Subject: Re: Open letter to those who believe in a right to free software
From: Ben_Tilly@trepp.com
Date: Mon, 25 Oct 1999 13:33:15 -0400


> >>>>> "Ben" == Ben Tilly <Ben_Tilly@trepp.com> writes:
>
>     >> It's not.  It is the considered judgement of an expert in the
>     >> field who has not yet done, let alone presented, a formal
>     >> analysis.
>
>     Ben> An expert in ***WHICH*** field praytell?
>
>     Ben> Economics.  NOT software development.
>
> Yup.  Full house beats a flush.  Economists must practice learning
> enough about other fields to make sufficiently accurate models of
> those fields for economic purposes.  Software developers, except as a
> hobby, do not do the reverse for economics AFAIK.  Seems like it would
> generally be a waste of time.
>
And their success in modelling is measured by...other economists.

OK, cheap shot.  But still.  You have made many comments that
indicate that you are coming to the subject with similar unexamined
biases to what people in software started with.  Those biases have
proven to be incorrect.  Why, then, do you dismiss those informed
conclusions?

>     Ben> It is the considered opinion of many experts in software
>     Ben> development,
>
> Etc, etc.
>
ie You know better.

>     Ben> Have you taken these basic facts of software development into
>     Ben> account in your opinion?
>
> Yes, and no.  Yes, I am aware of them.  No, some of them are not
> well-quantified in my informal model; I don't know what I can do about
> that in the formal model, since many of them aren't measured by
> anybody I know of.  Most economic models are driven by montonicity and
> convexity properties; unless there is reason to believe that something
> analogous to "the usual assumptions" won't hold for production of
> software, the complexity of the production process is not going to
> affect the results.  Brooks's Law, for example, is consistent with
> "the usual assumptions."
>
The usual assumptions appear to be somewhat distorted by the
fact that:

 - Vendor lock-in means that each software product is to some
   extent a natural monopoly (lawyers originally were encouraged
   to put Word Perfect to full use, they are still locked into it despite
   years of pressure from clients to switch - other examples exist
   if you are interested)
 - The bulk of development costs lies in testing and debugging,
   both of which are readily distributed
 - Software quality is frequently a market externality, indeed the
   developer *benefits* from a certain level of bugs - it gives
   consumers reasons to upgrade!
 - A significant portion of the value to a consumer lies not in the
   product, but in guarantees of future support and development
 - The incremental cost of distribution is approximately zero

Please don't just wave a hand and say that you are an expert
economist while I am not.  If you are aware of another product
with even half of these characteristics, please tell us.  And also
please explain why these factors are irrelevant.

To pick but one issue, software quality, you may wish to look
at various studies that have been done of software quality
and its consequences for support costs.  In a similar vein look
at TCO estimates and think about them for a while.

> Of the list you gave, my opinion is that none violate "the usual
> assumptions" about production.  This will need to be carefully
> checked, of course.  Consumption of software does violate the usual
> assumptions (it is non-rival and imperfectly excludable), but I am
> considering those.
>
Please explain for each of the above properties why it does not
violate "the usual assumptions"...

[...]
>     Ben> and you appear to not see that software has some unusual
>     Ben> properties as an economic good.
>
> Oh, indeed it has.  All goods are unique, of course.  But somehow the
> same economic laws seem to hold over and over again.  That doesn't
> prove anything; but experience shows that economists make better
> models starting from the standard set of models rather than by
> considering the exceptional aspects of each market.
>
A basic research question that I recommend to you.  To what extent
is a proprietary program a natural monopoly?  In particular what are
the real and perceived barriers in the market to switching products?

(Certainly the industry belief is that it is a natural monopoly, and a
lot of the industry is driven by the belief that it is a monopoly which
is likely to go to the first acceptable product with a desired feature
set.  This belief has large effects on software development, not
the least of which is a lack of concern over software quality.  You
can visit your local bookstore, go to the software development
section, and see a selection of books based on this premise.)

Ben