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Software has No Intrinsic Value

In a comment on my Not All Opinions Are Equal [1] post AlphaG said “Anonymous comments = free software, no intrinsic value as you got it for nothing”.

After considering the matter I came to the conclusion that almost all software has no intrinsic value (unless you count not being sued for copyright infringement as intrinsic value). When you buy software you generally don’t get a physical item (maybe a CD or DVD), to increase profit margins manuals aren’t printed for most software (it used to be that hefty manuals were shipped to give an impression that you were buying a physical object). Software usually can’t be resold (both due to EULA provisions and sites such as EBay not wanting to accept software for sale) and recently MS has introduced technical measures that prevent even using it on a different computer (which force legitimate customers to purchase more copies of Windows when they buy new hardware but doesn’t stop pirates from using it without paying). Even when software could be legally resold there were always new versions coming out which reduced the sale price to almost zero in a small amount of time.

The difference between free software and proprietary software in terms of value is that when you pay for free software you are paying for support. This therefore compels the vendor to provide good support that is worth the money. Vendors of proprietary software have no incentive to provide good support – at least not unless they are getting paid a significant amount of money on top of the license fees. This is why Red Hat keeps winning in the CIO Vendor Value Studies from CIO Insight [2]. Providing value is essential to the revenue of Red Hat, they need to provide enough value in RHEL support that customers will forgo the opportunity to use CentOS for free.

Thinking of software as having intrinsic value leads to the error of thinking of software purchases as investments. Software is usually outdated in a few years, as is the hardware that is used to run it. Money spent on software and hardware should be considered as being a tax on doing business. This doesn’t mean that purchases should be reduced to the absolute minimum (if systems run slowly they directly decrease productivity and also cause a loss of morale). But it does mean that hardware purchases should not be considered as investments – the hardware will at best be on sale cheap at an auction site in 3-5 years, and purchases of proprietary software are nothing but a tax.

9 comments to Software has No Intrinsic Value

  • According to Calculating the True Price of Software by Robert Lefkowitz, the price that customers are willing to pay for software is mostly the value of an option to buy support in the future.

  • Ben Finney

    > which force legitimate customers to purchase more copies of Windows when they buy new hardware but doesn’t stop pirates from using it without paying

    Please don’t contribute to the smear campaign of conflating “copyright infringer” with “pirate”. No violence or theft is being done by this crime.

    Your parenthetical statement should better say “… but doesn’t stop criminals from using it without paying”.

  • Ben, please don’t perpetuate the myth that personal-use copyright infringers are criminals or that copyright infringement is, in fact, a crime.

    it’s not a crime, any more than breaking a contract is a crime. it’s a civil matter, not criminal. for example, people who unilaterally break a lease may be legally liable for the remainder of the lease term, but they are NOT criminals and breaking the lease is NOT a crime.

    while the copyright industries have been mostly successful at externalising their licensing enforcement costs onto the general public, they haven’t been 100% successful in doing so – and even if they had, it would STILL be a civil matter that should properly be dealt with in civil court proceedings rather than in criminal court.

  • etbe

    Don: Interesting article. It seems to get similar conclusions to me but based on financial maths similar to that which is used by investment banks while my article is based on hand-waving.

    http://en.wikipedia.org/wiki/Pirate_party

    Ben: Unfortunately it seems that the Pirate battle has already been decided. The word Pirate is rarely used to refer to armed robbery at sea (even though such crimes are increasing in frequency – but as they often have state support you might call them Buccaneers). But groups such as the Pirate Party are doing a lot of good for our team while flying under that banner.

  • Stefan

    You should really, really, really really, REALLY look up the meaning of “intrinsic”.
    I start would be here :-) http://en.wikipedia.org/wiki/Intrinsic_and_extrinsic_properties_(philosophy)

    A hint: the money you have to spend one something has nothing to do with intrinsic.

  • AlphaG

    The problem is value is a personal thing and not something you always pay for.

    Hence there is space in the market for no cost, come cost and larger cost.

    My concept at the time of writing was along the line of things I have to pay for, earn by effort etc provides more ‘value’ to me as it required me to expend effort in obtaining it. Things that just arrive on the desk are likely to get less attention and are less likely to get mind share.

    Just think of it as the first car I purchased with money I earned versus a company car given to me

  • Ben Finney

    > [Copyright infringement is] not a crime, any more than breaking a contract is a crime. it’s a civil matter, not criminal.

    Copyright infringement *is* a crime in jurisdictions like the US (where many of these issues arise) and Australia (where both Russell and me are living), as well as others.

    Point taken, though, that it’s not universally true.

  • Ben Finney

    > Unfortunately it seems that the Pirate battle has already been decided. The word Pirate is rarely used to refer to armed robbery at sea (even though such crimes are increasing in frequency

    So, the decision of this battle prevents you to referring to copyright infringers as *anything but* “pirate”?

    Or is it rather that you *can* use factual terms, regardless of the result of any putative “battle”, but instead choose to conflate violence and theft with copyright infringement?

    Terminology isn’t a “battle” that’s decided once and forever. You choose the terms of discussion every time you express your thoughts. I’m asking that you choose terms that avoid needless conflation of issues best kept separate.

  • Ben: i live in australia too, and while the copyright industry has managed to buy/bribe/blackmail legislation that makes some forms of copyright infringement a “crime”, that doesn’t make all infringement criminal.

    nor does it mean that it is correct to just accept what they have done and let their corruption of the law stand unchallenged.

    in your own words, “terminology isn’t a battle that’s decided once and forever”.