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Looper's Delight
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At 2:46 AM -0700 9/10/00, Ben Porter wrote: >Well all this talk of warez and such fails to recognize a simple idea: >economics and how that applies to the software industry. > >Lets first look at physical products that you go and buy, like cars. What >kind of car do you think is a better car a top of the line Mercedes or a >Honda Civic? I'm willing to bet most people would think the Mercedes a >better car. Why? Because it cost more. It's a pretty simple idea. If >something costs more it is generally seen as being "better". > >Apply this idea to software. I'll use Adobe for example. They have various >versions of Photoshop available. They range in price from, I think, $40 >for a consumer level version to about $800 for a professional version. Now >the two versions are different, but the Pro version is not going to be >2000% better than the consumer level version as the price difference would >indicate. Photoshop LE is about $99. The full version of Photoshop is about $609. That's roughly a factor of 6. Is the full version 6 times better? That depends on what you need. Do you need CMYK editing for pre-press? Do you need extensive web optimization options? If so, then arguably the full version is infinitely better since it meets your needs and LE doesn't. Want something more concrete? Extensis MaskPro sells for about $199. The full version of Photoshop also includes professional masking tools -- not identical to those in MaskPro but competitive or better -- and those features aren't in LE. Is the full version of Photoshop's price out of line? A lot of prosumer digital cameras sell for more. (Let's not even talk about professional digital cameras.) Those cameras will probably be obsolete in a couple years and you won't be able to buy an upgrade for them. Now, yes, those cameras cost more to produce per unit than do boxes of Photoshop. The camera manufacturers probably aren't living that close to the edge yet, however, since this hasn't become a commodity market. (Even in the commodity PC market, it's just the systems assemblers that are getting squeezed. Intel still enjoys quite high margins per chip.) > >Now, lets look at manufacturing costs. A software company has to >manufacture a CD, a manual, and a display box. Go look at how much it >costs to get some CD's printed. This "manufacturing" can't cost more than >about $3 a unit to produce. A fraction of what it would cost to actually >manufacture an actual hardware product. > >But, you could argue about R&D costs. Well, any hardware manufacturer is >probably going to have to pay as much, if not more, than any software >manufacturer. With software you've got programmers, more programmers and >management. With hardware, you've got design team engineers, manufacturing >engineers, production workers, etc. and management. So, your R&D can't >cost very much when all your company does is programming. That argues that hardware probably has more R & D to recoop. It doesn't really argue that software has a small amount of R & D. Most software sells relatively few copies relative to hardware in the computer industry. A lot of software titles don't make all that much money once one factors in R & D. The broad successes like Photoshop pay for the more narrow products. The narrower the niche, and music is pretty narrow, the more important it becomes for people to pay for the software because there aren't other sources of revenue available to the software developer. >To me it is hard to argue that software is worth what it costs. Companies >like the above mentioned Adobe sell bundled software packages for up to >half of what it costs for the individual pieces of software. They can't be >losing any kind of money for this, so why don't they just sell all of >there software for half the cost? I think the hope is to be able to say, "If you want Photoshop, can we entice you to buy X, Y, and Z as well for a discount." >Well, no. There is plenty of freeware and shareware software out there. It >costs absolutely nothing to use. So, even if no one paid there would still >be software. Ever heard of Linux? Where would Linux be if it hadn't had Unix to copy? Where would GIMP be if it hadn't had Photoshop to copy? Yes, there would probably be software even if no one paid, but it would probably be quite different from what you encounter right now. Or to put it in a music related context, there are a lot of musicians who perform on the street hoping for donations. Some of them are actually reasonably good. Would the range of music that exists be different if no one ever paid musicians or all that musicians could get was donations for performing on the street? >Your logic about any hit song if very flawed. He could not have a hit song >without a contract to some big corporation. He could never make much money >off of that song due to the way the recording industry and copyright laws >work right now and so you are right back to the fact that if anyone >*stole* his song (a highly arguable statement) it would only be hurting >the big corporation that he has that contract with and he would never feel >much of a pinch unless he already was a huge, overbloated act, like >Metallica and U2. So, this automobile manufacturer is looking for some cool electronic music to put behind an ad and stumbles across a loopers tune on the web. Does the automobile manufacturer have the right to just use it? After all, the musician probably didn't really expect to make any money from it anyway. Another analogy: An awful lot of artwork goes for prices a lot higher than the cost of the canvas. This is also true for lots of reproductions, photographic prints, etc. which don't have any benefit of uniqueness. Do you have the right to walk into a photography gallery, steal a print, and leave cash for the cost of goods? Go paint your own pictures, take your own photographs, ... write your own software. Or find someone who is willing to do it for you at a price you are willing to pay. In summary, with respect to warez, Napster, etc.: It's the copyright holder's right to decide how the work gets reproduced and distributed. The copyright holder can decided to give something away or to charge a price for it. Mark