Cockroach Labs Changes Licensing Rules to Force Larger Companies to Pay

Cockroach Labs, the company and primary creator of the distributed SQL database of the same name known as CockroachDB, is once again changing its licensing rules — five years after moving away from the open source model.

The company revealed today that it is consolidating its self-hosted product into a single enterprise license, a move that encourages larger businesses to step up and pay for the features they really need. All customers with more than $10 million in annual revenue will now have to pay a fee that is based on the number of processors or CPU cores on the server system the database is deployed on—basically, the larger the database, the higher the cost.

At the same time, startups whose revenues do not exceed this threshold will be able to use the exact same enterprise version for free, in the hope that they will grow to a size that will eventually force them to pay for these premium features.

Cockroach Labs co-founder and CEO Spencer Kimball says the threshold will be self-attested, meaning no one will be asked to prove revenue.

“It’s just an honor system—most companies that should be paying us aren’t going to lie about something like this,” Kimball told TechCrunch. “We’ve shipped a very good base product that’s already exceeded the threshold of reliability and capability, and to grow our business, we need companies that are going to pay us, not be free riders. And you can’t blame them—we give these big companies our software for free. But that’s what we’re changing here.”

The announcement comes amid a series of licensing changes in the enterprise software space, underscoring the age-old battle between open source and proprietary software. Over the past 12 months, HashiCorp has switched its Terraform infrastructure-as-code software to a source-only license, while Element has moved key parts of Matrix, its decentralized communications protocol, to a more permissive open source license—similar to Grafana before it. Meanwhile, application performance management platform Sentry has created an entirely new license called the Functional Source License (FSL), aimed at “ensuring freedom without harmful parasitism.”

Cockroach Labs is no stranger to licensing changes. However, by moving all of its self-hosted deployments under a single license—ignoring specific features a developer or business might need—it further blurs the many lines that exist in the “software freedom” spectrum.

“We try to give our smaller customers a better product for their investment, and for our larger customers we try to find the right balance that provides a fair exchange of value,” Kimball said.

How Cockroach Labs came to be

Cockroach Labs is the brainchild of Kimball, Peter Mattis (CTO), and Ben Darnell (Chief Architect). But before all that, in the 1990s, Kimball and Mattis created the GNU Image Manipulation Program (GIMP), which is like a stripped-down, open-source version of Photoshop. After a decade at Google, they founded a photo-sharing app called Viewfinder in 2011, and their former Google colleague Darnell joined them the following year.

Viewfinder was shuttered in 2013 after Square acquired the startup’s founding team. The seed for CockroachDB was planted during their time at Square, and the first open source commit of the project came in February 2014.

Kimball, Mattis, and Darnell left Square to found Cockroach Labs in early 2015, quickly raising a round of funding from backers including Google Ventures and Sequoia, and launching CockroachDB into public beta the following year. In the meantime, Cockroach Labs has raised more than $600 million at a $5 billion valuation, and CockroachDB has gained popularity among developers for its promise as a resilient, scalable database capable of handling any kind of outage, with data distributed and balanced across multiple nodes.

However, like almost every major open source enterprise, Cockroach Labs abandoned the Apache 2.0 open source license in 2019 to protect its own efforts to sell CockroachDB-based services.

Why Suppliers Are Moving to “Source Availability”

It’s a familiar story: a major cloud provider starts selling its own managed version of an open source project, bypassing the company and the core developers who contribute most of the code. Amazon is often at the center of these disputes, with notable examples including changing the Elasticsearch license to prevent AWS from monetizing Elastic’s hard work.

While hyperscalers have every right to do so under open source licenses, companies like Elastic and Cockroach Labs have fought the trend by moving to a “source available” license. It offers many of the freedoms of a traditional open source license, but with one key difference: developers can’t sell a commercial version of the product “as a service” without paying for a license.

Under this licensing model, Cockroach Labs customers have always been able to self-host CockroachDB. This includes a free version aimed at smaller businesses, independent developers, or students, and an enterprise version with sugarcoating on top, including disaster recovery tools, improved security, cluster optimization, and support.

But Kimball says this approach had two problems: startups wanted some enterprise-class features but couldn’t or wouldn’t pay for them; and larger enterprises were cutting back on CockroachDB to save money, sticking with the free version even when the enterprise version made the most sense.

“Our ‘basic’ (free) offering has become one of our most experienced competitors,” Kimball said. “The reason that’s true today, but wasn’t necessarily true two years ago, is that the quality of the product has gotten to the point where you can go a long time without any support needs. That’s amazing, and we’re happy to be able to deliver that level of quality to our customers. But on the other hand, especially in more challenging macroeconomic times, we’ve seen some companies walk away from an enterprise contract — which comes with a better level of support — because they’re wondering how many support cases they’ve had in the last year.”

The licensing change will go into effect on November 18, when Cockroach Labs releases CockroachDB version 24.3. While the current self-hosted product has multiple different licenses covering different parts of the codebase, the new Enterprise tier will have a single license that the company calls the CockroachDB software license (none of these changes affect the existing Cockroach Labs cloud product).

“By giving these legacy companies all of their enterprise capabilities for free, we’re investing in them, giving them an enterprise-class product,” Kimball added. “In return, we hope that helps them succeed and grow to $10 million in annual revenue. It’s a quid pro quo that makes a lot of sense.”

The Future of Open Source Software

As all these various licensing changes pile up, it’s tempting to think that open source is dead. But it’s not that simple. Open source components permeate much of the software world, including CockroachDB itself, which relies on a number of third-party libraries, languages, and toolkits. The company still open-sources some of its internal technologies, such as the Pebble key-value store, which it created to replace Meta’s open-source alternative, RocksDB.

The same is true across the tech landscape, as evidenced by Spotify, which is transforming itself into a developer tools company, making money from its own open source projects.

Open source is doing quite well, but its position is shaky — especially in the context of fully-fledged commercial projects built by vendors, judging by the events of the last five years.

“I think the open source component will continue to grow — it’s incredibly valuable, and I don’t think it’s going away,” Kimball said. “But the reality is that for finished products, the best way to really monetize them in 2024 is to build a service around them. And once you build a service, almost everything starts to move toward closed source. Because if you just build everything open source for your service, someone else can come in and just build a service on top of that.”