This is where affiliate marketing and open source meet. In talking about Open Source Business Models or how to make money with an open source application. The first one that I want to discuss is what I call the “Affiliate Model”. This model is pretty simple. After creating a demand with an application,  a community around that application, and then an audience you now have a bunch of users who you can market services too. In the Affiliate Model you are using 3rd party services. The following are a few prominent examples:

1. Web-Hosting Services
2. Design Services
3. Domain Names
4. Backup Services

WordPress Is A Good Example

WordPress is perhaps the largest open source web application project out there. With millions of hosted blogs on WordPress.com and just as many self-hosted blogs. WordPress is HUGE! If you browse around WordPress.org you will see the Hosting page located in the main navigation. That page looks like this:

A person that I know “on the inside” over a Bluehost web hosting told me that a majority of all their new signups each day are from that ad right on the WordPress hosting page! Let’s say at a minimum WordPress is getting paid $100 per signup that they refer to Bluehost. Let’s run these basic numbers real quick:

$100 (per signup) x 100 (#of signups) = $10,000

I’d be willing to bet that WordPress is generating this daily just from Bluehost. Not including all the other providers. But enough of the speculation. Do you see where i’m coming from here? The affiliate model as an open source business model works. As the creator of the open source application, you can recommend to your users where they should host the application you have created for them. Think of what your open source project could do with $10,000!

Build Your Affiliate Relationships

You want to build relationships with the companies that you are going to be an affiliate with. For example, the standard affiliate for Bluehost gets anywhere between $65 – $100 per signup. But because of WordPress’ amount of signups daily plus their personal relationship with them they most likely will generate more per sign-up. Something like $125 per or $150 per. Get to know these companies and share with them your Open Source vision and what it will mean to them.

Earning & Reinvesting

At this point it’s all about earning and reinvesting back into your open souce app. At the point to where you start to earn a little bit of cash through Affiliate advertising, just simply continue to multiply your efforts. If you are generating $2,000/month you are no IBM. But it’s a start. Keep building your application. Keep building your community. And you will see those numbers continue to increase.

You will need to reinvest some of the earnings you make each month back into your open source project. Whether it be to designers to help “beautify” your application. Or in marketing through the web. This will speed up the process much quicker and allow your open source project to grow much more rapidly. Here’s what i’m talking about:

The Problem With Most Open Source Projects

The problem with most open source projects is not that that their application isn’t cool. Or that it doesn’t work. It’s that nobody sees the benefits of using it. If you can explain your open source app clearly and make it look “eye catching” than people will connect with it. This is what has happened to the WordPress’s and SugarCRM’s of the world. They are eye appealing to the end users.

By following a model (the one shown above) you can make sure that all aspects of your open source project are being taken care of. But you gotta make money to reinvest money back into your project. And this is where Affiliate Marketing really comes into play with Open Source.