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In the rapidly evolving software landscape, a new licensing model is gaining significant traction: Source Available licensing. As companies search for sustainable business models that balance open innovation with commercial viability, many are turning away from traditional open source approaches toward more nuanced licensing strategies. But does this represent the future direction for commercial open source, or is it merely a transitional phase?
The Rise of Source Available Licensing
Source Available licensing occupies the middle ground between proprietary software and open source. Unlike traditional open source licenses that grant users extensive freedoms to use, modify, and redistribute code, Source Available licenses provide access to source code while imposing specific restrictions—typically on commercial usage or competition.
The most prominent example is the Business Source License (BSL), pioneered by MariaDB and subsequently adopted by companies like Cockroach Labs, Elastic, MongoDB, and Redis Labs. Under BSL licensing, source code remains visible and accessible, but commercial usage faces limitations until the code eventually converts to a fully open license (typically after 3-4 years).
According to a 2022 White Source report, adoption of Source Available licenses increased by over 75% among commercial open source vendors between 2020 and 2022, indicating a significant market shift.
Why Are Companies Embracing Source Available Licensing?
Cloud Provider Competition
"The primary driver behind Source Available licensing is the cloud paradox," explains Stephen O'Grady, analyst at RedMonk. "Companies want the adoption benefits of open source but need protection from hyperscalers who can monetize their software more effectively than they can themselves."
Major cloud providers have built profitable services by offering managed versions of open source software without necessarily contributing significantly to development costs. This has created a sustainability challenge for the original developers.
Sustainable Business Models
Commercial open source companies face a fundamental challenge: how to monetize software that anyone can legally use, modify, and redistribute? Source Available licenses aim to solve this problem by creating reasonable commercial boundaries.
Elastic CEO Shay Banon noted when announcing their license change: "Our license change is aimed at preventing companies from taking our Elasticsearch and Kibana products and offering them directly as a service without collaborating with us."
The Debate Within the Community
The shift toward Source Available licensing hasn't occurred without controversy. Critics argue these licenses undermine the core principles of open source software.
The Open Source Initiative (OSI) has been clear that Source Available licenses don't qualify as open source under their definition. According to their criteria, true open source licenses cannot discriminate against specific uses or users—restrictions that Source Available licenses explicitly implement.
Bruce Perens, co-founder of the Open Source Initiative, has stated: "These new licenses create confusion by trying to capitalize on the goodwill around open source while removing fundamental freedoms that define it."
Proponents counter that Source Available licensing represents a necessary evolution for sustainable development of complex software platforms in the cloud era.
Case Studies: Success or Failure?
MongoDB
After switching to their Server Side Public License (SSPL), MongoDB reported a 38% year-over-year increase in revenue. While correlation doesn't prove causation, the company has continued to thrive despite fears that licensing changes might alienate users.
Elastic
Elastic's move to a dual license approach (Elastic License + SSPL) initially caused controversy, including a fork of their codebase by Amazon Web Services. However, their financial results have remained strong, with revenue growing by 42% in the first fiscal quarter after the license change.
Redis Labs
After implementing Source Available licensing for certain modules, Redis Labs (now Redis Inc.) reported a 40% increase in annual recurring revenue, suggesting the change hasn't significantly hampered commercial adoption.
The Future Landscape of Licensing Trends
The continued growth of Source Available licensing likely represents a permanent shift in the commercial open source ecosystem rather than a temporary trend. Here's why:
Hybrid Models Will Dominate: Most successful commercial open source vendors are adopting hybrid licensing approaches—maintaining open source cores while applying Source Available licenses to premium features.
Legal Clarity is Emerging: As more companies adopt these licenses, legal precedents and standardized language are developing, reducing adoption friction.
Developer Acceptance: While purists object, pragmatic developers increasingly understand the trade-offs that allow sustainable development of the tools they rely on.
Investor Pressure: Venture capital firms have become more sophisticated about open source business models and often encourage licensing approaches that protect monetization paths.
Is This Really the Future?
The question remains whether Source Available licensing represents a sustainable equilibrium or just another step in the evolution of software licensing. The evidence suggests it's here to stay, but with continuous refinement.
"The future of commercial open source isn't about abandoning open source principles," says Heather Meeker, open source legal expert. "It's about finding the right balance of openness and sustainability for each project's unique needs."
For companies considering their licensing strategy, the trend toward Source Available licenses offers both cautionary tales and success stories to learn from. The key is understanding your specific community, competitive landscape, and monetization goals.
As licensing trends continue to evolve, one thing is clear: the binary distinction between "open" and "closed" source is giving way to a spectrum of approaches that balance innovation, collaboration, and commercial viability in increasingly nuanced ways. Source Available licensing represents not an endpoint but an important waypoint in that ongoing journey.