I think niche market software, used by a limited number of highly specialized professionals, is somewhat incompatible with the open source economic model. When a piece of software is used by very many users, and there is a strong overlap with coders or companies capable of coding, say an operating system or a a web server, open sources shines: there is adequate development investment by the power-users, in their regular course of using and adapting the software, that can be redistributed to regular users for free in an open, functional package.

At the other end of the spectrum, when the target audience is comprised of a small number of professionals that don't code, for example advanced graphic or music editors or an engineering toolbox, open source struggles to keep up with proprietary because the economic model is less adequate: each professional would gladly pay, say, $200 each to cover the development costs for a fantastic product they could use forever, but there is a prisoner dilema that your personal $200 donation does not make others pay and does not directly improve your experience. Because the userbase is small and non-software oriented, the occasional contributions from outside are rare, so the project is largely driven by the core authors who lack the resources to compete with proprietary software that can charge $200 per seat. And once the proprietary software becomes entrenched, there is a strong tendency for monopolistic behavior (Adobe) because of the large moat and no opportunity to fork, so people will be asked to pay $1000 per seat every year by the market leader simply because it can.

A solution I'm brainstorming could be a hybrid commercial & open source license with a limited, 5 year period where the software, provided with full source, is commercial and not free to copy (for these markets DRM is not necessary, license terms are enough to dissuade most professionals from making or using a rogue compile with license key verification disabled).

After the 5 year period, the software reverts to an open source hybrid, and anyone can fork it as open source, or publish a commercial derivative with the same time-limited protection. The company developing the software gets a chance to cover it's initial investment and must continue to invest in it to warant the price for the latest non-free release, or somebody else might release another free or cheap derivative starting from a 5-year old release. So the market leader could periodically change and people would only pay to use the most advanced and inovative branch, ensuring that development investment is paid for and then redistributed to everybody else.