Why do people expect software products to be free?
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An age-old free-VS-pay debate just arose again in a one-on-one between Techcrunch and 37 Signals.
Started with 37 Signals (who charge for their hosted software) here, Techcrunch’s Michael Arrington took a small jab at them in a recent post.
The discourse is harmless, ofcourse, but the comments is an interesting read.
One of the commenters, Henry, writes:
we don’t see that something that is great, is worth something, and assuch is worth paying for. We’ll expect rent free apartments next, andcost free living. If only utopia would come?!
Which comes to my basic question itself — why software? Why is these such a high expectation that software itself will be free — more than rent, healthcare, etc etc? And FREE too, not just reasonably priced?
One argument is perhaps that software is invisible and not a good you can hold and feel, and hence it is difficult to see how the transaction is helping you gain something.
Perhaps another argument is because software can seemingly be quickly morphed and moulded into something else — while rents are for something you can’t really argue about (“here’s the house, here’s the rent, deal with it”) perhaps with software part of us feels that we should mould it to a simple3r version that we dont have to pay for?
What do you guys think — write out your thoughts here and lets add to the global debate.
12:39 pm
I don’t know if its about being intangible or not but as far as I am concerned I think ten times (and google about open source and free software with similar specs) before buying a software as in Pakistan I used to get these things almost free. So in my case its more about my comfort zone and being not used to instead of any thing else.
1:22 pm
If the software is making you more productive, it should not be free. There are tons of software that help you with your finances (Quicken, MS Money etc), documentation (MS Office, OpenOffice.org etc), and other specialized tasks that you do (graphics, animation, ERP, MIS, security). If you hired someone to do these tasks for you, you would pay them, but why wouldn’t you pay for a software that can do the same tasks much more efficiently.
Unfortunately in Pakistan, due to piracy, we have come under the impression that software should be free (or cost as much as a CD-ROM costs). This should change. We have to develop a culture of legalized software in Pakistan.
If you are really inclined towards free software, then perhaps you should consider open source free software community. That’s an entirely different world. They have some great products and some are lacking quite a number of features that are available in commercial software.
4:03 pm
Rather going into the debate what should be free or not, I would like to comment why software is different:
1. The cost for reproducing a piece of software is virtually 0 (if you ignore the associated media cost). In this regard, software is only similar to some creative works like music.
2. The amount of effort required + the overall quality depends enormously on the person who is carrying out the work. This makes software different from any other “laborious” work.
3. You can work from the comfort of your home. No other industry would dare doing that.
4. You can showcase, buy, sell and collaborate just using the Internet. Here, it’s different even from music where “jamming sessions” are almost mandatory.
5. Students are the cheapest resources are available. Many of them can produce high quality work just in their desire to learn more.
6. The only “tangible equipment” needed for producing your masterpiece is a PC and an Internet connection.
4:20 pm
Jaywalker:
Why would you say that the marginal cost of production for software is zero?
Are you saying that to mean that someone can easily copy-paste the code and launch it under a different name?
I would imagine that there are costs involved in even writing / reverse-engineering and rewriting some piece of software — e.g. its hard to copy Google’s algo even after they’ve described the basic idea behind it.
I’m asking becasue this was also mentioned on another blog I was reading but it didn’t make sense to me at that time as well – maybe I’m missing something.
5:05 pm
I am talking about making copies of “binaries” — not the source code.
You write it once, and then you make replicas without incurring any significant cost.
7:01 pm
Right right ofcourse.
So the binaries are cheap — burning on CDs, packaging and distribution costs money.
Even with online goods, distribution costs money and time. Even unit sold needs to be supported and maintained. People have to be trained.
The initial investment has to be recovered and investments have to be made in future enhancements.
Now that doesn’t JUSTIFY the PRICE of software, but it gives it a cost.
7:22 pm
Jaywalker, i think you got it all wrong with the cost of producing software. It has its advantages e.g. garage development but at the same time it is none-the-less a product which takes hours of man power.. and therefore it shouldn’t always be free.
Now, there are different ways to generate revenue. And software is very unique in that sense. You can have different models: charge your user, advertiser, etc… its like a free news magazine where 60% of the content is just advertisement.. or paid news magazine where 30% of the content is advertisements
its all relative.. and those who say that there are always “open source” softwares out there that you can use.. well one of the things you should really really really understand is that out of 6billion ppl in this world only 2% of us actually know what the heck open source is.. rest is the market waiting to buy software for their PC. Case in point: Microsoft Windows vs Linux/*nix
12:59 am
Hello all,
I’ll agree with Osama (these days I am agreeing too much with you, aren’t I?:) and Obaid … so here are my 2 cents:
1. The cost for reproducing a piece of software is virtually 0 (if you ignore the associated media cost). In this regard, software is only similar to some creative works like music.
