Making Money in Digital Money

[Jim Choate]

On Thu, 1 May 2003, Anonymous wrote:

> Robert Hettinga writes:
>
> > So, how do you do this? Easy. For software, the first copy is
> > auctioned for cash. Then the second copy, wherever it is on the
> > network, is auctioned for cash, and so on, until nobody's buying any
> > more copies, across the whole network. This is the oldest model of
> > trade there ever was. It's how red ochre from Maine ended up in
> > Neolithic tombs in Ireland. It's how Homo Habilis traded raw rocks
> > for finished hand axes across hundreds of miles of African savanna.
> > The Agorics guys called it the "digital silk road" for obvious
> > reasons.
>
> I hate to get into this, because I tried to educate you on this last
> year and you were totally impervious.  As usual you started firing
> invective in all directions in an attempt at misdirection.
>
> Let me explain it so simply you can't miss it.  This system does not
> work, because by the time the content is in the hands of just a few
> people, they will be bidding against each other to sell it on the net.
> Such a state of competition will quickly drive the prices down to the
> cost of reproduction, which is effectively zero.  Therefore you can't
> sell more than a dozen-odd copies of the software at a non-zero price.
>
> If most of the people buying this software are doing so with the
> expectation of recouping their costs by re-selling, then no one will
> buy after the first few, since they will not be able to make any money
> selling at zero.  But this means that even those first few buyers won't
> be able to sell at non-zero, since these second-wave potential buyers
> were their customers.
>
> Try to follow the logic here, Bob.  The inability to make a profit after
> there are a dozen sellers *implies*, logically, that even the very first
> seller can't make a profit, because his potential buyers will see that
> they have no profit opportunities.
>
> Therefore the only motivation anyone would have here is to buy the
> software for what it is worth to them, and not to redistribute it.  So we
> are talking about a private-contracting, custom-built software model.
> But it's not a software sales model.

Exactly! It is what the whole point of Open Source software is supposed to
be about. Give the technology away and sell the brains on how to use it to
solve somebody elses problem who doesn't have the drive/self-confidence/
whatever to do it themselves.

One of the great missed opportunity of most Open Source development is to
re-sell -specific versions- in a closed source model to individual buyers
to fulfill -local- goals. More Open Source licenses should have a clause
that states that if you want to use this software in a closed license
model please contact the author for special pricing".

It continues to amaze me the way many believe that because the software is
'free' the access and utilization of those who know how to apply it
should also be free. Ignorance of market dynamics; pure, plain, and
simple.


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      ravage at ssz.com                            jchoate at open-forge.org
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