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This is one example of a more general strategy: Give away the intellectual property and get your income from it indirectly. That is how both of the leading web browsers are provided. Netscape gives away Navigator and sells the server software that Navigator interacts with; Microsoft follows a similar strategy. Apple provides a competing browser--which is available for free, but only runs on Apple computers. It is also how radio and television programs pay their bills; give away the program and get revenue from the ads.

Source: http://patrifriedman.com/prose-others/fi/commented/Future_Imperfect.html#This_is_one_example_of_a_more_general_strategy_Giv

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[Sat Mar 12 11:03:54 EST 2005-70] Samuel Kleiner (NOSPAMsam@ulterior.org.NOSPAM):
Netscape no longer exists as a viable server company.
http://news.netcraft.com/archives/web_server_survey.html
You should use another example.
[Tue Jan 31 18:48:35 PST 2006-30] tid242 (NOSPAMNOSPAMsubscriptionsNOSPAM@tid242.kom.NOSPAM):
As Samuel pointed out you should rm the Netscape example and perhaps analyze how its offspring, Mozilla is effecting server markets. Also worthy of note: Apache is the most sucessful webserver (as may be seen from Samuel's netcraft link) and certainly does not fit into this paradigm.

As for the second point, it may be pertinent to look at the changing landscape of traditional media and how things like TiVo are impacting telivision; internet, newsprint (which has seemed to lose much of their pricing leverage over the past 10 years); and cheap data storage, the radio. Obviously other factors are at work, but worth considering.
[Tue Oct 10 11:29:34 PDT 2006-282] John Gilmore (NOSPAMgnu@daviddfriedman.toad.com.NOSPAM):
Mozilla is one of the most successful open source companies in history; it brings in at least $50M/year in advertising revenues from sending searches in that little box at the top to Google or other search engines (it gets a cut from each search). It not only develops the software for free, gives it away, but also takes out advertising designed to increase its market share (and thus search revenues).

So far its business model has been protected by obscurity, but that will not survive long. Anyone can take their browser, change three lines in it, and
make a competing browser that directs the money flow elsewhere. But there remains the problem of attracting an audience to *use* your browser, when it's no better than Mozilla's. Perhaps offering users kickbacks from the revenues that their searches produce would encourage a switch.

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