Subject: Re: How accurate is Metcalfe's law? (Was: Ximian software)
From: Ian Lance Taylor <ian@airs.com>
Date: 06 Jan 2002 14:12:50 -0800

"Gerald P. Dwyer, Jr." <gdwyer@dwyerecon.com> writes:

> >Even for programs which are useful to a large number of people,
> >software licensing is not the only way to link developer time to user
> >value.  The ASP model, in which the program is made available as a
> >service accessible over the Internet, is another approach.  It is
> >entirely feasible to charge users $1 each time they use the service
> >(or simply the first time they use the service), assuming they have
> >preregistered with a credit card or a Paypal account.
> 
> I don't think that payment per use is a "solution" at all. It is a
> device to charge more to users who use the program more. Given that
> even one use is zero marginal cost, this is likely to be less
> efficient than a flat fee per user (unless the program would not be
> produced without charging per use.)

Charging per use does tie revenue to value to the customer, and
therefore, at least in principle, encourages the producer to increase
value to the customer.

Charging per copy ties revenue to market share.  In fact, since the
marginal cost per copy is close to zero, existing vendors, who have
already made a substantial initial investment, can freeze new entrants
out of the market.

Ian