the company and to which we do not have an answer yet, but we will need to come up with answers in the short/mid term.

I´d like to expose them here so that we can collectively discuss it, as the majority of people here:

• has some level of enthusiasm for Open Source Software

• suffered some level of damage due to our difficulties as a company

I purposively used “Open Source Software” because there seems to be a confusion that MOD is an open source company, which is not true.

We utilize, develop, release, publish and foster Open Source Software, with small exceptions that @falkTX has already pointed out above, but we do not make Open Hardware, with some exceptions related to Control Chain devices that we have published the PCB designs and firmware too.

The issue here with these other projects is not software related, but business activity related.

On the software level, our entire audio stack is open source, from the plugin host to the graphical UI to the actual plugins that were made by us.

We haven’t crammed a bunch of pre-existing software inside our boxes. It is not as if the open source community had the mod-ui, mod-host, and etc. readily available and we said “How cool!! We can put this code in standalone boxes and sell them”

These things had to be built from the ground up. That is the value that MOD has added to the open source software realm as a whole. There is a value leap between the open source code that we use and the open source code that we offer.

This value leap had to be paid for, in the form of paid development time. MOD Devices has invested literally more than a million euros developing the complete stack.

Now let´s move into the business activity.

From the customer perspective, the function of the product is the thing that matters the most. Apart from some hardcore idealists, even the open source enthusiast will first look into function before looking into the nature of the code. What I say is that people are not buying “linux boxes”. People are buying standalone audio processors.

As we sell our devices as audio processing standalone boxes, most of the value leap that we provide is to have all that cool stuff that you would only do in your computer now in a box that you can carry. That is the function perceived by the customer.

So, when another box appears, that also allows you to do all that cool stuff in a box that you can carry, and using the same visual identity as we do, but with a smaller price tag, what do you think that happens on the customer minds?

For the person who does not know any of the devices, it is kind of the the same thing, but one is cheap and the other is expensive.

As @fer pointed out, the devices are in different leagues, but he has both and thus he can affirm that. But those who are getting acquainted with the products cannot tell exactly the difference.

Both have a shop. Both sell a box. Both have the same looking pedal like UI.

I have lost count on the number of sales and distribution deals that I lost due to this confusion. One of the exit deals we were working on was flagged because of this.

This is a very ungrateful position for us because:

1 - We spend in development and share it, but those who make use of what we share make financial profits with no return to us, be it financial or improved code.

2 - Not only we share and no not get anything back, but actually we are hurt by are losing sales and deals, as I pointed out earlier.

This generates a sort of self-predatory effect, as we share value that we create and that shared value is used against us.

To make it even worse, we are not Microsoft or Apple, with tons of cash to spend. We are a very small group of people literally bootstrapping a project. That means scarce and highly disputed resources to make the business advance. In order to evolve the stack the way we did, most of the budget is spent on tech. Marketing, website and all other things needed are always lagging behind the tech.

If the tech is shared as we do, we give a competitive advantage to the ones that get it for free, as they can spend all their resources in what we lack the money from. I’ve invested enough on website creation to know how much time is needed to have a website in the level of this or this and I would not be impressed if these websites have received much more resources than ours. This stretches to many things that are not tech, but more on the marketing side, content, videos and etc.

I would be glad if people from the forum could chime in and shed some light, so that we can discuss this in an open way and, in case we need to take decisions, that these decisions are aligned and well understood by our community.

[ignis32]

I would like to notice, that MODEP was the reason why I got my MDX device.
I’ve tried it on my RP4 out of curiosity, not being ready for the MDX price tag (it was 1000$ in my country at the moment) .

However, quite soon found out that possibilities justify the price pretty much and got convinced that it is what I want. and went for the real MDX in about a week. Cannot tell for others, but you got at least one customer via MODEP.

[Azza]

Maybe the business should have been split in two from the start : one branch writing (and possibly selling) Open Source Software (with whichever agreement needed to make $ out of it from MODEP or whichever other competitor) and a branch mainly focussed on the hardware part (and possibly paying $ to the first branch for using the software).

One question related to this : did you have a financial agreement with the Guitarix devs? I mean a lot of the Mod plugins are from Guitarix, and the big number of plugins included as “free” in the MOD store was used in the MOD ads. How do these guys get paid for their work?

