How exactly does someone make money from free software? And how do programs compete with websites?

Question

I always wanted to create software but was not really into websites.I see that popular programs(such as skype) don't make as much money as popular websites(such as facebook,twitter etc.).

Is this because monetizing websites is easier than programs? If so, why is that?

And what are some popular methods to monetize free programs? Should i change my mind and approach website development?

I'm confused.

Also note i am not talking about open source.

Answer 1

Here are some common ways that organisations monetise their software:

• Advertising - users are shown sponsored content within the context of the software. Often seen on free mobile applications and webapps. (e.g. YouTube, Spotify)
• Subscription - users must pay a subscription fee to use the software. Common for desktop applications, web applications, and games where new content is delivered periodically (e.g. Netflix, XBox Live)
• License - users purchase a license to use the software. Often the way that desktop applications are monetized. Users will make a one-time purchase and be able to use a given version of the software forever. (e.g. Microsoft Office, Adobe Creative Suite)
• Pay as you go - users add billing details, and the software keeps track of resources used and bills the user periodically. Common with cloud services. (e.g. Amazon AWS, Azure)
• In-app purchases - users may enhance their experience by purchasing and unlocking special features. Often used in games to allow users to buy special items or give users who spend money in the game an edge on competition. (e.g. Clash of Clans)
• Free -> Premium - users may access a free version of the software, but can improve their experience by purchasing an upgrade to a richer version. Often the free version is ad-supported. Often used for mobile apps so users may try an app before purchasing the full version, and software products with a "community edition" (e.g. Neo4j)
• Support contracts - the software is provided for free, but users may choose to subscribe to a support contract. (e.g. MongoDB)
• Training - users may purchase training and receive certifications for using the software (e.g. Hadoop)
• Hosting contract - the software is provided for free, but users may choose to pay for the organisation to deploy, host, and manage the software for them (e.g. ElasticSearch)
• Development contract - basic software is free, but organisation is hired to complete a development contract to provide customisations, integrations with other software.
• Selling data - the software collects data which is considered useful to others and they can purchase the data. (e.g. trading data)
• Speaking arrangements - conferences pay for founders/contributors to talk about the software

Is this because monetizing websites is easier than programs? If so, why is that?

I assume by "programs" you mean desktop applications. I would say it's easier. Monetizing desktop applications has more complexity because

• it's easier for users to subvert licensing/subscription/ads by cracking the software
• there may be fewer options for ad networks for desktop applications