The Implications Of Software Commodity?

comforteagle writes "David Stutz has written elegant piece over at OSDir.com titled 'Some Implications of Software Commoditization'. It explores the concept of commodification in a historical context while also seeking to discover lessons that might be applied to contemporary open source business efforts. David gets extra points in my books for including sugar, Shakespeare, open source, MP3s, and the British Empire in one article."

Comments

of course....

[Transient0]

like all property/physical world analogies to information, the differences trump the similarities in every attempt at relevance.

the fundamental issue being that you can't copy a pound of sugar from one box to another and still ahve the same amount of sugar in the first box.

Re:of course....

[ch-chuck]

you can't copy a pound of sugar

and software doesn't just grow on trees either, it has development costs that must be paid for somehow.

Re:of course....

[Anonymous Coward]

this is slashdot.

here, good citizens grow on trees, and there is no need for government.

Re:of course....

[Anonymous Coward]

Sugar doesn't just refine itself, not put itself into nice bags right into the store for sale. There are costs for all that, that must be paid somehow.

Re:of course....

[jfdawes]

The problem really is that the act of copying a piece of software is terribly easy and costs: The price of the electricity used to run the devices doing the copying plus the cost of wear and tear on the device plus the cost of the media used to store the new copy plus the cost of wear and tear on the media.

This is probably on the order of hundredths or thousandths (hundreds and thousands, yay) of a cent. For any piece of software.

And the old piece of software is still there, unchanged. The act of copying it does not destroy the original.

Some people may argue that the cost of research and development should be born by the user. They may be correct, who am I to say, however the only version of the software that has those costs directly associated it is the original.

Getting back to copying a pound of sugar. Just say we had a machine capable of copying the pound of sugar, given some carbon, hydrogen and whatever other raw materials it needed and electricity. Put the original pound of sugar (the one grown/ harvested/ processed/ researched/ transported/ etc) in the machine and "copy" it. Should the user of the copy have to pay for transporting the orginal to the shop where it was sold? Or just for the raw materials and electricity used in the copying process?

Re:of course....

[ewtrowbr]

You either missed to point, or didn't read the article. A commodity is roughly defined in the article as something for which there is broad demand. The interesting part comes with the networked interchange of the commodity. The analogy holds equally well for sugar and software. "the process of commodification frames the market conversation between consumer and producer"

Re:of course....

[Anonymous Coward]

The problem really is that the act of copying a piece of software is terribly easy and costs: The price of the electricity used to run the devices doing the copying plus the cost of wear and tear on the device plus the cost of the media used to store the new copy plus the cost of wear and tear on the media.

You forgot that every time you copy software illegally, an angel gets his wings ripped off and baby jesus cries (for 3 hours.)

Re:of course....

[Brandybuck]

The other major difference is the genericity of commodities. Bottled water is bottled water is bottled water, in much the same way that white sugar is white sugar is white sugar. Or as Bob Young would say, catsup is ketchup is catsup.

Unless you're a brand fanatic, replacing this diner's premium coffe with New Folgers Crystals isn't going to make any difference to anyone. But go recreate that classic television commercial by replacing someone's Mac OSX with a Dell running Linux and you'll hear quite a lot of outraged squawking. Heck, even secretly replacing the Korn shell with bash is liable to get you challenged to a duel with pistols at fifty paces.

Re:of course....

[Shurhaian]

As this and the next earlier sibling post point out, the commodity here isn't just the software - it's the time and effort that went into developing the software. That cannot be recovered - whereas sugar(consumed, broken down, exhaled as, largely, carbon dioxide and water, both of which are taken up by plants and put back together) works its way back into the ecosystem, and thus, is just as copyable as time and effort, which are ongoing without the steps in the middle.

Getting off topic here, but the point is, just because software can be copied quickly doesn't make it any less valuable to produce, and that value to the consumers is what defines a commodity.

Re:of course....

[ciaran_o_riordan]

If a food copier existed - if you could create as much food as you wanted, for the same cost as producing one portion of food - there would be riots in any country that prohibited the copying of food. (and rightly so.)