[plutek]

hey @gianfranco … thanks for opening up this important topic to the user-base! it’s a sign of your respect and consideration for this community that you value and solicit our input on something like this!

it totally makes sense to me that the aspects of MOD development which relate to “packaging” the open source content (plugins, linux) as a turnkey, transportable, “appliance” would be MOD-owned, closed IP. this is the sellable added value which MOD brings to the table, and the ability to use that flexible software in a hardware device specifically designed for performance is exactly the expertise i chose to spend money on — that’s valuable expertise and development, both in hardware and software.

of course one can point out that the open source software also represents “valuable expertise and development”; it’s a choice made by the developers to license it that way. i support those projects in various ways, including donations, as i’m able. similarly, it seems to me like a completely valid and understandable choice for MOD to have a closed IP license for it’s development; developers must be free to choose their manner of release, depending on their goals, beliefs, and the manner in which users are likely to value their products.

…my $0.02… (plus inflation )

[plutek]

@Azza

…Guitarix… How do these guys get paid for their work?

interesting question, @Azza !

[gianfranco]

@Azza

. How do these guys get paid for their work?

They don’t, as they are not developing for us under our orders and specs. They are developing their own software, for desktop use, and we are adding the necessary value - compilation changes, fancy UI, etc - to allow it to run in other environments other than the desktop. As I mentioned before, we provide the value leap at least.

If we have a developer from the community making code under our specs and request, we pay for it. Historically we have paid many developers from the Linux Community for some freelance MOD-related work.

[redcloud]

My 2 cents… (a big IMHO preamble is needed).

I think that in general, among customers, there’s a little knowledge of what Open Source really means. Most of customers interested in buying a Dwarf only expected to get a new device full of plugins of HIGH QUALITY. Dwarf was presented as a device more guitar/bass oriented than Duo and Duo X (see footswitch introduction, compactness [I recall a guy carrying a guitar/bass bag in one of the kickstarter campaign videos]). But Dwarf has also synth and CV stuff and I think that customers that bought it to use synths and CV (and actually received it) are the ones really satisfied. I think that those customers are also the ones “more educated” about Open Source world and their expectation have been covered by what Dwarf is able to offer, since synth world is by nature “more complex”. So they bought Dwarf with no surprises.

No need to repeat myself but, just in case, this is all IMHO.

On the other side, average guitar guy only need to plug a bunch of cables into few “black boxes” and start shredding. “We” barely know the difference between VST and LV2. Since Dwarf is perceived as a guitar pedal/modeler, the average guitar guy is only interested in comparisons about amp sims and fx quality in order to pick the best deal. Searching on YouTube for “mod dwarf vs…” show almost zero results and this is a killing factor.

Two more thing that have a big impact on sales (need again to say IMHO?) are

• the absence of professional demonstrator on socials (and this I believe is due to incomparable amp sims quality of competitors)
• the absence of user friendly installation of pedalboards sold outside the mod pedalboard site. Tone creators like to sell packages of presets + ir and they like also easy import systems fool proof. As far as I know, there’s no competitor who forces uses to load external presets via ssh only. This would mean more work to support customers on technical problems just for the installation of a preset + the ordinary work involving request like “this preset sucks with my setup”.
  They also like centralized shops where to sell their presets.

All this vital aspects, in the mass market, come way before every other debate on Open Source stuff.
Unless you want to focus on guitar/bass players sensitive to Open Source world… and this means reduce the market to the bone or slow growth if the project is successfull.

[gianfranco]

@redcloud

There is a bit of confusion here.

I agree with your points regarding videos and such.

But see, the missed deals I mentioned, are not related to the end customer, but to bigger customers like shops and distributors, or even potential buy-out investors.

The issue I am pointing out here, is the fear that the confusion between MOD and these other projects brings to potential commercial partners.

There is no way in this world to bootstrap a hardware company flying solo. You need a constellation of partners that range from production suppliers to brick-and-mortar shops.

What I am trying to point out is the difficulty brought when trying to establish these relationships.

[madmaxwell]

@gianfranco

not get anything back

I think @gianfranco that is okay to keep mod-host and mod-ui open source, mostly because the more developers or hackers or users play with it, the more issues/bugs you’ll receive and hopefully PRs. In practice you create a big ecosystem with a lot of users (even diy people and hackers or just academic people with low budget for a project and so on) and you represent the Pro version of this group. But imho would be better if you put a hat on it. A page on your site with derivative products, with the main features they offer. So that they’re officially part of the ecosystem and they feel to be part of it. For example the pedalboards could be shared too, so that every user of every platform can contribute to the richness of the sounds available to mod users.

