I think the answer is somewhere in-between. I really like the idea of "paid open-source", where someone creates a software product and you pay a small license fee to self-host it. This way you still have full control over the software, very low costs but the product is still externally maintained so you don't have to worry about it breaking. The only thing you have to maintain are the servers, but with all the VPS and managed cloud platforms out there, running a server, backing it up or monitoring it is done in a few clicks.
The biggest selling points of such a distribution system should be:
1) It's REALLY easy to set-up, no technical knowledge required.
2) It doesn't require any type of maintenance (eg. can run perfectly at least one year without changing anything, this means that the software should allow for OTA updates).
3) It is a lot (10x) cheaper than a SaaS alternative.
The biggest selling points of such a distribution system should be:
1) It's REALLY easy to set-up, no technical knowledge required.
2) It doesn't require any type of maintenance (eg. can run perfectly at least one year without changing anything, this means that the software should allow for OTA updates).
3) It is a lot (10x) cheaper than a SaaS alternative.