Commerce, like creativity, is brownian motion. Don't hold back society because you're afraid the stock prices of last centuries monopolies will drop.

Copyright is simply artificial scarcity for software. We have enough scarcity in the world.

Re:of course....

[ch-chuck]

Just say we had a machine capable of copying the pound of sugar

Then the customer would have to pay for the molecular synthesizer, and I bet they won't be cheap! Ok, say a grocery store buys a $50,000 synthesizer that can make basic raw materials like simple organic substances, sugar, salt, etc. out of water (H & O) and cylinders of carbon dioxide (C & O). He borrows 50 grand from the bank to invest in this technological marvel, and has to pay it back in 15 years, the expected life of the machine. He would have to collect enough in the sugar sold to pay off the machine, principle + interest, it's maintenance and repair once the warrenty expires, plus enough extra to pay his rent/mortgage, food, clothing, taxes, health insurance, transportation, childrens college education, etc.

Re:of course....

[jfdawes]

You're right, but you're really just arguing the original point. The technology to copy and store a 1 gigabyte file these days costs about $400 (I'm talking buying the whole computer w/ drives). Maybe less, depending on rebates blah blah.

In 1948, the same technology would have cost millions. Hell, even the electricity bill would have run into thousands. It may not be possible.

Let's assume this wonderful copying machine costs on the same order as a PC and reduce the copying costs to raw materials and electricity only, further assuming that the electricity cost is not unreasonable. So you're talking some carbon (some lumps of wood. Grows on trees. Arguments about suitable form for use by machine ignored. Arguments that sugar also grows on trees also ignored), some water and five minutes on your standard houshold 240V^H^H^H^H115V (Arguments about stupid american politically inspired choice of electrical transmittion grid ignored too).

Re:of course....

[richieb]

If a food copier existed - if you could create as much food as you wanted, for the same cost as producing one portion of food - there would be riots in any country that prohibited the copying of food. (and rightly so.)

Actually food copier does exist. Want more apples? Take the seeds plant them and wait a while (the copy process is slow :)).

Unfortunately the cost is still pretty much the same.

But I have heard of farmers being sued for planting genetically modified seeds (which were patented), even by mistake. And there are some African countries that are letting their people starve rather than accept geneticallyu modified food - partly because if their crops are "polluted" with the genetically modifed variety they won't be able to sell their produce in Europe.

Partly because of fear of IP protection.

Re:of course....

[Vancorps]

I'm sorry, does that mean we should still be paying many thousands of dollars for a TV?

Inherently when something becomes a commodity you cannot charge as much for it. Imagine if the cost of cars scaled the same way. Granted cars are a very bad example since they have no really changed in price at all. Just arguably more features.

Still, how do people make money producing a commodity? There are many ways, refer to sugar industry execs for lessons, same with coffee, and for that matter all the crops. You make your money in quantity, you make it so cheap to produce that you produce a lot more to make your tiny profit margin actually work.

Re:of course....

[Ohreally_factor]

Will someone please change that brat's diapers?

Re:of course....

[serutan]

I would argue that the cost of research and development should be borne by whoever wants to bear it, whether for profit or not. Giving away something is no crime just because someone else wants to sell it. But it can become a crime if big business controls the government, and it can become immoral if big business controls the media.

The ultimate goal of programmers is to eliminate the need for programmers, through intelligent software that reprograms itself according to need. I think the ultimate goal of business should be to eliminate the need business. I think we will reach a point, through commodification and automation, where the necessities of life are trivial and at least some of the luxuries are cheap. The only people capable of making that happen are open-source types who create because they want to improve the world.

The business world in general is going to become like the music industry, keeping prices high through artificial scarcity, enforced essentially at gunpoint by a bought government. An ominous undertone of the free and opensource software controversy is the theme that only businesses should be allowed to threaten other businesses. The idea that providing jobs is more important than eliminating the need to do the work itself may be disguised as morality, but the real motive is to keep a few people in castles no matter where the rest of us have to live.

