Dual licensing, sometimes called multi-licensing, is the practice of releasing the same source code under more than one license at once. The most common commercial form pairs a strong copyleft license, usually the GNU GPL, with a separate proprietary license sold for money. A copyright holder is free to do this because owning the copyright lets the owner grant the code under any terms it likes, as many times as it likes; the GPL binds everyone else, but not the author who owns the rights.
The model works because of how copyleft interacts with proprietary development. Under the GPL, a company that links the licensed library into its own product must release its product under the GPL too. Many proprietary vendors cannot or will not do that. Dual licensing offers them a way out: they pay the copyright holder for a commercial license that omits the copyleft obligation, while everyone building open source software continues to use the GPL version for free. The Free Software Foundation considers this legitimate; its GPL FAQ discusses selling exceptions to the GPL and confirms that a copyright holder may release a program under the GPL and also sell separate proprietary licenses to the same code.
Qt is a canonical example. Its licensing page states that Qt is available under both commercial and open source terms, where the commercial license suits “development of proprietary/commercial software where you do not want to share any source code,” while Qt under the GNU Lesser General Public License version 3 is appropriate for developers who can comply with the open source terms. The same codebase thus reaches both audiences, with the commercial license funding the development that the open source community also benefits from.
MySQL turned the same approach into one of the best-known open source businesses. The MySQL database was offered under the GPL for open source use and under a paid commercial license for companies that wanted to embed it in proprietary products without inheriting copyleft. That dual stream of revenue made the company a high-value asset and set up the later acquisition battles over the database, in which control of the copyright (and therefore the power to keep dual licensing) was a central concern.
Dual licensing depends on the licensor holding all the rights. This is why projects that pursue the model often require contributors to assign copyright or grant broad licenses through a contributor agreement, so that no outside contribution can block the owner from offering the proprietary edition. The technique sits at the boundary between the free software world and the proprietary one, using copyleft as leverage rather than only as principle.