Blind to Bargains - Jeremy Wagstaff

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Blind to Bargains
If We Won't Pay for Software,
People Won't Write It
April 20, 2007

Computers would be nothing without programs to run on them, so why do we spend so much time drooling over our hardware -- physical bits and pieces -- and so little over the software that makes the bits and pieces do what we want them to? And why are we so stingy about paying for software?

These thoughts were running through my mind the other day as I read the exchanges on a mailing list devoted to a piece of software I follow closely (a thought organizer called PersonalBrain, which I'll be taking a closer look at in a forthcoming column). When its creator, California-based Harlan Hugh, unveiled the pricing structure of the latest version of the program, there was a collective intake of breath among users. One, a doctoral student from Florida, exclaimed: "I stopped breathing for few seconds when I read the price."

It's true, the jump in price might sound heart-stoppingly steep -- to more than three times the cost of the previous version. But we're not talking massive amounts of money here -- $250, in fact, which nowadays wouldn't get you much more than dinner for two in a posh restaurant. And the people balking at shelling out are the same ones who are passionate enough about the software to spend their spare time reading and contributing to a mailing list entirely devoted to it.

The problem is that we users haven't yet come to terms with what software really is. We understand hardware -- wires, chips, silicon, more wires -- and can see it and touch it. It isn't hard to attach a value to that. But software is, well, soft. It's intangible. And we are still struggling to grasp the fact that hardware is a commodity, and software isn't. Which leaves software and the people who make it in a constant struggle to both produce something and find a way of making money from it.

Take Singaporean Joe Goh, for example. Mr. Goh produces a small tool called FunkeeStory (funkeemonk.com/funkeestory) that does one thing for one select group of people: backs up SMS text messages from a Treo smart phone to a Mac. He's been at it full-time for a year now, and is making between one and three sales a day. He's just about eking out a living, he says, as long as he keeps costs low. He still regrets an early decision: cutting the price from $24.95 to $19.95 in the panic of a quiet first week after launching last year. Even so, he still gets emails saying his tool is too expensive. "That's when it hit me," he says. "No matter [at what level] I price my software, there will always be people out there complaining."

All the free software out there puts further pressure on prices. No one today, for example, is going to pay for a browser, because you can get good ones free. Part of the blame lies with Microsoft, which has long given away its Internet Explorer. But the Open Source movement -- where volunteers contribute to writing software that is then usually made available to users gratis -- has also contributed with its Firefox browser.

It isn't as if people aren't making money out of software: Microsoft still charges an arm and a leg for its Office Suite: between $250 and $350 in the mid-1990s, against $150 to $680 now. Others have switched to different pricing models. McAfee VirusScan, for example, was a very popular antivirus program in the mid-'90s, selling for a one-time price of $65. Now people cough up the same price every year for a subscription.

The rise of Web-based applications that sit in your browser is also supporting the idea that software should, at least for simple tasks, be free. Google offers basic word processing and spreadsheet applications online at no charge, while other companies, like developer 37 Signals with its collaboration tool Highrise (www.highrisehq.com), offer free basic versions of Web-based programs and charge for advanced features like storage or sharing.

I have no quarrel with this kind of innovation. And the more stuff that's available without shelling out a lot of cash, the better for us as users. But I suspect that, too, it reinforces a growing perception that software is an entitlement, something we just grab out of the refrigerator when we need it. It isn't: It's the lifeblood that flows through the veins of our devices. We need to recognize that what we get out of our machines is nearly all due to software, and the brains that created and that maintain it require food to keep doing so. Sure, the likes of Microsoft probably don't need every one of us to shell out $600 for Office. But the real innovators have always been small artisanal developers, beavering away in obscurity and hoping to make a living. If we keep thinking that software is something that should be free, then, in the words of Singapore-based software developer Bernard Teo, we may find that there aren't many of those people around: "If a developer is not careful, he may find that it's simply not worth his time building and supporting his product, if consumers continue to expect low, low prices without limit."

Next time you balk at paying $30 for a program, think about how little that really is.
Posted on April 28, 2007 and filed under Technology.