Re:of course....

[DarkSarin]

This is correct. There is another point that is important to catch: if we get to the point where we can copy foodstuff as mentioned above, and software copies itself, we will also be able to cheaply replicate pretty much anything (clothing, etc.)

The question then, is what is left to provide jobs? My answer is this: education and entertainment. If we ever manage to solve the world's problems of food, clothing and other material goods, then the only things that will be of value will be education and etertainment.

But before we can get there, we must shift our mindset: we have to get rid of big businesses who exist merely to sustain themselves (there are several already who only exist because they have convinced someone that there services are of worth--indeed most businesses fit this model).

But if all material goods are easily reproduced, then its only a matter of time before they have no worth. Then, like diamonds, the only cost will be artificial.

At that time, we will be faced with the choice to accept the corporate overlords, or rebel and allow everyone equal access. I know what I will argue for.

Generally speaking, I am a capitalist, but if our technology goes far enough before we blow ourselves up, that economic model will need to pass also, as will all other current models. No clue what's next though, but I do imagine that it will be very different.

Re:of course....

[Gilk180]

Some people may argue that the cost of research and development should be born by the user. They may be correct, who am I to say, however the only version of the software that has those costs directly associated it is the original.

Getting back to copying a pound of sugar. Just say we had a machine capable of copying the pound of sugar, given some carbon, hydrogen and whatever other raw materials it needed and electricity. Put the original pound of sugar (the one grown/ harvested/ processed/ researched/ transported/ etc) in the machine and "copy" it. Should the user of the copy have to pay for transporting the orginal to the shop where it was sold? Or just for the raw materials and electricity used in the copying process?

The point that is being missed is that the original pound of sugar is a resource just like the carbon, hydrogen, etc. Without the original pound of sugar the copying machine would have nothing to copy. So why shouldn't the costs of producing the original poind be amortized to the price of the copy.

Saying cost to produce the original shouldn't go into the cost of the copy is equivalent to saying that the cost of the machinery to produce the copy shouldn't be included. Just because something is a one time cost does not mean that the consumers shouldn't pay for it.

The only difference with intellectual property (ie software) is that unlike a car or a pound of sugar, the majority of the cost of production is in up-front, one time, fixed costs, instead of variable costs that are paid to produce one extra copy of the product.

Re:of course....

[LouieLing]

You are all so dazzled by the commodity form that you cannot "think out of the box" & see that the process of commodification is endemic to capitalism
as is the notion of scarcity, well as the fiction
of the "Law of Supply & Demand". This is no where
better exposed than in the writings of Thorsten Veblen, a unique & much neglected U.S. economist & social critic. This little excerpt for your gestation is from his "The Engineers and the Price
System" (1921):

The mechanical industry of the new order is inordinately productive. So the
rate and volume of output have to be regulated with a view to what the
traffic will bear -- that is to say, what will yield the largest net return in
terms of price to the business men who manage the country's industrial
system. Otherwise there will be "overproduction," business depression, and
consequent hard times all around. Overproduction means production in
excess of what the market will carry off at a sufficiently profitable price. So
it appears that the continued prosperity of the country from day to day hangs
on a "conscientious withdrawal of efficiency" by the business men who
control the country's industrial output. They control it all for their own use,
of course, and their own use means always a profitable price. In any
community that is organized on the price system, with investment and
business enterprise, habitual unemployment of the available industrial plant
and workmen, in whole or in part, appears to be the indispensable condition
without which tolerable conditions of life cannot be maintained. That is to
say, in no such community can the industrial system be allowed to work at
full capacity for any appreciable interval of time, on pain of business
stagnation and consequent privation for all classes and conditions of men.
The requirements of profitable business will not tolerate it. So the rate and
volume of output must be adjusted to the needs of the market, not to the
working capacity of the available resources, equipment and man power, nor
to the community's need of consumable goods. Therefore there must always
be a certain variable margin of unemployment of plant and man power. Rate
and volume of output can, of course, not be adjusted by exceeding the
productive capacity of the industrial system. So it has to be regulated by
keeping short of maximum production by more or less as the condition of the
market may require. It is always a question of more or less unemployment
of plant and man power, and a shrewd moderation in the unemployment of
these available resources, a "conscientious withdrawal of efficiency,"
therefore, is the beginning of wisdom in all sound workday business
enterprise that has to do with industry.

