Open source development needs time and effort, which often means people need to get paid to devote their time. Popular business models include corporate sponsors, individual donations or selling SaaS or support services. However, the real value of open source projects is the freely available code which is hard to estimate and is not monetized in any of these business models.

I’m proposing to use market mechanisms to approximate the value and provide a steady source of income to the developer. For every share bought by an investor, x% cut is given to the developer. The cut can be thought of as a buy-in for the investor’s bet that the FOSS project will be valued more in the future. The developer’s income is proportional to number of trades and valuation of the stock. Thus the incentive for a developer is to provide value in the form of FOSS code and increase the value of the project. And the incentive for the investor is to correctly assess the growth trajectory for a project.

FOSS + market valuation has some unique advantages. Investors have the unique opportunity to look at the quality of code, documentation, contributors and community. On the other hand, investors can easily become contributors and contributors can decide to be investors as well.

This mechanism would provide a way for corporate sponsors and individuals to support open source and at the same time make a tangible investment. Even SaaS or support services that are provided by third parties would add to the valuation of the FOSS project. Thus this method of valuation is compatible with all the popular business models today.

A few questions I had

  - The x% cut creates an artificial spread. Is that a deal breaker? 
  - How to enforce the x% cut? It seems that this is only possible if the exchange is the only legitimate source of transferring shares.
  - x% cut is one mechanism I could think of for a sustained salary. Are there any other mechanisms?