Need help to understand the pros and cons between open source vs closed source license for webapp?

I'd like to ask you for the help/advise to come out of the problem that came out recently in our group.

We're working for 3-4 months on the web application similar to http://instagram.com/ or http://backspac.es/, and we've developed our original app with functionality that lacks in all projects that can be found in web.

Right from the beginning I was thinking to open the source code of the application since it is mostly a 50% - javasctipt, 10% - css, 20% - html and graphics that is accessed directly via browser and the frameworks/plugins we're using are the one of the best open-source projects.

But recently in our small group it came out that not all of us are very happy about this choice. Mostly the people are worried about "easiness to replicate the application".

I'm trying to convince people that our business model is based not on the app but mostly on the community of people using our app and the personal relations with sponsors etc. in a few words on personal relations not on code.

The second my point was to give to the community of users the possibility to participate in developing and/or in the discussion of future features, similar to the group of http://www.discourse.org/, but despite all of my efforts it seems that it is still not sufficient to convince people at 100% that open-source in our case is the benefit rather than risk/danger.

Am I miss something (let me here to skip my abilities to communicate)?

How to overcome the fear of people for being robed?

What would be your try on the open-source webapp?

Thank you!

There are different forms of protection. Copyright covers the expression, but not the idea. Given that 50% of the coding effort is in the javascript (which can be effectively downloaded anyway through the browser) the question should be ask, does the effort of preventing (whether technical measures, obfuscation, etc) infringement worth it? In other words, is that where the value of your site lies? Or is it the branding (which can be protected via trademark) or the UX (tradedress ) or the really clever backend code?

This comes back to the business model, if the point is to be a Social Networking Site then the effort should be on the social policy or the badge system or whatever makes your site unique. If you are doing a portfolio of artistic works with unique visual styles then copyright makes sense. The problem you are facing is that you are struggling to define social capital, which is not easily measured, and worse, cannot be directly monetarised (goodwill etc). I've seen various ways to find a balance

1. core app can be opensource but extensions or wallpaper are value-added paid services
2. defend the trademark like crazy (though community trademarks are a different fish)
3. follow a progressive release like github (from memory) where you promise to release the source in 1, 2, .. n years. The theory is that cloners will only get the last nth generation version (which means you have to innovate like mad)