zdnet.co.uk: Equilibrium price of proprietary software is nothing

[franz schaefer]

On Thu, Nov 06, 2008 at 09:16:10PM +0000, Alex Hudson wrote:

> Ben Finney wrote:

> > The article makes the familiar argument that in a healthy market any
> > goods will tend to be priced very close to their marginal production
> > cost, and the marginal cost of producing a new copy of an existing
> > program is effectively zero; this is acknowledged by free software
> > vendors, and not by proprietary software vendors.
> 
> That's not true; plenty of proprietary software vendors give their 
> software away at no charge, and some (and not enough imho) free software 
> vendors charge for theirs.

where of course the ones who give away proprietary software at a 0 price tag
do it just to establish or tighen their monopoly grip.

> I have a deep scepticism for arguments which say all software should be 
> given away at no charge. The fixed costs of development are such that 
> the "trend toward zero" is never actually reached for any but the most 
> popular of software.

if you count the LOC of openoffice and divide it by the number of m$-office
installations you get a price tag of about 1 euro or below (as an order of
magnitude).

software that is not used that much often is much smaler. similar orders of
magnitude are possible here. 

what the article does not mention but what is important here: with free
software you only have to develop once and do not have 3, 4 or 5 parallel
development teams who can not share their code and have to reinvent the weel
each on their own... 

also: the neoclassical approach to this kind of problems that sees the world
from the view point of the bussinesmen is not very helpful for this kind of
calculations. the bussinessmen says: ok. i have invested 1 million into the
development of the software. every piece i copy does not cost me extra. of
course he wants to recup his costs and he wants as much as he can get for
the software but if that is not possible he can calculated with a price tag
of 0 for each additional copy. (as the article says.)

the marxist view (labor theory of value) and the neoricardian view is more
appropriate here when calculating overall utility vor society: you devide
the number of working hours and multiply it with a price of workhour and
devide it by the number of copies required.

still a good article, though

greetings mond.


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