Via Mark Bernstein I came across this post by Dave Winer. There's some good stuff here:
For the last few weeks I've been asking anyone who will listen if it isn't weird that our economy is based on software, more and more, yet users don't want to pay for software.
In the same breath I express sympathy for the music industry, because they're going through the same devaluation we went through in software in the 80s and 90s. An average song is a bit bigger than the average software program of ten or twenty years ago, so it has taken a while for the distribution pipes to catch up. Today songs travel freely over the Internet, some people are optimistic about people paying -- I am not
Hmm. The problems are perhaps more similar than I had thought (in terms of the end result). In software, no one wants to pay for tools. This is in large measure due to the push from the industry heavyweights to go back to a free software model - IBM, for instance, seems to believe that a free tools model will help them sell truly high end software and services - which has the effect of squeezing the heck out of an awful lot of software vendors. Combine that with the rise of decent Open Source products, like PostgreSQL - and it gets even harder. The end result - an awful lot of potential consumers just download free stuff, and the market for tool vendors contracts. Music has some of the same things happening - it's very easy to download music (and ultimately video as well) - so why pay for it? This helps some artists who have had great difficulties breaking into the fairly closed music world, while it upsets the apple carts of all the existing vendors. Why is this happening? It's not just download ease - it's also the attitude and pricing models of a lot of the music industry. CD prices, for instance, have stayed at absurdly high levels - and this is where we see some similarity (again) with software. The existing vendors have gotten used to being able to charge high (and very limiting) license fees for software. Well, along comes Open Source - it may not be as good or as polished, but a free 80% solution seems better than the pricey 100% solution (and it's not as if a lot of the vendors have 100% solutions anyway). Back to music - the songs you download are often not as high quality as what you can get on a CD - but they are good enough.
It gets even odder. As this trend increases, you see the established players panic. Lawyers are deployed, lawsuits blossom. This has the effect of irritating the end users even more, which drives them further down the road towards free solutions. Look at the entertainment industry reaction to the ReplayTV - Commercial Skip and the ability to send shows got most of the major players to line up and have a complete snit. Most people are using this stuff for fair use purposes - and the hardline reaction merely torques them off. The software industry has the same problem. Attempts to increase leverage through ever more onerous licensing terms just torques people off.
And this is where Dave Winer (and a lot of other people) simply fail to see the problem. Markets change - just as Winer laments the passage of large IT shops, people in New England 150 years ago lamented the passage of large textile shops. The agile companies that saw change coming survived - just as the agile companies in software and music will survive this transition. The ones that don't survive will be the ones that keep looking back to the good old days in a vain effort to figure out how to get back there.