Subject: Re: Software Pricing
From: Scott Capdevielle <scott@syndicom.com>
Date: Tue, 19 Sep 2006 17:20:05 -0600
Tue, 19 Sep 2006 17:20:05 -0600
Lawrence,
thanks for continuing this thread.  To answer your question, I think it 
is sufficient for the pricing to be reasonable, but it should be defined 
up front.  Now, again, drawing from copyright practices, certain things 
like stock photographs, routinely define pricing for various 
applications. Example:

Television usage: $.01 per viweer reached
Magazine: $.05 per viewer reached
Web Site: $.02 per viewer reached

The most important thing about this licensing structure is it is known 
up front. Therefore a creator who wants to imbed this piece of work can 
calculate his cost up front and determine whether or not it is worth 
using that piece, finding another with different pricing or creating 
their own.  This is a calculation performed by almost any entrepreneur. 
If to license the work, the entrepreneur needs to negotiate, this is an 
impediment that will reduce adoption. 

Exclusivity is not irrelevant.  If the pricing is known but I do not 
know if I am able to license, then that uncertainty also will reduce 
adoption.  If exclusivity is stated up front, then, unless I am the 
exclusive licensee, the product itself is irrelevant to me.  If 
exclusivity is granted for a discreet period of time ( a model I am in 
favor of btw in certain circumstances) then this also helps to reduce 
the uncertainty.

Bottom line is what I am looking for is total transparency and a method 
for rewarding creative individuals who take risk to bring a new product 
to market.

scott

>Topic changed. Was "Patent-based dual-licensing open source business model"
>
>Scott Capdevielle wrote:
>  
>
>>what will the license look like? I have been researching the same
>>problem and coming up with a similar solution. One thing we believe is
>>that this type of license needs to have two components to have the
>>desired effect. I think these address Thomas' concerns but would also
>>like feedback:
>>
>>1. Non discrminatory license. Anyone can obtain the license regardless
>>of who they are and no exclusiviity is granted. This is important to
>>truly open it up to competition.
>>2. Commodity pricing known up front. The royalty must be small enough to
>>look like any other cost of 'manufacturing'.  In other words, if , in
>>your example it is bundled with a piece of hardware and the total 'cost"
>>of this solution is $100 then the license fee should be some small
>>percentage of that amount.  It is also important that the amount be
>>known up front so that entrepreneurs can do business modeling and factor
>>that cost into the equation. Making it a known quantity and non
>>discriminatory enables a wide audience to calulate the cost to produce
>>their commercial product in advance of making any investment.
>>    
>>
>
>Why is it not sufficient that the pricing be reasonable considering the
>value that the software adds to the hardware? Let the market determine the
>prices for patents and software, just as it does for oil and water.
>
>I can easily imagine certain patent claims being more valuable than others,
>just as certain software is more valuable than other software. These value
>calculations can be different in different contexts, just as an anti-spam
>solution can be more valuable in a company server than in a single desktop.
>
>As for exclusivity, International Characters is already promising "free for
>open source," so exclusivity is kind of irrelevant in some sense. On the
>other hand, can you explain why exclusivity for certain commercial
>applications is unreasonable in the abstract, or even why non-exclusivity
>inevitably fosters competition? 
>
>/Larry
>
>
>
>  
>



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