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A Clash of Economic Models

Proprietary software fits well with the idea of copyright. A proprietary software company sells copies of software as if they were physical property. This is a simple and obvious economic model to adopt for people familiar with physical property.

A proprietary software company creates a product, much as a car company would, and sells large numbers of more or less identical copies. This business model was popularized by Henry Ford around a hundred years ago, and hasn’t changed much in the intervening period.

Free Software is slightly different. While proprietary software claims "software has value," Free Software claims "creating software has value." Much of the software industry adopts the second belief, creating custom software. A customer doesn’t really want software—she wants to solve a problem. These producers don’t employ developers to write software; they employ them to solve problems. The solutions to these problems happen to be in the form of software, but it’s the talent capable of solving the problems that’s worth the money.

In a some cases, there’s very little difference between Free and non-Free software. If the software doesn’t already exist, the customer needs to pay someone to have it written. If it’s sufficiently specialized, distribution rights don’t matter, because no one other than the original customer would actually want it. In this case, it’s just a question of vendor lock-in; can the customer go somewhere else for bug fixes or feature enhancements? At this stage, the original distinction emerges. The Free Software company is selling its skills, rather than the code. The customer can go elsewhere later, but the Free Software company is likely to be more familiar with its own code than an outsider would, and so will be more cost-effective later on. A proprietary software company is selling a product. If you want modifications to that product, you need to go to the originator. In both cases, the customer is likely to go to the original supplier for changes, but for quite different reasons.

This difference leads some people to think that Free Software is somehow anti-copyright. Because copyright is based on the concept that ideas (or, rather, the expression of ideas) should be treated akin to physical property, it is somewhat antithetical to Free Software, which proposes a very different way of measuring value for intangible goods.

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