All software licensing is theft

And here’s why…

I’m going to take you on a bit of a journey. I am going to meander around a bit along the way, I’m afraid; and so you’ll need to bear with me. We will get to the point eventually, I promise...

(And, I should add, all opinions in here are mine alone.)

Going back in time...

This story starts back in 1977. The morning of the 7th of September 1977, to be precise. In a classroom at the South East Essex Sixth Form College (SEEVIC, to its friends). It was a Wednesday; a sunny day, just cool enough to remind everyone that autumn was not far away.

It was a time of considerable social, political, and economic upheaval. Inflation was running at 17%, which everyone was feeling quite good about since it was a considerable improvement on the 27% peak of the previous year. But pay rises were capped at ￡4/week – which, given that the average weekly wage was ￡68.70, meant that people’s purchasing power was going backwards at a rate of over 10% per year. It had been three months since it had become illegal to sack a worker for being black or female, and the nation’s old codgers wondered incredulously what the world was coming to. As British Leyland and Ford UK were exploring new depths of shoddiness with the Princess and the Mk IV Cortina respectively, Britons were, for the first time ever, buying more foreign-built cars than British ones. Son of Sam had been safely behind bars in the US for nearly a month, but the Yorkshire Ripper was at the peak of his murder spree and wouldn’t be apprehended for another 4 years. Elvis Presley had died from the world’s worst case of constipation just three weeks previously – signalling to many the End of Days, rock’n’roll-wise. A few days later Groucho Marx, by far the greater talent, had made a more dignified and altogether less hysteria-inducing exit courtesy of pneumonia. Voyager 1 was barely two days into its journey (which continues to this day) to the outer solar system and beyond, NASA having decided to mess with everyone’s heads by launching it a fortnight after the launch of Voyager 2. The Commodore PET, which looked for all the world like a combination cash register and audio cassette player but was actually one of the first home computers, had just gone on sale. The Baader-Meinhof Group was at its peak, robbing, killing and kidnapping its way across West Germany. (Remember West Germany?) England was frothing with indignation at the IRA’s mainland bombing campaign, and howling with wide-eyed terror at the Sex Pistols’ music. Everyone (including the Queen) was just about over the Queen’s Silver Jubilee. SEEVIC’s principal had just announced that, henceforth, students were only to smoke in the college’s nominated smoking rooms. I had just turned 16 and spent my life savings on what was possibly the world’s crappiest moped.

And, right at that moment on the morning of the 7th of September 1977, I was sitting in my first ever economics class.

I hadn’t particularly wanted to study economics. It was part of a deal struck with my Dad to gain his acquiescence in my staying on at school beyond 16. Dad was a great believer in education, by which of course he meant O-levels. The prospect of giving up 2 good wage-earning years to pursue the dubious benefit of a few A-levels was not one to be consented to lightly. But after much negotiation, it had been agreed that I could defer entry into the workforce until age 18 on the condition that I studied at least one subject that “would be of some use in business”. And economics, we both agreed, sounded kinda like it was probably a bit about business.

(The A-levels thing was only one of a number of challenges to Dad’s world view that my siblings and I have managed to present him with over time. It is with no small amount of gratitude that I note that he always – eventually – supported us in what we chose to do, irrespective of what he personally believed we ought to do.)

So here I was, bright-eyed and bushy-tailed sitting in A-level Economics, year one, lesson one. And at the front of the class was one John B. Hearn, the man destined to be my economics teacher for the next two years – and also, as it turned out, to become a bit of a mentor. It took about 20 minutes for the class to agree behind his back that he should henceforth be known as “JB-Baby”.

A bit about economics…

JB-Baby started by patiently explaining to the class what economics was really all about. Whatever we might have thought it was about, he assured us, we were wrong. If we thought we were signing up to a class in commerce, or accounting, or distribution, or manufacturing, or anything else that we might have believed was what “the economy” was all about, we were way off the mark.

This was scary stuff. If Dad ever found out about this, I’d be buggered.

JB-Baby had the habit of delivering his classroom lectures in a slow and evenly paced hypnotic monotone – a kind of verbal Braille. Key words were delivered after a short pause and a face-distortingly exaggerated enunciation, as close as I have ever seen anyone come to speaking in italics.

“Economics,” JB-Baby intoned, “is about two things. It is about… scarcity, and it is about… choice.”

