SHEIZAF@HBUNOS.BITNET (Sheizaf Rafaeli) (01/27/88)
Jean-Claude Morand raised the issue of who buys and how are prices to
be assessed for software (vol 3, #1). In the following I'd like to
make the following arguments (here's an executive summary):
1) The issue of funding for software is related to the issue of software
theft.
2) The issue of funding for software does not have to be solved by
increasingly sophisticated costing models. Rather...
3) One way to fund mass produced, mass consumed software of general interest
is to treat software like journalism, drama, film, literature and music:
A cultural commodity paid for through advertising.
4) I am not aware of any current use of software as an advertising medium
(other than for other software products).
5) Given the logicality of (3), (4) is surprising.
6) The prospects of using software as an advertising medium raise some
questions: practical, ethical and otherwise.
(Please skip the rest of this lengthy message if you've had enough. The
remainder is an elaboration on these six points. As I am researching these
issues, I would be grateful for any information, comments, criticisms).
The question of funding for software (in ten years or even today) has
deeper importance than some realize. It really is part of the general
question about who pays for cultural content and form. Discussion of the
economics of software should be informed by the treatment of software as a
cultural (literary?) form. The Medicis (benefactors of art, literature,
learning in post Renaissance Florence) are not around anymore to patronize
this or any other art. The phenomenon of rich patrons who determine what is
and what isn't art has disappeared. Nor does it seem particularly
efficient to have the content of software determined (guided) by the few
but rich.
However, it also seems that the average users are also less willing
to pay for their share in the costs of developing, marketing, and
maintaining the software. Witness the development of software theft,
but also freeware, shareware, software lending libraries, etc.
Interestingly, the question of who pays for software is closely related
to the issue raging on the pages (screens?) of this digest: the uneasy
relation between Universities, Basic Research, and Industry. We're
not sure who calls the tune, but the piper needs to get paid.
An attendant problem is that of software theft: It seems that no sooner
a useful software package gets on the market than illegal copies of it
outnumber legally purchased copies in use. The assumption that excellence
gets rewarded financially has a glitch in it. Any discussion of pricing
strategy for software has to take this into account. In a comparative study
of software theft we have just completed we ran into two outcomes of the
proliferation of software theft:
1) One result of theft is that some software designers shy away from
writing general purpose software. It simply doesn't pay anymore. The
designer of software faces a very weird demand curve for her
product. Response is not (cannot be?) just in pricing policy.
Often, the designers' solution is to tailor software by hardwiring,
firmwaring, or simply directing their energy toward the solution
of problems that are decreasingly general, increasingly
particularistic, decreasingly interesting or creative. One
result of software theft is the decomposition of a mass market
for software to many small, fragmented (but paying) audiences.
2) Honest microcomputer software users are rare. Illegal use of
software is widespread, this is not news. What is amazing is that
(for study, comparative purposes) we were almost unable to locate
ANY users whose consciences and hard-disks were completely
clean. The term "deviance" (statistically defined) is no longer
appropriate for this particular crime.
Add to these findings the apparent fact that for almost every
copyright protection device or strategy a (cheaper) solution
arises. The problem of who pays what, then, goes far beyond
pricing policy. Furthermore, it is no longer just the problem of
designers/producers of software. Users/consumers and the culture
at large should be just as involved. The economic process is
shaping a cultural outcome.
One solution may be financial support of software via advertising
revenues. Software could be reconceived as a vehicle (medium) which carries
and is paid-for by advertising. Imagine a spreadsheet "brought to you by
Campbell Soup", half an hour of wordprocessor use "sponsored by your local
grocery store", expert systems' advice courtesy of a political
candidate, an information utility paid-for by a catalog store. We may
also speculate about advertising-funded computerized communication-
Bitnet, CSnet, ARPANET paid for by Madison Avenue. In several ways, this
makes sense:
Software is a means of expression. It is the imposition of form and the
selection of content in ways which are creative and artistic toward ends
that are hopefully useful, or at least aesthetically pleasing.
Comparing the historical development of the software market with that of
other forms of expression is interesting. Software, like journalism,
drama, literature, music, begins without a market structure to prop it
up. (Urge to write? Drive to program?) Earliest funds come from
philanthropic rich and powerful benefactors. (Medicis, Apple
Foundation, IBM education grants). Software, like journalism, music,
literature, film, then gets its financial push from the producers of
hardware who stand to benefit from the diffusion of their products for
the purposes of consuming these modes of expression. Phonograph makers
subsidize early Jazz; RCA makes radio and then television programs so
that people would buy the sets. (This is the stage that is equivalent to
the hardwiring/firmwaring of software of today). Very soon radio and
television, newspapers and magazines, and other forms of communication
found the way to charge industry at large (not its own consumers) for
cultural production consumed by the mass. This just may be the crossroads
software is at.