To read the rest of this essay see:

http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/vebl en /

His analysis of the relationship between "big business" and the application of science & technology is first rate even if his suggested resolution seems more fanciful today than when he
first proposed it.

Re:of course....

[iminplaya]

In 1948, the same technology would have cost millions.

Was there even 1 gigabyte of information in existance back then? :-)

Re:of course....

[jfdawes]

Why shouldn't the costs be amortized? Because it may be impossible to fairly decide what portion of the cost of the copying equipment to assign to each copy. If you want to charge a fee for the use of your copying machine, fine - but do not try to argue that the cost of performing the copy should be in anyway related to the cost of producing the orginal.

Copyright laws exist for this reason: to protect the investment of the person/people who spent the money to research and develop the product. They are too often abused to protect a profit making "copying machine".

Re:of course....

[H4x0r Jim Duggan]

> food copier does exist. Want more apples?

That's not copying, that's manufacturing. The difference is the point.

Re:of course....

[Gilk180]

If you want to charge a fee for the use of your copying machine, fine - but do not try to argue that the cost of performing the copy should be in anyway related to the cost of producing the orginal.

That isn't the situation intended by the parent. If you are making a copy of something that you produced, then the copying facilities are all you should have to pay for. And you should have to pay whatever the owner can get out of you.

However, if the only place you enter into the production of the final copy is as a consumer (ie someone else produced the original and made the copy) you should pay for part of the cost of producing the original and the cost of copying.

<Philosophical Rant>
The idea of fairness is a wonderful goal, but how do we decide what is fair in any case? Is equality fair? I don't think so. If I work 60 hours a week and you do nothing, is it fair that our salaries are equal?
</Philosophical Rant>

It may be impossible to fairly decide what portion of the cost of copying is assigned to each copy, but it all comes down to how much you are willing to pay for the copy(not just the copying service). Once you buy the copy, the proceeds should be divided among the producer and the distributor(or copier).

Of course if the copying company does not own original sugar, it should have to share the profits with the owner of the sugar used to make the copy. That is the whole purpose of copyright law. To make the copier treat the owner of the original "fairly".

Re:of course....

[Artifakt]

If we make scarcity scarcer, then someday there won't be enough to go around, and only the wealthy will be able to afford scarcity anymore. At this point, War and Pestilence are having a tough time generating scarcity without motivating some people to reduce scarcity at the same time, and even Famine and Death seem to be on the brink of faltering in what was once an unbroken string of successes. Is this the future you want for your children? (Because it's certainly what I want for mine).

Re:of course....

[aztracker1]

Getting back to copying a pound of sugar. Just say we had a machine capable of copying the pound of sugar, given some carbon, hydrogen and whatever other raw materials it needed and electricity. Put the original pound of sugar (the one grown/ harvested/ processed/ researched/ transported/ etc) in the machine and "copy" it. Should the user of the copy have to pay for transporting the orginal to the shop where it was sold? Or just for the raw materials and electricity used in the copying process?

How about money.. well, should someone copying cash be charged with a crime, for only making a copy of an original.. or should the cost of the paper, ink, and electricity be enough?

Re:of course....

[andy landy]

It's not as if it's just "easily copyable" things like software/multimedia that's the issue.

Sure you can't "copy" a bag of sugar, but you can't "copy" a microprocessor either - It's still copyright infringement if you make your own Pentium CPUs.

Conversely, you can still "steal" a copy of Windows XP off the shelf - you have the physical item (Box, holographic CD etc), wherever you stole it from doesn't.

The whole concept of IP is to protect ideas, which is a very different paradigm to protecting physical items.

