AWS, MongoDB and the economic realities of open source

Original author: Ben Thompson
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In 1999, US music industry revenues reached a maximum of $ 14.6 billion (all figures from the RIAA ). But it is important to understand what was sold:

  • $ 12.8 billion received from CD sales
  • $ 1.1 billion from the sale of cassettes
  • $ 378 million in sales of music videos on physical media
  • $ 222.4 million - singles on CD

In general, the music industry mainly sold plastic discs in beautiful boxes. Recorded music is just a way to distinguish some pieces of plastic from others. The music itself was not for sale.

This may seem a silly difference, but it becomes clear what happened next:

The revenues of the music industry fell sharply, although the distribution and availability of music soared to the skies. People no longer bought plastic discs from the music industry; they just downloaded music directly.

Sale of convenience

The problem is that recorded music is useless from a business point of view: once a recording is made, it can be copied as much as you like. The offer is virtually endless. From this it follows that the monetization of the record depends on the imposed deficit. It was precisely this role that plastic discs played: the final stock of physical goods, which was the most convenient way to produce music. Pirate mp3 files from sites like Napster and his followers turned out to be even more convenient - and cheaper.

As seen in the diagram, the industry began to stabilize in 2010, and in 2016 it returned to growth. It seems that in 2018, sales will increase by about 10% from $ 8.7 billion in 2017 and reach the peak of 1999 in the not too distant future.

What happened? The music industry — largely through Spotify, and then Apple — found a new product. No, they still do not sell music. In fact, they beat piracy in their own game: the music industry sells convenience . You can get almost any existing entry for as little as $ 10 per month.

DocumentDB (MongoDB compatible)

From the January 9 AWS Blog:

Today, we are launching Amazon DocumentDB (compatible with MongoDB)  - a fast, scalable, and highly available document database compatible with existing MongoDB applications and tools. For document storage, six-replication SSD are used in three availability areas. This is a distributed, fault-tolerant, and self-healing storage that provides performance, scalability, and availability for MongoDB workloads on a production scale.

The specifics of MongoDB and DocumentDB are not particularly important for this article. All you need to know is that MongoDB has developed a more flexible DBMS that is better suited for large volumes of both structured and unstructured data. This is useful in large-scale applications for which conventional relational databases have never been designed.

And now you can run it on AWS. As if.

Open Source Project Licensing

MongoDB is released open source. MongoDB Inc. received venture financing, and in October 2017, went on an IPO. It distributes its main product, the database server, under the GNU Affero General Public License (AGPL).

AGPL - a close relative of the GPL, copyleft type licenses from Richard Stallman. Copyleft allows the free distribution, use and modification of copyrighted material (in this case, software), with the proviso that the same rights apply to all derivative works. That is, any project on the GPL code must itself have a GPL license. This is in contrast to “licensing” licenses, which allow the use of copyrighted material without the condition that derivative works will also be open source. AGPL has expanded the GPL to Internet systems. Since the software is only used here and not copied, the GPL will not work, but the end result will be even more burdensome than the GPL.

Both the GPL and AGPL are especially problematic for commercial companies: for example, Apple prohibits software with a GPL license in the App Store, because the app store requires apps to have a single-user license. Licenses can be replaced, but the GPL cannot be circumvented. AGPL is even worse, because its rules work just after using the software; this is why Google prohibits AGPL in the company. From the Google open source documentation :

The license imposes restrictions on software used over the network: Google is extremely difficult to comply with. Using the program under the AGPL license requires that it only refers to software under the same license. Even if you think you don’t refer to anything, it still represents a huge risk to Google due to how integrated our code is. The risks far outweigh the benefits.

There is one addition:

In some cases, we may have alternative licenses for the code under AGPL.

This is MongoDB's business: it just offers alternative licenses.

MongoDB Business Model

MongoDB explains its business model in the form of S-1 :

We believe that our highly differentiated business model combines the benefits of open source code for developers with the economic benefits of a proprietary software business. To encourage developers to explore and use the platform, we offer an open source community server. Community Server is a completely free version of the DBMS, which does not include all the functions of the commercial platform. So developers are free to evaluate the product. In our opinion, this contributed to the popularity of the platform and stimulated sales of a corporate subscription ...

Unlike companies that work on third-party open source projects, we own intellectual property, as we are the creators of software, which allows us to implement the paid subscription business model ... The main package is a comprehensive offer for corporate clients of MongoDB Enterprise Advanced to work in cloud, local or in a hybrid environment. MongoDB Enterprise Advanced includes our own database server, advanced security features, corporate management capabilities, a graphical interface, analytics integration, technical support, and a commercial platform license. We also offer MongoDB Atlas, a cloud-based database as a service, or DBaaS, which includes an integrated infrastructure and community server management.

In fact, besides the open source database server, MongoDB sells three things:

  • Additional tools for implementing MongoDB in large companies
  • Hosted service for using MongoDB in smaller companies
  • Legal certainty

The importance of the latter cannot be overestimated: the corporate version of MongoDB and the hosted service do not fall under the AGPL or the new Server Side Public License (SSPL) , which MongoDB introduced at the end of last year. SSPL is AGPL on steroids: it forces companies that provide services based on MongoDB to open the code not only for changes made, but for the entire stack.

What AWS Sells

Amazon is the largest company that works on the SaaS model. However, this does not mean that Amazon is selling "software." The reality is that software is no different from music: it is infinitely reproducible, and therefore is worth nothing in itself.

