Proprietary software and "Lipstick on a pig"

Mark Taylor of Sirius Corporation has written a very interesting article that explains in economic terms why proprietary software is doomed.

Is proprietary software simply a pig skilfully dressed up to make the unwitting think it has intrinsic value?

The answer is 'yes', and here's why.

In any free market, the price of a commodity, over time, falls close to that of its marginal cost of production. A number of things can interfere with this process, the most damaging being the existence of a monopoly, but in the absence of market distortion this rule always holds true.

Red Hat CEO on the "economics of abundance"

Red Hat's CEO, Jim Whitehurst was interviewed by Bangkok Post recently. I liked his comments on the "the economics of abundance" versus the old notion of "intellectual property."

Red Hat's CEO spoke of "the economics of abundance" that applied to software, and how, in the digital age, when intellectual property could be copied for free the question was "How do you build economics around that?" And he noted how the use of "old-world concepts" such as "it's mine and it's property," by calling it "intellectual property," built on an old-world sense that it had value and cost a lot to duplicate.

Emphasising that Red Hat was a very strong believer in intellectual property rights, he said that in the old-world, with physical things, you couldn't give away a product for free to try out, "but if you think about the economics of abundance, where bits can be copied for free, why shouldn't that be a business model?

"It's kind of flipping business models on their ear," he said. "Rather than apply old-world physical products' commercial principles, let's start from scratch and say 'is there a whole new way to create value?' And that's what we think we're doing and that's pretty extraordinary too. We still have a long way to go. And I don't think that we're fully there in understanding yet. All
content, music ... how do musicians make money? Should it be using DRM, or is there another way to do it?