Re:of course....

[Anonymous Coward]

This is true, but the issue isn't only copying. To put a pound of sugar on the table requires labour costs. To develop "a pound of software" also requires labour costs, but the next pound can be copied at a much lower cost. However, if the license is such that copying and reuse by other developers is not possible, then the next copy must be developed at the roughly the same cost as the first "pound of software". Using free - as in freedom - software components makes the the next copy less costly to develop. For the sake of the argument, I'm presupposing that integration of the different parts aren't too difficult, which would drive the labour costs up again.

Re:of course....

[Anonymous Coward]

but you can't "copy" a microprocessor either - It's still copyright infringement if you make your own Pentium CPUs.

No, that might be a patent violation (dependig on implementation details), but not copyright infringment (unless you actually took their designs).

The whole concept of IP is to protect ideas
No, it's to protect the implementation of ideas. Ideas themselvs can't be protected (not even by patents, although that's what software patents try to do), they belong to the a single person. But when he shares his ideas with others, it belongs to the world (read Thomas Jeffersons letter to Issac blah blah).

Re:of course....

[bogado]

The problem with food is that the final product have a cost similar to the one of their components. Take aids medicine, for instance, it is possible to copy those for a price witch could be considered free by most, but they are not.

In the same way when you copy a file this copy is not free, it cost space in some medium and also to make this copy you use energy. Sure this price is so low that could be considered free by even poor people.

Re:of course....

[jadavis]

Nah, synthesizers work based on REAL raw materials, mostly quarks. You can throw anything in there.

"Hey Joe, the synthesizer is a little low on downs. Throw some electrons in there, will ya?"

Re:of course....

[robnauta]

The other major difference is the genericity of commodities. Bottled water is bottled water is bottled water, in much the same way that white sugar is white sugar is white sugar. Or as Bob Young would say, catsup is ketchup is catsup.

Unless you're a brand fanatic, replacing this diner's premium coffe with New Folgers Crystals isn't going to make any difference to anyone. But go recreate that classic television commercial by replacing someone's Mac OSX with a Dell running Linux and you'll hear quite a lot of outraged squawking. Heck, even secretly replacing the Korn shell with bash is liable to get you challenged to a duel with pistols at fifty paces.

Your example is flawed. Replace 'white sugar' with 'red wine'. Red wine is just red wine, it's all the same, tastes the same. I am sure almost everyone would disagree. There are thousands of different wines, prices from $1 to $1000 per bottle, and anyone who drinks wine will tell the difference between a fine $10 bottle and a sour headache-inducing $1 bottle.

This removes the assumptions from your conclusion, which are irrelevant anyway. You act like Linux is the most important thing in the world. Who would care about korn and bash ? Isn't linux all about people developing open source, then after a dispute going their separate ways and developing two almost identical branches ?

PS. the 'classic' commercial (from 1984) didn't feature OS-X...

Re:of course....

[Bremen24601]

The counterargument to this is quite simple. If we improve efficiency in one area (overproduce) another may go underproduced because resources are lacking. If the car industry was to go full tilt someone wanting to develop a new steel product may not be able to get the steel to produce their contraption.

The Soviet Union was a good example of this. They could produce great quantities of items. However they still still suffered crippling shortages. A good example is the soviet manufacturing of TVs. They produced more than they needed. So when color TV came around they still had huge stockpiles of B&W units. Since production was tied up in B&W units production of color units suffered.

We are also neglecting the cost of warehousing overproduced items. Not to mention any perishable goods may not last long enough to reach market. Just because twice as much food is available is no reason to eat twice as much :0) Or may directly, overproduction leads to overconsumption.

Re:of course....

[EnderWiggnz]

You are extremely wrong - an implementation of an idea is protected under a patent.

Re:of course....

[fleck_99_99]

The ultimate goal of programmers is to eliminate the need for programmers, through intelligent software that reprograms itself according to need

In my former life, I was a programmer, but I have to admit, my ultimate goal wasn't something worth going into here, but involved a bevy of supermodels rather than self-intelligent software. Perhaps I'm just shortsighted.