On the business side of things, you can still offer closed source plugins and synths and samples. You could also provide artist presets for existing plugins like other competitors that are under non commercial usage license, so that you can build your unique value by presenting a thing that is more polished and ready to use. I think it is already what you’re doing. But I don’t think your unique value is on the host/editor, I mean they’re impressive but I think still the benefit from programmers and users usage/tweaking is important. And also the more these two components arrive everywhere the more people will be familiar with the interface and workflow. And will look at you when looking for a professional device to run it. Derivative projects/products have to publish the code, it’s obvious. So that eventually you can also take a new feature in consideration. This is the value you get back.

A fresh example: I have added Model SIMs feature to mod-ui/browsepy. I would never did this if I couldn’t access to mod-host/mod-ui source code and test locally. And like me I think plenty of developers had in the past and will in the future contribute to the platform.

Finally I don’t think one would not buy a Mod Dwarf because he prefers to use his Rpi. I think that the majority of customers will immediately see the difference. If they don’t you can explain it to them in the derivative products page. I mean a lot of guitarists I know in person would never buy something that is not in a metal case.

Just my 2 cents

[redcloud]

Thanks for clarifying it. I think that Open Source knowledge and awareness does not build in a few days. Big players in the musical instruments world are focused on closed source companies 99% of the time. The only chance to have appeal with them is to put Richard Stallman at the head of marketing of those companies.

[gianfranco]

Our original partners, Hacklab, got to host and meet Richard Stallman once in a WordPress event in Brazil.

Not sure your plan would work

[jtemple0967]

IOW…you spent all that money on developing the complete package, why not recoup some of that cost? And you wouldn’t be selling the already available open source plugins from Guitarix, etc…you’d just be selling modui and modhost.

[dreamer]

My personal take is that the MOD software stack actually is more reliable because it has more stakeholders associated with it.

Even though the amount of contributions to the software have been quite minimal, the fact that more people are using it means bugs and features are more thoroughly tested as well.

Of course these are not insights one can likely attribute to investors and distributors. They have very little understanding of these kind of software developments and thus for them it may indeed cause confusion.

I don’t know what is the best way to inform these groups of key players in the process of the nuances related to Open Source Software.

[Joal_ban_Kluane]

Open source and business (making money) will always be a more complicated equation to resolve. Especially the side where the (paid for) effort you do to produce an open source product can be reused by others for free. You basically give it away. But you also get it: all the work needed to produce a full software stack (linux, jack, apache, etc) is the result of open source work. It works as intended. You enrich an ecosystem, and others will benefit from your expertise, as much as you benefit from others’ expertise.

Not always as in “they take your software and sell their product with it”. They could (should?) participate in improving mod-host/mod-ui… or not (unless the license forces them to release whatever improvement they make, but they might not make such improvements in the first place, I am not sure). But also, plugin developers could take advantage of the MOD to have a platform to use to distribute their work (and they do! see some of the comments above), so using Free Software makes things complicated, but also is a bless. I wish I could get “community upgrades” (like plugins) to improve my Zoom R24 or my Roland Fantom X8. It’s never going to happen. But MOD Dwarf (btw I just received one I ordered, knowing that the Tier 3 may still take a while), I am sure I will be able to get new plugins for years, even make my own if I have a specific need (or ask somebody to)!

I think the business model for MOD is still the hardware. The software enables the hardware and gives it value, and the hardware gives value to the software like no other (MODEP - which I have tried - and others are not in the same league). Another thing that gives special value to the hardware are the online services, and more specifically their integration with the hardware, the access to the plugin store, to the pedalboard sharing (from my perspective, the hardware should be what gives the key to these services, so it does not make sense to open them to other platforms - these are services, not software). In that respect, what needs to be communicated is that the hardware makes the software shine and that the software makes the hardware shine. You can get clones elsewhere, but it’s never going to be the same.

What I would find difficult is how to keep the balance between on one hand the one-time fee that is the hardware, and on the other hand the continuous improvements (software upgrades, plugin development) and service access (plugin store, pedalboard sharing, etc) that keep costing the company. One is of course the fact that the existence of these services gives more value to the hardware, hopefully convincing people to buy a unit. But at some point, the existing users could be willing to give more, in order to get more.

I don’t have an answer, I think putting services behind a subscription model (like Roland and others are doing) is a bad idea. I would not want to believe that I “rent” my unit, that it becomes worthless (or at least less valuable) without a monthly fee. At the same time, if I think I can get value by some subscription, that wouldn’t be lost if I stop subscribing, I might be willing to participate. E.g. if it’s a bit like a “patreon” where once a certain amount is collected, it could trigger some paid work (e.g. some specific plugin, some additional platform feature that would not otherwise be able to see the day). Everybody would benefit, even those not participating, but by participating, one would help this development to come earlier. This kind of things (not saying ALL development should be financed this way, don’t get the wrong idea! ).

