The following is a retrospective on open-source funding and Vercel business model.

https://leerob.io/blog/funding-open-source

Next.js is a free open-source framework. The creators, Vercel, fund its development. How is this possible? Why would they give it away for free?

Let’s talk about funding open-source software (OSS).

Current State

2023 will be the year of hyper rationalization for how OSS is funded.

More companies are going to need to sponsor maintainers, and engineers need to do better due diligence for how projects are maintained and funded.

Behind many successful OSS projects, there’s a successful business or crowdsourced funding.

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In the case of Next.js, Vercel is subsidizing R&D by building a platform for developers to iterate and deploy their Next.js site. They’re not the only ones, though. For example:

• MySQL / Oracle
• Vitess / PlanetScale
• Terraform / HashiCorp
• WordPress / Automattic
• Kafka / Confluent
• Apache Spark / Databricks
• Laravel / Forge, Vapor, and more

And many more.

How Vercel Funds Next.js

Vercel makes money from two types of customers: pay-as-you-go (swipe your credit card) and enterprise customers.

Many of these customers use Next.js, the software Vercel funds maintenance and development for. Next.js is free because of these paying customers.

It’s better to be open and transparent about how libraries and frameworks are funded. If your company is betting on OSS, you want some assurance that it will be maintained and actively developed.

To find the answer, work backward from the money.

Walled Gardens

Wouldn’t this create vendor lock-in? Not exactly.

Developers don’t want walled gardens. They want the freedom to eject and self-host. It’s about control. This is why all Next.js features work self-hosted. Vercel provides infrastructure and a workflow on top of Next.js. You can host Next.js elsewhere, if you want.

I’m a fan of the model Next.js uses. It’s clear how it’s funded (through Vercel) and the incentive is aligned (I want to deploy Next.js at some point, maybe I will try Vercel). It’s a similar story for Svelte. You want to deploy SvelteKit, maybe you’ll try Vercel.

What’s Next?

There are other OSS sponsorship options as well, like GitHub Sponsors, OpenCollective, Patreon, and more. I think it’s fantastic this infrastructure exists and it’s now easier than ever to support open-source developers.

Let’s see what the future brings.