It’s actually problem because the bad business model of the open source has made it’s software fall behind their propreitory alternatives?

What does "fall behind" mean in this context? Faster development cycles (i.e. more features/changes more often)?

Proprietary software is faster at generating bloat. Sure, sometimes there are some good ideas mixed in there that FOSS doesn't have, but the only thing that's keeping those aspects proprietary is intellectual property law and not some fundamental truth about FOSS v. Proprietary.

Even so, why is faster development more important than community? Why is it more important than freedom of information? Why is it more important than optimization, well-organized code, or mod-ability?

1. What is the philosophy of open source and free software?

https://www.gnu.org/philosophy/philosophy.html

the four essential freedoms: (0) to run the program, (1) to study and change the program in source code form, (2) to redistribute exact copies, and (3) to distribute modified versions.

Why open source softwares are bad at making money?

I'm assuming you mean "Free Software(s)" since many "open source" softwares are proprietary and therefore as good at making money as any other corporate venture. (Insert a list here of all the failed tech products from the past 50 years for maximum irony)

The reason Free software is "bad at making money" is because the current global economic paradigm relies on some form of property to be profitable: i own something (a thing, a skill, an idea), you want it, I can rent it or sell it to you. In the sense of software, this is "Intellectual Property" aka owning the ideas.

Free Software's philosophy is inherently pro-community and anti-private property, which means it will always be bad at playing Business' game. Which is good, because the values that the Free Software movement holds have nothing to do with capitalist values.

Ironically, if you care about ownership, you should actually be pro-FOSS. It gives you the most control over what software is running on your computers at any given time, and therefore means that it's closest to true ownership of your computers. Is it ownership if you're not legally allowed to open it up and "look under the hood" or modify the code?

Is there a business model, besides subscription as many people can’t pay? Or am I wrong here?

Not being a paid developer, I don't know much of the business side of FOSS development; i will offer that some devs make the source available but charge for compiled binaries and may or may not publish compilation instructions, meaning that casual users can support the devs financially and code literate users can choose whether to contribute to the project.

Solutions proposed to solve this problem

It's only a problem to those looking to monetize any and all intellectual property. If you're a dev and worried about starving, go work for a proprietary company. Leave greed out of FOSS.

Seriously, no ill-will. As much as I hate Micr*s*ft, I feel no anger toward all the devs working for them. Coders have gotta eat too, can't blame them for working with proprietary software to do so.

Some examples of bad and good open source business model and whether it’s good or bad than their mainstream propreitory alternatives?

Good: any business model that preserves the four freedoms and copyleft

Bad: walled-garden models that require buy-in to have access to source code (whatever redhat's doing with centos), museum models ("look, but don't touch") that let you see the code but have licenses that protect it from changes/redistribution (most of Microsoft's "open source" projects)

Snark aside, "[better] or [worse] than..." is a very subjective evaluation. Better or worse than doing what? FOSS will always be worse at making money, but proprietary will always be incentivized to remove more rights from the users in favor of monetizing as many aspects of software use as possible. For FOSS the primary goal is creating the software in-and-of itself, for proprietary the main objective is profit. Their objectives are so different they aren't even opposed: they're orthogonal to each other.

I am sorry to say some of what you write is not correct.

Red Hat — I know they had their slice of controversies lately, but still — is a ≃33bn USD company, how is that not making money? They sell solutions based on OSS (different from selling software!), which is one viable way of making money.

Other ways are: selling support, selling licence exceptions (when you are the sole copyright holder of the codebase, MySQL did that), sponsored development for new features, SaaS (bad!), customization for big enterprises/public actors, open-sourcing software but keeping assets proprietary (some games do that), and many more.

One big problem that I see with the current system is, that - like everything in capitalism - it works with the attention economy. Big projects with many functions (like computing platforms) get much attention, especially from companies, who donate and contribute for their own good. But there are many small projects, often small libraries, that are developed by single persons for free, but used everywhere. If I remember correctly the disaster with log4j was such a case. Real developers surely know even better examples. The funding of such widely used software can effect the security of our whole IT stack.

For me an issue on the other side is that it can be hard to leadership to pay money for FOSS. This more true the less informed they are. Personally one thing I see that would help if CTO level folks had business reasons for buying down risk by getting SLAs for CVE support, and investing in major work to reduce technical debt when using FOSS. US federal government there are tons of laws and orders that are suppose to encourage using and paying for FOSS but the federal government isn't ran by technical people, so it's hit and miss on adoption.

Upvoting because of the great responses.