“Everything,” he continued, “is… scarce. Some things are… more scarce, and other things are… less scarce. If there was no… scarcity, then there would be enough of everything to allow... everyone to have as much of… everything as they wanted. But there isn’t. Which is what economists mean when they say that everything is, to some extent… scarce. If there was no… scarcity, then there would be no need for… economies, for… markets, for… money, for… prices, for… property, for… buying, or for… selling. And studying… economics is about studying how people deal with that… scarcity. How we make… choices about who gets to use these things that are… scarce.”

Whoa! Mind-blowing stuff. Not only was I being told that everything was scarce, which was scary enough all by itself. But I was also being told I’d need to start thinking about a whole bunch of things that I had grown up believing were – well – just the way things were. Property, prices, buying, selling, money – all were just (as I would learn to call them over the coming months) social constructs designed to solve this newly revealed problem of scarcity.

As road-to-Damascus moments go, I admit that it took a few months to really sink in. The norms of the market were so inextricably woven into every aspect of everyday life that it was a major mental struggle to try to look at them critically. Almost daily, poor old JB-Baby would need to remind the class of the basics – of… scarcity and… choice – as his 16 year-old charges tried to inject everyday reasoning about “mine”, “hers”, “belongs”, and so forth into the economic models of the A-level curriculum. (In particular, the economic null-concept of “deserves” was an especially difficult one for people to let go of.)

In the end, some of us more-or-less got it, and some didn’t. I think I did, kinda. Here’s the key bit, for our purposes:

Property is the principle that underpins how we deal with scarcity. When there are not enough instances of a thing to allow everyone to have as many of them as they want, we create “ownership” over each instance of that thing. The “owner” then gets to decide how that instance of the thing gets used. People who own a thing get to say what that particular thing does and doesn’t get used for. People who don’t own any of the things don’t get a say. Harsh, but simple. And so easy to grasp that it seems almost like a law of nature. But it isn’t – it is just a convenient social construct, a means to an end.

There are some important points about property to bear in mind here:

1. The creation and assignment of property rights makes sense only to the extent that it helps solve the problem of scarcity. There is no “natural” property right above and beyond this simple pragmatic objective.
2. The concept of property is only useful when it relates to specific instances of things, not to classes of things generally. You might “own” a tin of beans, having bought it from the supermarket. But it solves nothing to assert “ownership” of all beans everywhere, now and forever. Your ownership of one specific tin of beans resolves the scarcity problem of who does and who does not get to eat those beans. Asserting “ownership” over every tin of beans solves nothing.

There are a couple more important points to note about property. But before we introduce them, there is another central economic principle to be introduced – one that had to be hammered repeatedly into my slowly developing frontal lobes all those years ago with a number of lengthy monologues from JB-Baby: that of Consumer Sovereignty.

Consumer Sovereignty says that the role of the economy is to use available resources to produce the best possible outcome for the consumer. Most of us are, of course, both consumers and producers – we use stuff ourselves and we make stuff for others to use. But the point of the economy is to let people use stuff – making stuff is just a means to that end.

Here’s the key take-away (and I guarantee it’s something you’re going to struggle with):

Whether something is good or bad for an economy relates only to whether it is good or bad for consumers. Whether something is good or bad for producers is irrelevant – producers are just a means to an end.

Or, to put it another way:

If there is more stuff available for consumers, that’s a Good Thing?. If there is less stuff available for consumers, that’s a Bad Thing?. Making less stuff available to consumers just to make life better for producers is a Spectacularly Bad Thing? because producers, like property, are just a means to an end.

Which sets us up to consider that last two important points about property:

1. Your “ownership” of your tin of beans exists to protect your right to determine how that tin of beans will be used. It is for your benefit, nobody else’s. In particular, we do not limit other people’s access to your tin of beans in order to create more market demand for beans; we do it because the inherent nature of the beans means that they can only be eaten once and by one person.
2. Following on from the previous point: when your property right is violated (i.e. when someone steals your tin of beans) it is you who suffers the loss, nobody else. The damage can be stated as “I was looking forward to eating those beans, and now I can’t”. It is not stated as “whoever stole those beans won’t be buying their own, so the manufacturer has lost out on a sale”. Producers, remember, are just a means to an end.

Of course, this is all a very simple description of a complex reality – economists really love their “simplifying assumptions”. Most of us are both consumers and producers, and what we get to consume is inextricably linked to the value of what we produce. Many economic changes make some consumers better off and others worse off, so the net impact is not unambiguously either better or worse. Many of us gain inherent satisfaction from the work we do to produce stuff, rather than just grudgingly producing in order to consume. We constantly make trade-offs between consuming now and consuming later, between consuming and investing, etc. There is an extraordinary amount of devil in the detail, which is why economics quickly gets to be hard (and fun).

