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I'm working on an open source project I'd like to release at some point. I am going to license it under the AGPL v3, but I'd like people to have the option to pay for private development which only they have access to under a commercial license.

Do I need to specify this commercial right from day one of releasing the open source software or can I release it under the AGPL v3 and then at a later date add in a business license for custom development work?

I assume I would need some form of contributor agreement in place to allow for things like this to happen?

I'm not very clear on the specifics I am afraid as this will be my first open source project.

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You don’t have to specify this additional license at all. You can offer it at any point in time, publicly or privately. Just like you can also change the open source license, or add additional ones, or stop offering it as open source at all.

However, this requires that you have the rights to do so in the first place.

If you are the only author (so you wrote everything yourself), you do have these rights.

If you aren’t the only author (so you integrated contributions, or made a derivative work), you don’t have these rights, unless

  • the authors licensed their work/contribution under a license that allows it, or
  • the authors gave you permission in some other form (e.g., by signing a CLA).
  • Actually, you can just write over or remove those old contributions. Or you could externalize them in some way just to satisfy the license conditions. Get creative. – Josh Habdas Feb 15 at 13:01

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