Re: Software as a public service

Stephen J. Turnbull wrote:

> This is what is so damn frustrating about the economics of software.

There are a lot of things frustrating about the economics of software, 
and the fact that it is not exactly like anything else is one of them.

> "Everybody knows" that software is intangible and non-scarce, and that
> OSS is just plain The Right Thing.  But economic analysis says that's
> a contradiction---OSS leads to market failure.  While if you assume
> that software is tangible and scarce, then you _can_ get the result
> that IP doesn't give the incentives that it claims to give.

Let me explore a different direction.  When looking at why peer 
production works great for things like software, but not so great for 
things like entertainment, I have tried to come up with language for 
things which have value "for what they do" and other things which have 
value "for what they are".

Software is valuable because it is used to accomplish some task, and 
accomplishing that task has value.  Software provides more value as it 
accomplishes more tasks, not as it exists in some larger number of 
copies.  (I'm not talking about network effects here, where software can 
be said to be anti-rivalrous)

In the sense of the word scarce you are talking about there being a 
higher demand for software to do various tasks than the supply of (and 
knowledge of) existing software to accomplish these tasks.  Once the 
software to accomplish a specific task "exists" it can then accomplish 
that same task for anyone any number of times without any additional 
cost.  It is in this latter sense, not the former, that people suggest 
that software isn't scarce.

This is very different than oil which "exists" (and we are aware of its 
existence and value to us), but where the amount of the *same thing* is 
in limited supply.  With non-rivalrous goods there is no natural 
scarcity in the number of the same thing, even if there is a scarcity of 
the existence of a required thing.


Is there economic terminology that separates these two different types 
of scarcity?

-- 
  Russell McOrmond, Internet Consultant: <http://www.flora.ca/>
  http://www.digital-copyright.ca/blog/2 (My BLOG)
  Sign the Petition Users' Rights! http://digital-copyright.ca/petition/
  To protect Internet age creativity we must reform WIPO, not copyright!