In article <[log in to unmask]>, James
Wowchuk <[log in to unmask]> writes
>While much has been said in this thread about the pricing strategies
>benefits and drawbacks, one fundamental policy has not been questioned: Why
>is software licensed rather than sold?

To make it clear what is happening. You are obtaining a restricted right
to utilise, not the entire intellectual property.

Software *can* be sold, and we as a software company write some software
that *is* sold, However, when we sell software in  that way, it is for
the buyer to do with exactly as they will - to copy it, distribute it,
licence it, even sell it again. Further, it is no longer ours at all,
and we cannot copy it, licence it, sell it, or even (strictly) use the
ideas from it in another product.

>The obvious answer is that software is licensed rather than sold to prevent
>copying.  Yet licensing doesn't actually *prevent* copying.  It merely
>provides for penalties if it is discovered by the licensor.  While not being
>a lawyer, I believe that these same or similar penalties would still apply
>even to a sold software.
>
But would be harder to enforce.

>Consider that anyone with a photocopier can make copies of any book, but my
>local book seller doesn't trouble me with incomprehensible license
>agreements when I line up with the latest stack of "Goosebump" books for my
>kids.
>
Nor does a software store trouble you with them. You don't have to sign
the licence to buy a copy of MS Office. Just to open it once you get it
home.

The author of the "Goosebump" books relies upon copyright. And also upon
copying being expensive, slow, not in colour, degrading by generation,
and still leaving you with a pile of loose sheets. What a bind!

Note the greater emphasis on anti-piracy as copying gets easier and
better, through books, sheet music, tapes, videos, CDs and software.
Note also how digital technology, which avoids the degradation by
generation, has the music industry worried.

>Another more valid argument for licensing may be given that licensing
>prevents on-selling of old product.

Not true. You can sell a licence on just as readily as you can sell on
the product. Again, look at MS Office. The licence just requires that
you provide the product complete, with any upgrades you have taken, and
don't keep a copy back.
>
>That licensing though *does* inhibit a second-hand market for software is
>clear, but I'm not yet certain whether this is good or bad.

What inhibits that market is the suppliers refusing to support or
upgrade old versions. If a piece of software is stable or current, it's
resaleable.

Take Corel Draw, where you can still buy versions 6 back through 3 at
progressively lower prices even though 7 is the current version. Second-
hand Corel Draws will still sell. (Or would, if Corel weren't doing
brand-new copies at knock-down prices - you can't win).
>
>As it is, once the license fee for software is made, there is no value left
>to the purchaser.  Where I buy a new piece of equipment for my factory, the
>capital value is preserved: I've exchanged cash for equal value in
>equipment. But for software, the money is gone and there is no value showing
>up for the company.  It is simply an expense.

Maybe in Australia, but not here. Software licence expenditure can be
capitalised in the UK, just as factory equipment can, provided it is
written down over the term of its useful life. Are you saying software
goes straight off the balance sheet over there?
>
>As to whether intellectual property rights are better protected by license,
>I think we can see that Music CDs and VideoTapes are as reasonably well
>protected as software without complex agreements restricting what machines
>they may be run on or how many people are listening (providing it is not in
>a commercial environment however).

As most software is, and certainly the stuff we write and use. See what
happens when writable CDs are #1 each, and the kit to produce them is a
domestic item; I bet that, as they tried to do with Minidiscs, they
'magically' won't support 44.1k sampling.
>
>So I like to consider what the software "product" world would be like if
>software was sold, say as Nintendo plug ins, or Dongles, rather than our
>software "license" world.  If there was a used market for some software,
>then software may be capitalized rather than expensed, encouraging software
>use for the longer term: if its purchase was amortized over three years, you
>would certainly expect to get three years use out of it.  If a new version
>was released every three months later you would question your supplier's
>reasons for not including this initially.  The purchaser may be
>
People regard dongles, jiggered discs and the like, as just too
intrusive. As a trade-off, the supplier can sell more copies of
unprotected software, even at the risk of some piracy, than of protected
software where every copy is guaranteed legit, but less people buy it.

>Needless to say, tier pricing would not be effective if the software is sold
>as a product.  It comes at what ever price you can get for it, and it would
>work on whatever system it was designed for.  If you can get Chevy intake
>manifolds to work on a Ford engine, then so be it.  You could get the
>situation where your software might break say if you moved from a PA7100
>chip to a PA8000, but so what?  If there are other PA7100 chips about, then
>sell your version and buy a newer one, or take a dealer trade in.

Yes, but Chevy intakes won't allow manifold copies of themselves....
>
>I suspect in the software product world, people would be more willing to
>stick with version they had rather than instantly choose an upgrade, simply
>because they know there is still some realizable value in it.    As it is
>now, when a new version come out, old version prices are virtually written
>off.  But with a second-hand market, this wouldn't be the case.  With some
>recent versions of some software in hindsight I wished I kept the earlier
>release.  Maybe customer wouldn't be in such a demand for new releases, but
>for corrections to product flaws.

Depends how tough you can be. I had this session once with a supplier,
who shall remain nameless, where, when Version 2 didn't work, I was
offered Version 3 at an upgrade price. But he *wouldn't* fix 2. So I
sent it back for a full refund, as the licence enabled me to, and bought
3 for the same money. (That didn't work either, actually, but much more
subtly).
>
>Who knows...perhaps a software product 2nd hand market might yield a
>specialized customization market, just as with 2nd hand cars?  Fluffy Dice
>for Visicalc anyone?

It was nostalgic to be able to run Space Invaders again on the Sinclair
Spectrum emulator on my Pentium - don't think I'd have paid *money* for
it though....
>
>With the realizing of residual value in your current version, your
>reluctance to upgrade may encourage software suppliers to be more concerned
>at providing additional value to your existing investment in their product?
>
I'd like it to be that the only reason for an upgrade is to add
functionality. IMHO, software suppliers should have a legal obligation
to fix any bug you notify in a prior version. If they can't, they should
be compelled either to refund your money entire, or, at your option, to
supply you with the new version at no charge.

>Before anyone thinks I'm down on all suppliers, I should point out that
>there are a number of software suppliers (and it especially pleases me this
>is more common in the HP3000 world than others such as Unix and PC) that,
>while observing the common convention of licensing, do attempt to provide
>software much like a product:  no or limited tier prices, strong concern for
>investment protection, straightforward agreements.
>
If you have a prior version of our software, we will still support you,
but only for the functionality described. Software is funny stuff in
that it doesn't wear out - it just gets left behind as the world moves
on.

>But I think it is interesting we as a community so readily accept
>'licensing' for software when we wouldn't for other things.
>
I think it is interesting that we will so readily accept stuff where the
answer to 'If this software was a plane, would you fly in it?' is such a
resounding 'No way!'
--
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