But for our purposes here, the complexities are less important than the principles. Particularly the bit about scarcity. (Did I mention scarcity?)

Many of you will have noted, when reading the bit about “everything is scarce”, that actually not everything is scarce. (Admit it, you had an “Aha! Gotcha!” moment then, didn’t you?) The air we breathe, for example, is not scarce, insofar as there is more than enough for everyone. Where I live in the Waitakere Ranges, West of Auckland, water is not scarce. It is so not scarce, in fact, that (and I promise I am not making this up) it literally falls out of the sky. We just collect whatever falls on the roof and use it to our hearts’ content.

You will notice one thing that these not-scarce things all have in common: there is no market for them. Nobody sends me a bill for the air I breathe, or for the water that I collect from my roof. Nobody owns the air; there is no price for it. Economists are wholly uninterested in it. Because it isn’t scarce. No matter how much we might need it (oxygen is hardly a discretionary item), the absence of scarcity makes it wholly irrelevant to the economy.

Here comes a bit about software…

Back in 1977 when I started this journey, the scarcity thing was quite simple. Either something was scarce (in which case economists cared about it) or it wasn’t (in which case economists didn’t even acknowledge its existence). But it was around that time that things got a bit more complicated. People started wanting to sell this stuff called software.

The idea actually had its origins back in 1969. Up until then, it had never occurred to anyone to treat software as any kind of thing of its own – it was just an inherent part of what computer manufacturers needed to provide in order to make their products useful. Of course, in 1969, “computer manufacturers” meant “IBM”, who controlled around 70% of the market for business computers – the remainder being shared among the “seven dwarfs”: Burroughs, UNIVAC, NCR, CDC, and Honeywell, GE, and RCA.

It was in 1969 that the U.S. Department of Justice decided that IBM was unfairly exploiting its dominant position, and started an antitrust case that would drag on for 13 years. In one of its early responses to this, IBM had the idea of trying to undermining the Justice Department’s case by making its software available to its competitors. For a fee, of course. Proprietary software was born.

It took a while for the idea to catch on, and even longer for the legal wrinkles to be tested and ironed out in court. But by 1974 Digital Research, the first of the large microcomputer software companies, had been established. And in 1975, two 20-somethings named Bill Gates and Paul Allen were able to enter into a licensing deal with Micro Instrumentation and Telemetry Systems (MITS) for MITS to sell their “Altair BASIC” software as an optional add-on to the MITS Altair 8800 hobbyist computer kit-set. It was the first example of “shrink wrap” software. A whole new industry was born. Microsoft was incorporated that same year; Software Development Laboratories (later to be known as Oracle), Lotus, Borland, Corel, SCO, Ashton Tate, Satellite Software International (sellers of WordPerfect), Micro Focus, Informix Corporation, and others quickly followed – buoyed by a rapidly expanding market created by mini and microcomputers.

The era of the weightless, non-scarce, digital product had arrived.

OK, enough about software, back to economics…

These non-scarce things made from scarce things (like programmers’ time) gave economists the heebie-jeebies. Forced to admit that they could no longer ignore the phenomenon, economists instead invented some jargon to describe it: non-rivalrous goods. A tin of beans, the economists said, is a rivalrous good, because we must compete for its use. If I give you my tin of beans, then I must give up the use of it myself. But an MP4 file of “The Secret Life of Pets”, they told us, is a non-rivalrous good. We don’t need to compete for its use – I can both give it to you and continue to use it myself. (This was all quite prescient of them really, when you consider that the creation of “The Secret Life of Pets” was still nearly forty years in the future.)

There’s an important point about non-rivalrous goods. A point so important that JB-Baby would doubtless want to recite it all in italics:

Giving someone a rivalrous good is a (relatively) zero-sum game. Someone gains the use of it, but someone else loses the use of it. Giving someone a non-rivalrous good, however, unambiguously makes the world a better place – the recipient is better off, and nobody is any worse off.

(Transferring ownership of rivalrous goods is only a relatively zero-sum game because of the different value people attach to different things. Transferring ownership of a tin of beans from someone who values it only a little to someone who values it a lot does make the world a better place. In fact such exchanges are, ultimately, the basis of all wealth creation.)

There is an obvious corollary to the above point, being:

The best possible state of affairs is one where everyone has unfettered and unconditional access to all non-rivalrous goods.

Considered in reverse, it becomes even more obvious. Imagine a world where everyone can have as much of a Thing as they want, without cost. If we now move to a world where one person no longer gets to have any of the Thing, then that person is clearly worse off. Since everyone else is in the same state as before (of having as much of the Thing as they want), we have clearly made the world a worse place – if only for that one person.