> Have you ever distributed software? How much does it cost to distribute software over internet? How do you support customer queries? What happens when people want guarantees for the software, and when your software is used by 2, 10, 20, 30, 300, 3000, 300000 people? Software is FAR from music. I’ve worked on medical software, and believe me you have to have a certain quality to get approval from FDA, and have HIPAA compliance etc. It’s not something you produce and forget about and hope that people would either be your fans and listen to you or just leave you alone.
2. The amount of effort required + the overall quality depends enormously on the person who is carrying out the work. This makes software different from any other “laborious†work.
> Do you think products are basecamp, facebook, myspace, youtube, or our very own iscrybe etc., are created by ‘one’ person? What happens when 2 persons collaborate on a software? They require communication, a common repository etc. what happens when the software has exceeded 5000 lines and modules are changes often? How do you cater for multiple versions?
3. You can work from the comfort of your home. No other industry would dare doing that.
4. You can showcase, buy, sell and collaborate just using the Internet. Here, it’s different even from music where “jamming sessions†are almost mandatory.
> Firstly, you mentioned “buy, sell”, you probably mean distribute and exchange (just for the sake of argument). Secondly, I dont really know how to respond to the comparison between software distribution and jamming sessions
5. Students are the cheapest resources are available. Many of them can produce high quality work just in their desire to learn more.
> You really think students can create windows vista,XP, 2000, 98 … ? Office 2007? Basecamp etc etc..?
6. The only “tangible equipment†needed for producing your masterpiece is a PC and an Internet connection.
> a PC isn’t always bought by dads, and internet connection costs money as well. My company pays A LOT for our internet connection, back-up connections etc – not to mention quite a few companies have invested a lot in providing us with big pipes so they probably wanna recover their costs as well, and since we have to pay them to do our work we wanna recover our costs, and hence you gotta pay for the software that we (i.e. the software engineers) do for you. Yes some people like to do free software but I am afraid, you gotta charge for something, software or support or lots of ads…
1:03 am
Oh btw, I just noticed you wrote that software is different from other ‘laborious’ work. I get offended by that. I’ve worked 4 hard years to get my CS degree, and have been working hard for quite some time now to deliver what my company’s customer’s expected. I don’t know how is this different from other ‘laborious’ jobs? There are people like me who have to stay late in office to meet tight deadlines, and we work hard to ensure that our products are bug free. Believe me it’s REAL hard work …!
10:28 am
I am surprised both by the ignorance of the people and their ability to take things out of context for the sake of argument. I recommend “The Cathedral and the Bazaar” to everyone. You can get it from here: http://catb.org/~esr/writings/cathedral-bazaar/cathedral-bazaar/
12:16 pm
Hey… let’s not all up and attack Jaywalker together (what happened to the old days of DISCUSSING something?)
I was actually trying to get some clarfication from Jaywalker because a lot of people write about marginal production costs of software, not just Jay.
Obaid: Microsoft is making a lot of money because MS products are cheaper than FREE open-source products. How do I figure that? TCO.
Anyway, as I said all of these things are COSTS, but they have nothign to do with whether or not software should be CHARGED for.
The charge or not charge question depends on what people / your customers expect to happen.
You cannot charge for a commoditized good no matter how much better it is or how long it took you to make it.
Similarly, you cannot charge for something that inherently only adds entertainment value (myspace and other social networks).
You cannot charge for software that is considered essential — e.g. Email / RSS readers — they’re not premium products anymore.
Generally, you only charge for something that people think they are obtaining at a premium. A lot of people do not consider software to come at a premium, because the general perception is that someone else will copy it and offer it for free soon.
2:50 pm
you cannot charge for software that is considered essential — e.g. Email / RSS readers — they’re not premium products anymore
It depends how mentioned things are being used. Email and RSS are used as technologies rather product. If some system is fetch data from external/any system in RSS format and charging money then it wouldn’t be some unfair with the users.
9:16 am
Osama, I agree yet again
You are right that it’s about what people “expect” from the software. For example, if they expect to be able to reach customer support to help them with their problems, they will probably have to pay for it.
Also, I think most people misunderstand the concept that marginal cost of production of software is 0 (and i am the last person to say this because I dropped out of intro to microecon in college
), what it really means is that marginal cost of distribution is 0. So compare to other products, you can consider it 0 to have that other person get your software distribution. However, everything else costs money – from server bandwidth, disk space, to customer support, upgrades and fixes.
But yeah, it really depends on what people are expecting from the software and what the software claims to achieve. For example, RSS/Emails could be charged if they were used by an organization (and had a lot of collaboration features), but could be free if some individuals wanted to use them.
At the end of the day, some people would like their software to be FREE and will become Richard Stallman or Linus
and others would want to charge people for it and they’ll become Bill Gates or Lawrence Ellison, or they may still become Lary Page and Sergey Bin or Pierre Omidyar if they can manage to extract a lot of cash from somewhere in the user base (advertisers, users, buyers, sellers, etc.etc.).
By the way, there is no harm in starting FLAME wars every once in a while, it spices up the post