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[News] Non-Free Software is Life in a Bubble

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Bursting the proprietary-software bubble

,----[ Quote ]
| 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.   
| And what is the marginal cost of production of software? The marginal cost of 
| any product is the cost of making the next copy. 
| If you stop for a moment and consider it, you'll see the cost of making the 
| next copy of any piece of software is almost zero--with perhaps a vanishingly 
| small amount for electricity.  
| That phenomenon is precisely the same as the one challenging the business 
| models of the music and film industries. The equilibrium, free-market price 
| of software is nothing.  
| A matter of survival
| Free software acknowledges that truth. Proprietary software does not. 
| Instead, like the banks, proprietary-software vendors have had to justify the 
| cost of their wares by constructing complex arguments about value.  





All bubbles...


The Patent Bubble... Still Growing

,----[ Quote ]
| The brainchild of former Microsoft CTO, Nathan Myrhvold, Intellectual
| Ventures has reportedly amassed $5 billion in capital and a portfolio of over
| 20,000 acquired patents -- and it's looking for more. From the perspective of
| the tech sector, Intellectual Ventures combines two questionable business
| models, the patent troll and the pyramid scheme, in a form that evokes Wall
| St.'s cleverness in designing glitzy vehicles for esoteric assets.
| IV does not create or market products, so it is invulnerable to the patents
| of others. It looks like a patent troll, because it makes money from "being
| infringed." But IV has a new twist: The companies that settle not only pay
| license fees but are induced to invest in IV, thereby providing the capital
| to acquire more patents, set up new licensing funds, and pursue other
| companies.
| [...]
| There you have it: Arbitrage in exotic assets. A system that values legal
| instruments over real products. And a context-dependent and uncertain value
| for the legal instrument itself. No better than mortgage-backed derivatives.
| And maybe a lot worse.

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