Consumers have already shown that they are eager to use free
software. Can we show that software (penny software?) may be an
attractive medium for advertisers?
- It reaches fairly upscale audiences, with larger than average disposable
incomes.
- It already reaches groups that are highly segmented (differentiated by
taste, interest and other advertiser-relevant qualities).
- Attention paid to software by its users is high. (Mostly higher than other
forms of communication currently carrying advertising).
- Length of exposure (time) is longer. The ephemerality of the message
is smaller than that in other forms of mass communication.
- Space and the attendant demand for brevity (the 15 second tv commercial)
are less of a problem. Software carried advertising can (therefore) fulfill
more tasks: not just persuasion, but also more informing.
- Software offers an option for broader bandwidth in its appeals (more senses,
sound, movement)
- Software is better designed to include involvement schemes -- get them to
buy through "foot in the door" techniques.
- The status of software as a medium is (still?) higher than most other
mass media outlets.
- Suggestibility of the audience may be, therefore, high. Defenses are
low. Advertisers rejoice.
- Distribution costs for the commercials/ads (the equivalent of
layout, printing, delivering the newspaper, transmitter and
amplification costs) are (in the case of software) shared by the
audience. The consumer/target is likely to carry most of the costs of
copying and distributing copies of software (if it is good enough).
The above should not be understood as an approval - just a statement
that such a development could happen. Several questions could be raised:
- What will this do to software: As in literature, music, drama, two tiers
of software can evolve: low-brow (advertising supported) vs. high-brow
(connoisseur-oriented) non supported software.
- Will machine-readable information (as distinct from software) also undergo
this process? Online information (in factual, bibliographic, journalistic,
tabular and other forms) is currently priced on the bases of pay-per-use,
time, fixed-sum, and other schemes. Minitel, Compuserve, the Source and
others have preceeded others in introducing advertising to pay for portions
of their service.
- Does the advertising industry generate enough revenue to make this
proposition interesting? Seems that it does - but I don't have the
data to prove this.
- One question that can be raised has to do with the distinction between
entertaining cultural fare, and all other cultural genres. One could
argue that advertising gravitates to the entertainment niche, shying
away from anything useful. Furthermore, some say that once advertising
is introduced to any mass communicated context, it trivializes and
denigrates it (witness North American commercial TV news):
a) Is this a rule? (how about highway billboards, PBS and CPB
sponsorship, etc. as exceptions?)
b) If it is (partially) true, it raises the specter of some
interesting ethical questions vis a vis the quality/sobriety of
software.
- Ethical and legal concerns: Subliminal persuasion. Self governing by
the media outlets themselves (as in smoking advertisements). Quality
control of software algorithms - avoiding the bastardization/crass
commercialism of software.
This message is much too long already. I am researching some of these
issues currently, including some field tests of actual software containing
simulated commercials.
I would like to plead for feedback. Any response, related anecdotes,
criticisms are welcome. I promise to share the results of our studies.
Sheizaf Rafaeli
Hebrew University of Jerusalem Online: SHEIZAF@HBUNOS.BITNET
Mount Scopus, Jerusalem, 91905 or
ISRAEL KBUSR@HUJIVM1.BITNETphco@ecsvax.UUCP (John Miller) (01/29/88)
Mass advertising through software is an interesting idea, but I think any attempts in this direction would provoke the same response as has copy protection -- a major outcry of protest and a thriving industry for removing the unwanted features of the software. Although some advertisements are recognized for artistic merit or comic relief, the public generally is contemptuous and unappreciative of advertising. John Miller
bayes@hpfcdc.HP.COM (Scott Bayes) (02/02/88)
One phenomenon you might wish to investigate further with respect to
using software as an advertising medium/transport is something I've
noticed in my brief 2-1/2 weeks of owning a Macintosh:
Much of the public domain and shareware software I've seen carries an
"advertisement" for a compiler/development system, or related game or
utility. Often the code seems to have been distributed free of charge
for the sole purpose of exclaiming "Look what great things the XYZZY
development system (or whatever) can do!", or "And for an even more
fantastic experience, buy the Widget package at only $49.95"
This is probably rather more incestuous than the general
software-as-advertising scenario you posit, but bears a very strong
family resemblance to same.