Re:of course....

[EnderWiggnz]

and this obnoxious drivel got modded up???

Hey Mods, get your crack right here.

Ooh, extra points, I want some!

[thelenm]

Everyone knows that Shakespeare (who was a sugar freak) would have released his work as Open Source in an MP3 format if the British Empire hadn't stopped him.

Re:Ooh, extra points, I want some!

[Feztaa]

Total bullshit, Shakespeare preferred Ogg Vorbis.

Re:Ooh, extra points, I want some!

[Anonymous Coward]

actually, Shakespeare made sure that none of his actors were ever in posession of a complete copy of the script, so they could not steal it, copy it, and go off to start their own production somewhere else. I'm in no way anti-GPL, but since Shakespeare had to make a living from royalties, he probably would've been...

Sure you can.......

[i_want_you_to_throw_]

the fundamental issue being that you can't copy a pound of sugar from one box to another and still ahve the same amount of sugar in the first box.

You can if you clone it.

Re:Sure you can.......

[Destoo]

Thank you replicator. You are a real time saver.

"If God had intended man to fly, He would not have invented Spanish Air Traffic Control."
-- Lister

Re:Sure you can.......

[Anonymous Coward]

I will waste one of my two daily posts to call you a FUCKING IDIOT.

Few posts have been better spent.

Try this instead

[jfdawes]

From David Stutz's website (http://www.synthesist.net/writing/commodity_softw are.html)

One SENTENCE!

[Milo Fungus]

simoniker really just wanted to one-up David Stutz by including sugar, Shakespeare, open source, MP3s, and the British Empire in one SENTENCE! Is there a special karma bonus for that?

(Hey! I just did it too! Can I have the karma bonus as well? Nevermind the karma. Just visit my website and support the Creative Commons.)

Re:One SENTENCE!

[MisterMo]

Hey, you forgot pork-bellies and the Chinese government...

Re:One SENTENCE!

[Anonymous Coward]

How long will it take you slashdotters to realize that italicized text was written by the SUBMITTER of the article, in this case "comforteagle". Simoniker did not write a single thing on this story, he merely posted it. Only when unitalicized text appears after a submitted article did the slashdot employee write it. Geez people, come on!! your UID is pretty low too!

Also available on synthesist.net

[MisterMo]

This article was originally posted on Stutz' website. Since OSDir seems to be slashdotted, you can read it here!

Re:Also available on synthesist.net

[Ohreally_factor]

Thanks! Really interesting article, especially for a wonk like me. Much to think about.

Lessons in history

[Un0r1g1nal]

While there are many lessons to be learnt from history, the human race in general seems not to care, actually let me rephrase that .. .. the people with all the money and the governments supposedly representing the masses but actually more likely on the pay check of said rich people/companies do not care in the slightest. They would prefer to opress progressive science by stopping technological advancement by whatever means necessary, because it would put a dent in their profits!!

Re:Lessons in history

[ErikTheRed]

Like they say: Those who fail to learn history are doomed to repeat it. Those who actually do learn history are doomed to know what's coming from the other 99.99999% of humanity.

Re:Lessons in history

[geminidomino]

Snarfed for sig fodder!

Re:Lessons in history

[EvilTwinSkippy]

And I'll be laughing all the way to the bank.

Just look at real estate. Don't by the scummiest house on a nice block. By a scummy former rental next to a crack-block that the city is going to condemn, bulldoze, and then sell off to a housing company that's going to be dropping in luxury townhomes.

My house has doubled in value in six months. Not like I'd move. The neighborhood is great.

Muhahahahahaha.

Now, about those scummy public schools...

/.'ed Text

[comforteagle]

I often used the phrase "the commodification of software" to represent what I believe is the critical force behind the rise of open source software. Broadly used software is now defined primarily by its capacity for networked data exchange of standardized commodity datatypes such as a web page, an MP3 file, a UNIX executable, or a Word document, rather than its application model and user interface. This short note explores the concept of commodification in a historical context while also seeking to discover lessons that might be applied to contemporary open source business efforts.