And yet we don’t make non-rivalrous goods freely available. In fact we go to considerable lengths to stop people from having the use of such goods, even though there would be absolutely no cost to anyone in allowing them to have access.

And for this, we must blame King Diarmait mac Cerbaill.

And now we’re going waaay back in time...

King Diarmait mac Cerbaill was, as I’m sure you all know, High King of Ireland in the sixth Century AD, and the last pagan King of Ireland.

King Diarmait was asked to rule over the first ever allegation of what we would now call copyright infringement. The Cathach of St. Columba is the oldest Irish book of Psalms still in existence, and the earliest remaining example of Irish writing. It was also, according to King Diarmait, an illegal copy. The copy was made (old-style, with quill pen and ink) by Saint Columba, a sixth Century abbot and missionary, from an original lent to him by St. Finnian of Movilla. Such books being highly cherished and providing considerable prestige to their owners, Finnian took great exception to having it copied and allowing Columba any “unearned” replication of its benefits. The King agreed, and demanded that Columba hand the copy over to Finnian. Columba, however, was not one to take things lying down. The dispute escalated into a fully-fledged insurrection against the King, culminating in the Battle of Cúl Dreimhne and the loss of 3,000 lives – which kinda puts Kim Dotcom’s current travails into some perspective.

Columba won, by the way, and the notion of copyright disappeared for a thousand years. Only to come roaring back in the Sixteenth Century as an attempt to stop everyone from going to Hell.

The Sixteenth Century, you see, was when the world reached peak Catholicism. The Catholic Church had the Known World nicely divvied up between itself and the Orthodox Church, and the Known World was getting bigger in leaps and bounds. The schisms of the Fifteenth Century were behind it, the Church had managed to whittle its way down from three popes to just the one, and its missionaries were spreading the word and recruiting adherents throughout the Americas, Asia, Africa, and Oceania. Things were looking good.

There was just this niggly little problem with all the printing presses.

Because if there was one thing the Church understood really well, it was that information is power. And the Church made (if you’ll excuse the pun) damned sure that it controlled the information it needed to. Its hold on power was based on a simple pitch: there is this thing called everlasting life which, ironically enough, starts when you die. Whether your everlasting life is a really good one or a really bad one comes down to whether or not you obey all The Rules and believe all The Beliefs. And The Rules and The Beliefs are all laid out in The Books. And only the Church can tell you what all The Rules and The Beliefs are because (a) there aren’t very many of The Books, and The Church controls pretty much all of them, (b) to read The Books, you need to be able to read, which is against The Rules (unless you are one of The Church’s priests), and (c) even if you can get hold of one of The Books and do know how to read, they’re all in high Latin which only the priests can understand. So, went the Church’s line, do everything that we tell you or have a really, really bad everlasting afterlife. In a pre-scientific age it was quite a compelling value proposition.

But printing presses threatened to undermine all that. Printing presses did, in fact, undermine all that. But not without the Church putting up a fight.

With printing presses, the whole notion of The Books being scarce and all under the control of the Church disappeared. If books weren’t under the control of the Church, then they could be printed in any language. And if books were plentiful, it became much easier to teach people to read. Which is why, in 1501, Pope Alexander VI issued a papal bull prohibiting the unlicensed printing of books. His successor followed up in 1559 with the Index Librorum Prohibitorum, a list of books and authors prohibited for being heretical, anti-clerical or lascivious (and which the Church maintained and added to right up until 1966).

As with all exercises of holding back the technology tide, though, it didn’t work. It was in 1517 that, according to legend, Martin Luther nailed his Ninety Five Theses to the door of All Saints' Church in Wittenberg. He may well have nailed them to a door, but he also got lots of copies printed and distributed far and wide. The genie was let out of the bottle: lots of people were exposed to an alternate point of view and started thinking for themselves, and the Protestant Reformation was well and truly kicked off. It didn’t take long for Luther to get his own listing in the Index Librorum Prohibitorum, but by then he and his followers didn’t care. Northern Europe was quickly lost to the Reformation, and Germany became a religious war-zone for decades.