In the end, around open source software, there are generally two ways of making money: on either side of the software: the hardware and the extra services. the software itself should enrich these two, and in turn be enriched by these two. And then, you need good communication so that it is clear to everybody

[spunktsch]

@ignis32

I would like to notice, that MODEP was the reason why I got my MDX device.

the same for me. You pay for the Hardware and the service (plugins, pedalboard cloud). The same thing google does.Using open source as tools and base but keep the Hardware (pixel phones, tensor) and some software (gmail) closed.

@gianfranco

This is a very ungrateful position for us because:

1 - We spend in development and share it, but those who make use of what we share make financial profits with no return to us, be it financial or improved code.

2 - Not only we share and no not get anything back, but actually we are hurt by are losing sales and deals, as I pointed out earlier.

isn’t this the the reason why the whole ecosystem exists? You build your system around existing and free (open source) software (80% of your plugins are not develop by the mod team) and save on the initial costs that even a portion of the guitarix plugins would have cost in development. Not to mention the linux core.
Don’t take this the wrong way many businesse operate that way and it makes sense on a basic level. But to state you did all the work without getting paid in some form is a bit shortsighted.

[redcloud]

Basically, since open source is everywhere under the hood, maybe it is counterproductive to advertise that “our platform is 99% open source” and make a leverage point out of it. It just makes noise for non insiders.

[fer]

For me it was also open source that brought me here, and for users and the MOD ecosystem it has many advantages as many had pointed out… but I also appreciate all the closed stuff that MOD offers.

For investors, I suppose it would be better to consider them as potential customers and no competitors… I suppose going to user-based cloud instead of device-base goes in this direction. For example If all mod-ui with rpi or pc users could also buy closed or even MOD plugins should be very interesting for investors. And now the price difference with a mod dwarf is not so big to do the step forward eventually.

For big customers I don’t see the conflict. For example I doubt Thomann could sell them.

[looperlative]

I’ve been involved in open source for longer than should be allowed. I spoke at the first Linux Kongress. If the main selling point of your product is the software, then you only win if you are selling services such as maintenance contracts. However, if the winning part of your product is the hardware design, then the open source should enhance and not detract from your product. Blokas doesn’t have a polished hardware package and Zynthian is not the ideal user interface for a guitarist. Offer a quality product and if possible, find something in what you do that can be patented.

[Saki_Ciselas]

Exactly what C&G did with the Organelle : pure data vanilla in a functionnal cute little metal blue box. With a community that makes more (useful and/or experimental) patches than you will ever need. Love that piece of Gear, and even though you can do the same thing with a Rpi for a fifth of the Organelle costs (and I tried), what makes it awesome is the immediate physical interface the hardware provides with the patches you or others made.
Genius!
I always saw my DuoX and Dwarf the same way I see the Organelle.
I have a Pisound with Modep, and I never use it to run Modep, but rather instances of Orac in Pure Data. I bought the DuoX the day after I gave a try to Modep. In a way, Blokas made me buy MOD.

[funkypou]

I’m not sure there’s a clear question in this topic.

If ii is “How do we make money with open source software ?”, others with more knowledge than me about open source business models have already given answers : it seems like it’s either with hardware or service.

If it is “Should we keep our software open source ?”, I can share my experience and my opinion.

1. How did I hear about MOD ? On some Linux musicians forum (Ardour, linuxmusicians or something).

2. Why did I invest in this project ? Because the software is open source. There’s some political value about it and I can spend more on something I believe in than on just a product from a company that just wants to make money. Of course, the product had to look good. And it did : the hardware seemed of high quality and the possibilities of the device were attractive. Maybe I’ll have the chance to check, maybe I won’t.

So I may belong to a niche (musicians who are also Linux and open source software lovers) but it’ might be interesting to keep this niche on your side and market more towards this direction. What other guitar pedal of this quality runs on open source software ? I don’t know any.

What are the best selling points from all musicians (open source supporters and others) perspective beside the high quality hardware ? In my opinion, it’s something you can’t find on other pedals : hundreds of plugins and an OS that is constantly improved. When I invested, I thought The Dwarf would receive updates for years and would have a constantly growing list of plugins. Amazing ! And what makes this possible ? The open source software. Most companies just give you a couple of firmware updates.

I understand your disappointment when you see others take advantage of your investment in the software without any compensation. It’s a bit like what Tier 3 backers can feel when they see people playing with their Dwarf. But, as others have pointed out, remember that one of the selling points you used for marketing is the huge list of plugins, most of which being open source. So you also benefit from the open source community. Maybe it’s worth considering being part of it.