Commodity

The word commodity is used today to represent fodder for industrial processes: things or substances that are found to be valuable as basic building blocks for many different purposes. Because of their very general value, they are typically used in large quantities and in many different ways. Commodities are always sourced by more than one producer, and consumers may substitute one producer's product for another's with impunity. Because commodities are fungible in this way, they are defined by uniform quality standards to which they must conform. These quality standards help to avoid adulteration, and also facilitate quick and easy valuation, which in turn fosters productivity gains.

Karl Marx considers commodities important enough to begin his book Capital with a discussion of them. The first chapter concludes with a discussion of what he terms "the fetishism of commodities," from which the following quote is taken:
A commodity appears, at first sight, a very trivial thing, and easily understood. Its analysis shows that it is, in reality, a very queer thing, abounding in metaphysical subtleties and theological niceties. So far as it is a value in use, there is nothing mysterious about it whether we consider it from the point of view that by its properties it is capable of satisfying human wants, or from the point that those properties are the product of human labor. It is as clear as noon-day, that man, by his industry, changes the forms of the materials furnished by nature, in such a way as to make them useful to him.

Marx asserts that commodity markets are more about power, politics, and even religion, than they are about their actual underlying resources. Commodities exist to facilitate exchange (and, since this is Marx, to subjugate the laborer). They are a way to build up an abstract world in the image of commerce, rather than reflect a more natural order for the world. Commodities are a reflection of the politics of human values: the contracts by which commodities are defined, and the standards that form the foundation for such contracts, are more important than the inherent quality of the commoditized thing. This is a very important lesson to learn, and one which the open source community should heed when marshaling its limited resources.
Commodity, the bias of the world

Shakespeare, of course, always has something to say.

Here is a soliloquy that concludes Act II of King John on the topic of Commodity. It is delivered in the play by the bastard son of Richard Coeur de Lyon, who has just convinced England and France, at war with each other, to suddenly strike an opportunistic political bargain and ally themselves against the city of Angiers:

Mad world! mad kings! mad composition!
John, to stop Arthur's title in the whole,
Hath willingly departed with a part,
And France, whose armour conscience buckled on,
Whom zeal and charity brought to the field
As God's own soldier, rounded in the ear
With that same purpose-changer, that sly devil,
That broker, that still breaks the pate of faith,
That daily break-vow, he that wins of all,
Of kings, of beggars, old men, young men, maids,
Who, having no external thing to lose
But the word 'maid,' cheats the poor maid of that,
That smooth-faced gentleman, tickling Commodity,
Commodity, the bias of the world,
The world, who of itself is peised well,
Made to run even upon even ground,
T

Re:/.'ed Text

[Tiro]

Braudel is amazing. I haven't heard of those other guys though.

Oh yeah? new form of karma whoring

[Rosco P. Coltrane]

David gets extra points in my books for including sugar, Shakespeare, open source, MP3s, and the British Empire in one article.

"To MP3 or not to MP3, that is the question:
Whether 'tis GNUer in the mind to suffer
The slings and arrows of outrageous coffee with no sugar
..."

Okay, do I get points now?

Re:Oh yeah? new form of karma whoring

[bluewee]

no, for where tis dwells the brittish empire?

Re:Oh yeah? new form of karma whoring

[Anonymous Coward]

Alas poor Yorick! I GNU him, Horatio.

Re:Oh yeah? new form of karma whoring

[Lifewish]

You need an "Alas, poor Empire" in there for maximum score I'm afraid.

Re:Oh yeah? new form of karma whoring

[shuane]

David gets extra points in my books for including sugar, Shakespeare, open source, MP3s, and the British Empire in one article.

Doesn't that mean that the original poster gives themself extra points for doing the same? (Oh, and me too, if a comment counts as an article!)

And,

[Anonymous Coward]

You can't copy a folio of Shakespeare from one book to another.

Oh, wait.