Another thing I've noticed is that computers (actually the operators of
same, of course) have a voracious appetite for software; the appetite is
larger even than that of stereo equipment for program material, in terms
of the cost of satisfying that appetite. I got my Mac on Jan 9, and I
already have a (borrowed) hard disc containing >15MB of software, of
which I'll probably wish to keep >10 Meg. This is after less than 20
days ownership! The cost of purchasing all this software at even a
"reasonable" price tag is probably a large percentage of the cost of the
computer. What costs the future promises, I shudder to imagine!
How can one afford this cost? Often the answer is that one cannot. One
must do without, steal, borrow, homebrew, or save pennies for future
gratification of the appetite.
I think a large part of the problem is the sheer cost in terms of
programming hours required to produce a halfway decent piece of code.
Once (if ever) programming of real applications becomes a mass
production task, rather than a major effort, the whole nature of the
software market will undoubtedly change drastically. Look at what Henry
Ford did to the nature of American life. I'd even venture that
mass-production of software (creation, not copying) could radically
change our current culture.
I hope some ideas in this overlong response were useful to you. I think
your research topic fascinating.
Scott Bayes
bayes@hpfclw
p.s. I've been progamming commercially for >14 years now, so claim
some small authority.kurt@tc.fluke.com (Kurt Guntheroth) (02/02/88)
John Miller wrote: > Mass advertising through software is an interesting idea, but I think any > attempts in this direction would provoke the same response as has copy > protection -- a major outcry of protest and a thriving industry for > removing the unwanted features of the software. Although some advertisements > are recognized for artistic merit or comic relief, the public generally > is contemptuous and unappreciative of advertising. Ah, but you forget, soap software is free, like broadcast TV. Will you pay for a modified software version rather than accept the free one? Some will of course, and some will buy additional software to remove commercials from their soap software. But this is a small problem. It's like the "mute" buttons on TV sets and the fast forware buttons on VCRs. I have both of these commercial killers, but I still see about 2/3 of all commercials beamed to me. A more interesting problem is finding advertisers who would buy space of technical products. Kurt Guntheroth
farren@gethen.UUCP (Michael J. Farren) (02/02/88)
Sheizaf Rafaeli mentioned, in a longer article:
> - Honest microcomputer software users are rare.
One of the biggest problems I have with the current 'debate' on copy
protection which is raging throughout the microcomputer groups is,
simply, that people are vehemently defending positions that they have
taken with, it seems to me, no actual evidence at all to support those
positions. I, at least, have never seen a study which showed the actual
impact of software theft on manufacturer's revenue.
Is your study one such? If so, could you consider sending either a
pointer to it, once it is published, or posting the study itself, if
it's not too large? What is crucially needed in these discussions is
data. No one can take a truly effective position on copy protection (or
any other controversy, for that matter) without data to support it.
Michael J. Farrenaburt@isis.UUCP (Andrew Burt) (02/19/88)
Kurt Guntheroth replied to John Miller with: > Ah, but you forget, soap software is free, like broadcast TV. Will you pay > for a modified software version rather than accept the free one? Some will > of course, and some will buy additional software to remove commercials from > their soap software. I would be willing to purchase soap-s/w IF the ad disabled itself after some small number of runs. I don't mind watching commercials the first time I see them, but it's the 2nd...Nth time that I get very annoyed with it. If the ad ran 3-5 times, then quit, that would be fine. (But it should be rerunable on demand, should I get interested in seeing it again.) Another idea that might be viable to lower the overall cost of s/w, something I proposed in the midst of the copy-protection battles in comp.sys.ibm.pc,comp.misc,etc. is that of large scale software publishers, in place of today's vast array of small one-shot software companies. Microsoft is certainly a "large" s/w pub. by today's standards, but not on the same scale as Prentice-Hall is, say, for computer science books. With the resources to produce and market s/w concentrated in larger places these processes would not be duplicated by each small company with a terrific program to sell. The arrangement could work as the current author-publisher one does. This could also serve as an avenue for shareware authors who aren't really happy with the idea that few people will pay for their code: They could submit it as a proposal for a "paperback" program to a publisher, as an author would a novel. After all, the cost of a floppy is $.25 or less, the publishing houses would have high volume (of different s/w) to keep printing costs lower overall. I think today's book publishers are especially well suited to entering the market this way: They already have the printing facilities, the distribution channels, a sales force, know how to find editors for the related topic, etc. Are there any existing examples of book publishers that are now doing software on a large scale? Any examples of s/w-only publishing houses? Andrew Burt