Alongside the Church, Europe’s kings had their own reasons for acquiescing in this control of printing, and pursued it with gusto. Anything that encouraged critical thinking among the hoi polloi about how kings ran their countries was to be sternly discouraged. The English Crown, for example, was conducting its own on-again, off-again schism from the Church throughout the Sixteenth Century, and had no wish to see the exercise complicated by people forming opinions of their own. England first moved to severely curtail printing in 1557, and within 30 years had commissioned the original Star Chamber to clamp down on the "greate enormities and abuses" of "dyvers contentyous and disorderlye persons professinge the arte or mystere of pryntinge or selling of books". The right to print was limited to Oxford and Cambridge Universities and to a small handful of printers in the City of London – all of whom could be relied upon to toe the line and censor anything that might lead to unhelpful ideas among the populace. England’s few licensed printers quickly organised themselves into “The Worshipful Company of Stationers and Newspaper Makers” and, for the next 140 years, got fat on monopoly profits as a reward for helping the government of the day prevent any independent thought.

Fast-forward to the 1690s. Social values and political power structures had moved on. The overt censorship built into the printing restrictions was becoming less and less palatable to Parliament (whose members had, in the previous century, learned a thing or two about putting the King in his place), and in 1694 Parliament allowed the restrictions on printing presses to lapse. Now anyone could print anything. The Worshipful Company of Stationers lost its monopoly, and its members their monopoly profits. They were, to say the least, miffed.

There were various attempts by the Stationers to get their monopoly privileges restored. Initially, appeals were made to the need for books about religion, history, affairs of the state, the law, and so forth to be regulated and censored for the national good. They pursued this line for over 10 years, with no success.

Then, inspired by self-serving rhetoric from well-known authors such as Jonathan Swift and Daniel Defoe, the Stationers changed tack. The problem wasn’t a threat of sedition and heresy after all, it was the unfairness of authors being inadequately compensated for their writing. Proposed bills for “Better Regulating of Printing and the Printing Presses” were replaced with more acceptable proposals “for the Encouragement of Learned Men to Compose and Write useful Books”. And eventually, in 1710, the Stationers got their way.

It was complete tosh, of course. Both Swift and Defoe, for example, were of sufficiently independent means that they needed no financial inducements to write. When the campaigning eventually succeeded in getting the Copyright Act of 1710 (a.k.a. the Statute of Anne) passed, the remuneration to authors barely changed. Before the act, they were paid a lump sum to hand over the manuscript to the printer. After the Act, they were paid the same amount to hand over the manuscript plus their interest in the copyright. But the printers had their monopoly back (after a fashion), so all was well. And it just took off from there.

Fast-forward to 1977…

A quarter of a millennium later, as I sat in the SEEVIC classroom reflecting on the scary notions of scarcity and choice, the scope and duration of copyright had grown out of all recognition. As well as books, by then it also covered music, paintings, sculptures, photographs, movies, and more. The term of copyright protection had extended from the original 14 years to, essentially, forever. In all of these areas, huge industries of intermediaries had grown up. And these intermediaries had learned to mimic the success of the Worshipful Company of Stationers – using their monopoly position to maximise what consumers paid for their products, and to minimise what the original creators received. Countless millions of young musicians around the world came and went dreaming of “making it big” while record companies signed them up to contracts that, no matter how talented they might be, offered the chance of nothing more than a meagre wage for all except a very, very few.

The intermediaries could, of course, produce arguments that seemed to justify their existence – and their pay cheques. Distributing books, movies, etc. all took effort and consumed scarce resources. Vinyl needed to be manufactured and stamped into records, card and ink needed to be created for record sleeves, the finished product needed to be transported, record shops needed to be staffed, and so on. This work consumed real resources, and created genuine economic scarcity in the music we bought – the scarcity model of economics still applied.

The fact that the price we paid was inflated by the monopoly conferred by copyright law was not something we really noticed. Content creators were easily convinced by their industry intermediaries that the cost of all this manufacturing and distribution really did mean that there just wasn’t much left over for poor old them. In a pre-digital age, the cost and effort to individuals of making copies was, give or take a few C90 audio cassette tapes, just not worth it. (And the copies were never quite as good as the originals.)

Back to software, finally...

But then the analog age turned into the digital age. Suddenly, the cost and effort to individuals of making perfect copies was, give or take a few blank floppy disks, just about zip.

Within 6 months of inking that deal with MITS, Bill Gates was complaining loudly about the fact that almost nobody was actually buying his software, choosing instead to simply share it around. It’s an issue that has never gone away. Restrictions on the copying and reuse of software have never really resonated with consumers’ innate sense of right and wrong. The idea that, having bought some software, it still wasn’t really yours to do with as you wish, jarred with people’s expectations of what “ownership” meant.

As other products – music, movies, books – have become digital, their markets have faced similar crises. Their response has been to impose ever more complex and onerous technical measures (such as copy protection) to enforce an artificial scarcity on these products, combined with ever more punitive penalties for circumventing them. And yet still nobody cares. In spite of all the hysterics from digital content industries and their attempts to reframe the issue with terms such as “intellectual property”, “piracy”, etc., there is still almost universal social tolerance of copyright contravention.

