Open source was a ZIRP marketing funnel

Enterprise software companies built around open-source software projects have been backing away from traditional, permissive licenses for several years now, making it clear that the vibrant open-source ecosystem that spawned an explosion of innovation over the past decade might have been just another ZIRP phenomenon. Redis, one of the first companies to move in that direction, ended its open-source era last week.

Going forward, the Redis Source Available License or the Server-Side Public License will govern all future versions of Redis, the company announced Wednesday. Both of those licenses are known as "source available" licenses, which means they allow users to inspect the code and use it for personal or internal projects but prohibit companies from using the code to provide commercial services that compete with Redis.

Redis had already implemented those licenses for what it calls "modules," or packages of code that add enterprise-grade functionality to the core Redis project, which until Wednesday was available under the Berkeley Software Distribution license. But going forward, "Future Redis source-available releases will unify core Redis with Redis Stack, including search, JSON, vector, probabilistic, and time-series data models in one free, easy-to-use package as downloadable software," said CEO Rowan Trollope in a blog post.

Cloud providers will have to obtain a license to sell managed versions of the core Redis project, and the company announced that Microsoft has already agreed to pay for such a license. Redis customers that are already paying for its commercial version won't see any changes.

Like MongoDB, Elastic, and HashiCorp before it, Redis wants to ensure that it will be the only company allowed to monetize the core Redis project.

Most enterprise companies built around open-source projects wrote the vast majority of the code that goes into those projects. After the economy shifted thanks to rising interest rates, those companies are under increased pressure from their investors to see a return on that expenditure, but the permissive licenses that were almost standard-issue over the last decade allowed anyone to take that code and build a revenue-generating business around it.

Companies released their code under those types of licenses for several reasons: they wanted potential customers to test drive the basic features without forcing a commitment, they wanted the marketing goodwill associated with being "free," and they wanted to look like outsiders challenging the status quo of closed software. When growth was the north star of enterprise software investing, that approach worked quite well. Now that revenue is harder to find and profit has become paramount, it does not.

It's getting hard to understand why any company should consider using open-source software released under a traditional license by a venture-backed startup.

Companies that decide to retract their permissive licenses always complain that the Big Three cloud bogeymen forced their hand. But it seems inevitable that smaller cloud software companies who don't directly compete with Redis and used the open-source project in good faith could be exposed to legal action if they continue to use source-available Redis, given that some of these newer licenses haven't really been tested in court.

That is, of course, the point: most of those companies will likely choose to avoid the legal confusion and pay Redis for a commercial version. Companies that want to use traditional open-source projects now face a choice between company-driven efforts that innovate quickly but could change overnight and foundation-led projects, which move slowly but promise stability.

(This post originally appeared in the Runtime newsletter on March 21st, sign up here to get more enterprise tech news three times a week.)