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New Software Business Models

17 June 2015
Phoenix, AZ

This week we left the mild Bay Area summer for oven-like Phoenix and the annual gathering of “Netroots Nation.” A four day gathering of three thousand progressive movement organizers, Netroots is a not-to-be-missed conference in our field. We came to demo our new tool CallPower, learn from other technologists, and meet potential new clients.

One of the most relevant sessions was titled “New Software Business Models,” and included a panel of representatives from Action Network, Control Shift, Hand Stack, and New Media Ventures discussing how to build a progressive and sustainable software business.

The first takeaway was that operating structure matters, and business incentives can drive software requirements. Many of the panelists have benefit-corporations, which are similiar to the standard C-structure but include a clause that legally binds them to value their social mission in addition to creating profit. Others operate as a non-profit and so only have a duty to their mission, but the resource constraint can limit their ability to invest in technology without a large operating buffer.

For businesses that choose to only do business with “progressive customers,” defining who this includes can present a challenge. Nathan Woodhull of ControlShift said this is “tricky, but not hard” and that their internal metric is whether they would personally volunteer for the organization. Internationally, where the political spectrum can be different than in the United States, and they rely on a network of allied friends and clients for assistance in making client decisions.

Without an alignment of incentives between the business, customers, and end-users the software can suffer. For large vendors that rely on upgrades and contract renewals to maintain sales, new features and interface redesigns can creep in without a compelling user need. Other real needs can be unmet if the software is good enough to sell, even if it has persistent issues. One pithy summary was that “who owns the organization, owns the technology.”

For us, the most interesting question was about software licenses and pricing models. With our new CallPower project, we intend to sell a hosted version to interested organizations, while also keeping the core of the tool open source. The AGPL license provides some protection against competitive forks, but not as strong as keeping the source private. While some in the progressive space only share their source with mission-aligned clients who have signed a non-disclosure agreement, we don’t feel that this fulfills the spirit of open source software on which we all rely.

Several pricing models are possible for hosted “software as a service”: based on client usage, means, or value. Because the CallPower uses Twilio connectivity and Amazon services which already have usage-based pricing structures, we have initially decided to determine our hosting pricing on a combination of client means and value. We will continue to do client-directed development, and are excited to add a secondary stream of income to allow us to grow and invest in new projects to share with the community.

Stay tuned for more announcements in the future, and we hope to see you at Netroots 2016 in St. Louis!

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