Which makes perfect sense, because software, once it is created, isn’t scarce. Conventional economics says that, because it isn’t scarce, it shouldn’t be the concern of markets – shouldn’t be bought and sold, shouldn’t be the subject of property rights, shouldn’t have a price.

But there’s a wrinkle, of course. I can hear you all screaming it as you read this. Software may not be scarce but the resources used to create it are. We use a lot of scarce stuff to make software and other digital products that, once made, aren’t scarce. Scarce resources go into creating new movies, music, novels, and software – all of which, once they have been created for the first time, can be reproduced over and over at zero cost.

So what’s the answer?

Proprietary licensed software certainly isn’t the answer (we’ll come to why later). But it did, one day in 1980, force someone in Massachusetts to walk up the stairs. He didn’t want to walk up the stairs, and he wasn’t at all happy about having to.

On that day, Richard Matthew Stallman – one of the world’s original hackers, a researcher at MIT's AI laboratory, and known as “rms” (all lower case) to his friends – didn’t receive the message on his computer terminal that he was waiting for. He was waiting for a printer to tell him that his print job had been completed. The printer was up several flights of stairs, and so Stallman had long ago modified the software controlling the printer so that it would electronically message him when a print job of his finished printing. The message never came.

The message never came because the University had installed a new printer. And with the new printer came new printer driver software. And the new printer driver software didn’t have Stallman’s mods, and so it didn’t send him any messages when it completed his print jobs. So Stallman did what any hacker of the time would do; he asked for a copy of the source code for the printer driver so that he could modify it as he had with the previous one.

But this time, he was told no – he couldn’t have access to the source code. The code “belonged” to Xerox, the printer manufacturer. It was proprietary software, and they weren’t inclined to let anyone see or modify it. If Stallman wanted to know if his print job was finished, he would need to walk up the stairs and look.

He didn’t want to walk up the stairs and look. He so didn’t want to walk up the stairs and look, in fact, that he decided that the whole operating system would need to be rewritten from the ground up, unencumbered with all this copyright nonsense – free and unfettered forever. Then he would be able to hack the printer driver to his heart’s content.

And thus was the GNU Project born.

Getting closer to the answer…

The GNU Project was the first of many free, mass collaboration software projects. It took a while, but by the mid-1990s the project, boosted by Linus Torvalds’ creation of the Linux kernel, was able to provide a complete, free, and unfettered operating system to anyone who wanted to use it. Today, Linux powers everything from Internet giants such as Google, Amazon, Facebook, eBay, and Twitter to your home TV, router, tablet, phone and watch. Probably even your car. It is everywhere.

There are countless such mass collaboration projects ongoing today. There are thousands of free software products being developed in areas as diverse as computer aided design, finance, image and video editing, many fields of science, risk management, telephony, speech synthesis and recognition, enterprise search, education, office productivity, healthcare, animation, graphic design, information security, the list goes on.

All free. Not just free as in “free beer”. These software products are all free in four different, but equally important, ways:

• You are free to use it for any purpose.
• You are free to study how it works, and change it to make it do what you want.
• You are free to make and redistribute copies, so that more people can get the benefit of it.
• You are free to try to improve it, and release your improvements (and modified versions in general) to the public, so that the whole community benefits.

These are four freedoms that you don’t have with proprietary licensed software – freedoms that proprietary software vendors and copyright law confiscate from us all. The loss of these freedoms is part of the reason why proprietary licensed software is destructive to the well-being of the economy.

What proprietary software licensing steals from us all…

Before we go on, it is important to remind ourselves why the concepts of “property” and “ownership” exist. They are, you will (I hope) recall, nothing more than social constructs designed to address the problems of scarcity. Vendors of proprietary software will object to what follows on the basis that they “own” the software they create, and that the freedoms they are stealing from us were never ours to begin with because the “owners” never “gave” them to us. But this argument is based on the self-serving notion of “ownership” as a natural right, rather than as the limited social construct that it is, intended only to solve the specific problem of scarcity. Their argument is as specious as if the owners of the world’s forests came together and insisted that, since it is their trees that create all the oxygen, we should all have to pay them for the privilege of breathing.

