Free alternative to Basecamp. Is there a flaw in 37 Signals business model?

logo-bc.gifHere's an alternative to 37 Signals popular Basecamp project managing software: ActiveCollab (Absolutly terrible name.) TechCrunch article link.

 A flaw in the newfound "simple" business model? Seems when somethings so simple it's easy enough to knock off. And since there are any number of programmers ready to provide a free service, where are the barriers to imitation?