Traditional business models for software development are currently being challenged by the phenomenon of open source software where communities of programmers leverage the Internet to develop free software without receiving any direct compensation. To understand the success and the prospects of open source software it is necessary to examine the motivation of the participants in open source projects. This paper presents a theoretical model to study the three main factors leading to participation in open source projects: intrinsic motivation, personal need and expectation of future returns. Implications of the model are derived and their significance discussed. We conclude that open source software will be an enduring alternative to traditional software development and that it is possible to combine aspects of both development approaches.