Now consider what is being stolen from you:

• You are not free to use licensed software as you wish. If you want to install it on a second or third machine at home, you’re out of luck – you’ll need to buy it all over again. Buy it all over again, that is, if it’s still for sale. Once the vendor withdraws it from the market, you’re stuck – and you’re still not allowed to install the one you have on multiple machines.
• You’re not allowed to study how it works. Embedded in many software licenses are prohibitions on reverse-engineering or decompiling the code, and often even on doing formal comparisons (such as performance benchmarks) with other products. Companies often take a broad view of what constitutes “reverse engineering” and take punitive measures to shut it down. Princeton student Alex Halderman, for example, was famously threatened with court action by SunnComm Technologies after revealing that merely holding down the shift key on a Windows PC would bypass their proprietary CD copy-protection technology.
• You most certainly aren’t free to redistribute copies. It is worth reflecting on just how damaging this is to society. You have a copy of, say Microsoft Windows. Your neighbour doesn’t, but has a computer that he could install it on and get some small benefit from. Not enough benefit to make it worthwhile paying out the $200 or so that it would cost to buy his own copy, but some. Microsoft and their distribution partners aren’t ever going to get that $200. There is nothing in this that will make them any wealthier, however it works out – the neighbour simply doesn’t think that using Windows on that computer is worth that much. But it is worth a little. Conceptually, we could make the neighbour a little better off – and make absolutely nobody any worse off – by giving him the use of Windows on that computer. But the terms of the licence forbid us from doing so, and so the world is a worse place than it could be.
• Nor are you allowed to improve it. You want to hack that game so that you can play it with your mates on your own server rather than the vendor’s? Nope. Want to continue playing it after the vendor has moved on to the next thing and shut down those servers? No to that too – the fact that the vendor has now rendered your purchase useless is not their problem.

The prohibition on studying and improving proprietary software is a seriously destructive force. As Eric Raymond famously described in his 1997 essay “The Cathedral and the Bazaar”, innovation in software is orders of magnitude more effective when it is a contest of ideas that build on one another, rather than of products that all need to be built from scratch. In the proprietary software world, if you want to make, say, a better database product, then you need to start by expending time and effort reinventing a whole lot of wheels, recreating functionality that has already been created by someone else (and probably by several people, several times). In the free software world, you don’t need to waste all that time and effort. You simply use what has already been created and build on it. All of the developers’ energy goes into innovating, rather than replicating. This is one of the reasons why free software is able to adapt and evolve so much more quickly than proprietary software. Conversely, it is one of the reasons why proprietary software vendors need to spend many billions of dollars on R&D just to keep up with what free software is able to achieve with combined sponsorship dollars measured in the tens of millions.

But lack of freedom is only half of the problem created by proprietary licensed software. The other half is the sheer dead-weight cost of software licenses.

By some estimates, more than US$400 billion is spent every year on software licences, just by businesses and governments alone. That’s over a fifth of their total IT spend. Only a small fraction of this money actually gets spent on developing software. Oracle Corporation, to pick just one example, reported in its Q2FY17 financial results over US$13 billion in software licence revenue, and yet it spent barely US$1.5 billion in research and development. That’s an 88% dead-weight cost right there. Oracle spent US$450 million more in the quarter on selling the product than it did in creating it. Microsoft tells a similar story in its most recent quarterly report; software product revenues of US$13.5 billion versus R&D of only US$3.1 billion; a 77% dead-weight cost. Again, Microsoft spends more on selling us their software than they do on creating it.

But it is worse than that. For most large corporations, the cost of the licences themselves is just the start. There is a further and substantial dead-weight cost incurred in ensuring that they are complying with the terms of their licences. Failure to do so risks being pinged with punitive fees. This need for compliance has spawned two entirely new and lucrative industries: software licence compliance auditing and software asset management. It even comes with its own ISO standard (ISO/IEC 19770-1, in case you were wondering). All this, to make sure that people pay for something that costs nothing to manufacture.

Before you shrug and think “oh well, it’s only software”, reflect on this: software is becoming embedded in just about everything. Producers are quickly wising up to the idea that they can extract more money from you, throughout the lifetime of your use of their product, by “licensing” their product to you rather than just selling it to you. Back in 2015, John Deere made headlines when it told the US Copyright Office that buyers of their tractors were really only acquiring “an implied license for the life of the vehicle to operate the vehicle”. This, among other things, means that you’re not allowed to try to repair it yourself but have to take it to an approved dealer, who in turn needs to pay exorbitant fees back to John Deere for the right to practise his or her craft. Software licensing terms are being used to stifle competition and restrict consumer choice in a wide variety of markets, including printer cartridges, mobile phones, video console accessories, and a wide range of after-market maintenance services (including for motor vehicles).