Instead, software value is usually implemented in three ways:

  1. Equipment. The most famous example is the iPhone, the only way to get iOS, but there are countless other examples.
  2. Licenses. For decades, this has been Microsoft’s core business: licenses were sold to OEMs for the consumer market or companies directly. Indeed, there is some irony in the fact that historical enemies - Microsoft and open source - were equally dependent on copyright, a strong legal regime and the integrity of companies.
  3. Software as a service, SaaS (including infrastructure as a service IaaS and platform as a service PaaS). New model of Microsoft, Amazon and almost all software startups. In this case, it is not the program itself that is for sale, but its utilitarian benefit: the developer does everything else, including ensuring reliable availability of the service.

Given this fact, we read again what AWS announced:

This is a distributed, fault-tolerant, and self-healing storage that provides performance, scalability, and availability for MongoDB workloads on a production scale.

AWS does not sell MongoDB: it sells "performance, scalability and availability." DocumentDB is just one of many areas where these advantages of AWS are manifested.

These are really important things. Corporate customers are moving to the cloud, not because it is necessarily cheaper (although costs are better correlated with use), but because performance, scalability and availability are difficult problems that have little in common with the core competencies and businesses of most companies.

But this is AWS core competency with an impressive infrastructure that you can rely on to solve these problems. Effectively working servers for millions of clients allow you to throw more resources on these tasks than any other company can allocate, plus your own achievements: from software of data centers to own chips (and large wholesale discounts from suppliers such as Intel).

As a result, “performance, scalability and availability” become an extremely attractive business: the more customers AWS receives, the higher the margin, and the company can use much more resources for new use cases, which makes AWS even more attractive for new customers. Microsoft is competing, but so far behind, Google is even further. In fact, even a managed service MongoDB works in the cloud: it just does not make sense to raise its infrastructure.

Open source task

Thus, we come to the main task for open source companies:

  • MongoDB uses open source to attract developers.
  • MongoDB Inc. built a successful business selling additional MongoDB management tools for companies.
  • More and more companies want to go to the AWS cloud (or Google, or Microsoft with a similar MongoDB offering ) because they value performance, scalability and availability.

Here the position of MongoDB Inc. not too different from the position of record companies after the appearance of mp3 on the Internet: they do not sell software, but rather tools that make this software usable. But these tools are becoming increasingly obsolete as calculations move to the cloud. And now AWS sells what buyers really want.

Worse, since AWS does not have access to MongoDB (only compatible APIs), it only supports MongoDB 3.6, and the current version is 4.0.5. It’s quite possible that if AWS becomes popular, MongoDB will actually begin to stagnate: of course, you can get the best version from MongoDB Inc., but then you have to manage it yourself or make efforts to link all of your AWS services with MongoDB (again , the potential for differentiating this proposal could be saving MongoDB and an important lesson for other companies).

An authorization license is not necessarily salvation. For example, Redis Labs offers its Redis database under a licensing license: this means that AWS usually has the latest version, which is good for the development of Redis, but does not bring it any money. This forced Redis Labschange the license for additional modules by adding a Commons Clause clause that forces service providers to pay for the use of modules, effectively turning them into non-free software.

It's hard not to sympathize with MongoDB Inc. and Redis Labs: both companies have spent a lot of money and effort on creating their products, and now Amazon is making money from them. But here's the thing: Amazon earns not by selling software, but by a service that businesses value, and MongoDB and Redis are popular largely because they started from open source.

Economic realities and future

The bulk of the writing is well known to people from the open source community: for some time, there has been intense debate about the impact of cloud services on open source. But I think that these debates are too distracted by the theme of “justice” and to what AWS supposedly “owes” to open source. It is quite possible to understand, Yes, companies such as MongoDB Inc. and Redis Labs have worked hard, and yes, AWS is largely based on open source, but the world is driven by economic realities, not by subjective judgments about justice.

That's why I started with music: a sharp drop in sales of record companies was not necessarily “fair,” and yes, companies like Apple with the iPod earned billions from piracy. But it is only the fact that the music itself has become infinitely reproducible.

The same goes for software: the bits on the disk are fundamentally free - ask Richard Stallman. In his essay “Why programs must be free,” he wrote:

The marginal cost of a copy of the program is close to zero (and you can pay this cost by doing the work yourself), so in the conditions of the free market its price would be almost zero. The license fee significantly hinders the use of the program. If a program that is useful to many is not free, a much smaller number of people will take advantage of it.

It is easy to show that the general benefit of the program for society is reduced if it is assigned an owner. Each potential user of the program, facing the need to pay to use it, may decide to pay, but may refuse to use the program. When the user decides to pay, there is a transfer of values ​​from one side to the other, the total wealth does not change. But every time someone refuses to use the program, it hurts him without bringing benefits to anyone. The sum of negative numbers and zeros is always negative.

But this does not reduce the labor costs of developing the program. As a result, the overall performance of the process, measured as user satisfaction, delivered by the hours of work, decreases.

This is an inevitable compromise, and it is fair to ask the question: will the golden age end for companies that build a business on open source software (although not for open source itself as a whole). The monetization model depends on the local use of the software; as cloud computing begins to dominate, the economic model becomes much more complex.

However, AWS, Microsoft and Google are also better off taking a break. It’s hard to imagine that they will ever pay for open source software, but at the same time writing (public) software is not necessarily the core competency of their cloud business. They also benefited from open source companies: they provided the means by which they sell their product — performance, scalability, and accessibility. Right now everyone is winning, but if you just follow economic realities, then in the long run, everything will get worse.

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