Subject: Re: Economics of software distribution
From: rdm@CFCL.COM (Rich Morin)
Date: Wed, 17 Mar 93 05:10:37 PST

There *is* a shrink-wrapped version of Linux, produced by Adam Richter's
Yggdrasil (yggdrasil@netcom.com).  It needs work, but it's clearly on the
path to being a plug-and-play product.

I'm not sure whether it will succeed economically, however.  In the short
run, it needs promotion to find folks who will pay Adam's fairly nominal
prices in order to save the hassle of FTP'ing, building, etc.  In the long
run, Adam will have to contend with the fact that any competitive product
(including FTP distributions) is free to include all or part of his work.


In my own case (Prime Time Freeware), I allow and even encourage sites to
put my collection up for FTP access.  (It hasn't actually happened yet,
to my knowledge, but I've had several inquiries.)  I can do this because
(1) I see it as good advertising and (2) I'm selling convenience, rather
than software per se.  Some of PTF's customers, to be sure, don't have
FTP access.  Many of PTF's customers do, however, but buy PTF because it's
handy and economical.

In talking to folks that are interested in doing their own freeware CD-ROMs,
I make two points, in general:

  1)	Any value added to the software itself will offer only a brief
	proprietary advantage.  If it's really useful, the freeware
	community will adopt it.  So (from a strictly economic view)
	the added value should be in some other area.

  2)	Products which compete strictly on the basis of price (minimal
	or no added value) do very little for the end user (as long as
	the previous prevailing prices were reasonable), and make it
	harder for the participants to add value.  (See any Econ 1
	textbook on "pure competition".)

PTF's added value lies in:

  a) location and selection of packages
  b) ancillary documentation files and booklet
  c) frequent and regular publication

Any party interested in competing with PTF is forced to (1) do his or her
own independent R&D or (2) play catch-up after each new release.  The
former isn't "pure competition", because the end product will differ.  The
latter is silly, unproductive, and unprofitable *as long as PTF's prices
are kept within (the freeware community's idea of) reason*.

I actually like this situation.  It forces me to stay on my toes, and to
make my money from providing (as opposed to restricting) access to free
software.  Because the economics of the situation prevent me from making
excess profits, I am comfortable in accepting the money I do make as pay
for the service I provide.

Unfortunately, as has been noted at length by other posters, this does
nothing for the freeware authors, save to provide another distribution
channel for their work.  And no, I don't have an answer for that problem.
I can't raise my prices and subsidize (for example) FSF, because that
would drive away the customers.  It's a puzzlement...

-Rich