The industry will argue of course, that all of this is necessary because it is the only way to ensure that all those software developers get paid. But it isn’t true. There are lots of other ways – all of them more efficient and effective, all of them encouraging and accelerating innovation, none of them wasting $3 out of every $4 spent on things other than development, none of them wasting development effort on constantly reinventing the same old wheels, and none of them criminalising the consumer just for using the product the way they want to.

Let’s consider a few examples. Let’s start (if for no other reason than that he was born in 1977, when this story started) with a guy named Mark Spencer.

How to make software without theft...

Mark is a hacker from Alabama. He has a couple of Linux things to his name (the L2TP daemon and the Cheops Network User Interface, if you’re interested), and after leaving university he started his own Linux support business. It quickly got to be successful enough to need a PPX for the office. But PBXs were heinously expensive. So instead of shelling out the big bucks, he knocked up (and released as free software) an interesting little suite of programs called Asterisk. Then he went on to build a business (Digium, Inc) around it.

Asterisk has completely cannibalised what was previously a cosy US$7 billion/year oligopoly, dominated by companies such as Avaya and (more recently) Cisco. Asterisk allows people to set up and run a PBX that is every bit as functional and fully-featured as the proprietary offerings from the big players. And it runs in standard Intel hardware. And it’s free.

Now here’s the clever stuff that has made Asterisk so successful for Mark Spencer and Digium:

1. Because it has been released as free software, lots and lots of people are using it. And lots and lots of people are enhancing it and extending it. And all of those enhancements and extensions are released back to the community. Which means that Asterisk is evolving at a rate that conventional PBX developers can barely even dream of.
2. Because customers want working systems, not just software, Digium is able to make money by selling the scarce stuff that goes into making the non-scarce Asterisk software useful. Products such as IP phones, telephony interface cards, gateways, and services such as commercial support, installation, and training. Lots of other people and other companies around the world are of course able to do the same thing – which is what makes Asterisk such a vibrant and rapidly developing project. Mark is never going to be as rich as Bill Gates, but he is doing well enough to keep him doing what he’s doing. Which is all that’s needed because, remember, the economy exists for the benefit of the consumers, not the producers. And the consumers of PBX systems are doing very well out of the Asterisk revolution.

Then, at the other extreme, consider the Apache Software Foundation.

Apache works to coordinate the efforts of around 3,000 volunteer software developers working on around 100 separate projects. Most famously, it maintains the Apache HTTP Server, the software behind more of the world’s websites than any other web server software. The Apache server is estimated to serve over 46% of all active websites and over 43% of the million biggest sites.

The Foundation doesn’t pay any of the developers, it just coordinates their efforts. But that’s not to say that they are all working for free. Many of them get paid to work on Apache projects by their employers, who have built some or all of their business around providing the scarce stuff that’s used to turn Apache software into something useful and useable – web hosting companies, web consultancies and developers, etc. Others work on the projects to enhance their own credibility – consultants, trainers, developers, and the like whose marketability (and income) depends on having tangible evidence of their competence.

Finally, consider the Linux Foundation. This organisation oversees the development of many key parts of what we commonly call “Linux”, including the Linux kernel itself. The Linux Foundation does employ salaried staff, paid for out of the fees paid by its member organisations. These fees add up to around US$6 million a year – provided by companies such as Cisco, Microsoft, Fujitsu, HP, IBM, Intel, NEC, Oracle, Qualcomm, and Samsung. In total, more than 200 organisations contribute to the upkeep of the Foundation. Many of these companies also directly employ people on their own payroll to work on projects supported by the Linux Foundation. They, like Digium, understand that a free and non-scarce Linux boosts their ability to sell their own market offerings – computer or network hardware, mobile phones, etc.

There are many other groups and companies developing free software – the Document Foundation, MariaDB Corporation, the PostgreSQL Global Development Group, the GIMP Development Team, the Open Source Software Institute, the Adempiere Community, the Mozilla Foundation, the OpenVPN project, the GNOME Project; hundreds of teams of varying shapes, sizes, and motivations.

The rising tide of free software raises all boats.

All these corporates, these small businesses, and these individuals have worked out why it is in their best interest to expend time, money and effort to help develop software and then give it away. They know that by sharing, rather than hoarding, their software work products they also get the benefit of the work products of thousands of others. They know that this freely available software immensely increases the value of the things they can sell that have true economic scarcity – whether it be their consulting time, a piece of hardware, a hosting service, or a mobile phone. They have worked out, in a world that is constantly balancing the Yin and Yang of collaboration and competition in every aspect of human endeavour, that software is about both collaboration and competition of ideas, not just about secrets.

Through their efforts and their results, they have given the lie to the idea that software licensing is a good, or even a necessary thing.