Commodities: Low Cost vs. Standards

[G4from128k]

Commodities have two key business properties. First, competition is based on price -- the efficient low-cost producer gets the business. Second, commodities are standardized so that the same commodity from two different sources can be interchangable.

With regard to price competition, OSS seems to have a big advantage. Free beats proprietary on price any day. The only interesting question is whether OSS software makers are more cost-efficient ($/line-of-code) at developing new software than are close-source vendors. Perhaps this will come down to a competition between developing -world OSS developers who work parttime for free for OSS versus developing-world developers who get paid a fraction of the labor rate, but work full-time for commerical software vendors.

With regard to standards, I fear that Microsoft has made itself the de facto standard inspite of all the open standards bodies. Even the web seems to be moving into the MS camp. Websites are developed to display well in Internet Explorer, streaming media is often only available in Media Player, everyone uses MS Office, and soon many might be forced to use MS trusted computing. I'm not sure how open standards can re-assert themselves to commodify the playing field in terms of non-MS-controlled "standards."

Software won't be a commodity as long as one player controls the standards because one player has monopoly marketshare and everyone neds to be compatiable with that standard.

Re:Commodities: Low Cost vs. Standards

[Anonymous Coward]

The funny thing is, in most instances I welcome windows media streaming content over, for example, real video. It's much easier to either watch the content via kmplayer in my browser or to strip it out for later perusal with mmsclient. real is quite hard to do either.

Re:Commodities: Low Cost vs. Standards

[mangu]

Software won't be a commodity as long as one player controls the standards

Or as long as there aren't any true standards. I usually compare software to marriage: before getting any software you must get to know rather well what you are thinking about, and be really sure about your intentions. Shifting from one software to another is often as traumatic as getting a divorce. My company a few years back changed from an in-house accounting software to SAP. It took from six months to a year before they got it running reasonably well, and they are still trying to get rid of the "sap" jokes.

Re:Commodities: Low Cost vs. Standards

[Milo77]

i am confused. i consider format standardization as being different than software commoditization. software is not sugar, and is infinitly (well almost) differentiable. people said the browser had been commoditized, but if that were true then i wouldn't care if i had to use ie, but i do care (i gotta have tabs).

now i think we're a little biased here on slashdot because we want operating systems to be a commodity. but even if linux and windows shared the same executable format (100% compatible), they still wouldn't be a commodity. windows (or linux) might incorporate some wizbang feature that improved usability, or maybe one's more secure or faster, or scales better. even if they're both free, that doesn't make them a commodity - any more than if they both cost $99. if it did, then noone would be buying macs.

at any rate, i believe standardization is a good thing. it means that different software products will be able to compete based on features (stability, speed, memory footprint, etc, etc), but the real questions is, once standardization is achieved which model will produce better(this requires knowing what people want - not a strength of the OSS movement) software: opensource or proprietary? just because proprietary software has avoided facing us under the terms of standardization doesn't mean they are incapable of doing so.

would you like one lump or two.

Re:Commodities: Low Cost vs. Standards

[some guy I know]

i believe standardization is a good thing.

Uh, you do know that it is "standard" (at least in English) to capitalize the word "I" and the first word in a sentence, don't you?
If you think that standardization is such a good thing, then why don't you follow elementary standards of written English?

Re:Commodities: Low Cost vs. Standards

[jilles]

It's not about price. Building software is about composing commodities into something that is not yet a commodity. With microsoft you have to pay for the commodities. With OSS you get the commodities for free and, depending on the license, your creation becomes a commodity for others to use.

The problem for MS is that because of their position on OSS, they are denying themselves access to a huge repository of commodities. While occasionally some OSS commodity slips in (like the BSD TCP stack), most of the development of MS goes into developing their own commodities. While this costs money it does not add value. This is the primary problem that MS faces. As long as they can keep their profit margins upwards of 85% they can sustain this style of development. Arguably, in the short term it is what keeps their profit levels at this insane level. In the long term, however the amount of MS proprietary software commodities will force them to cut cost somehow.

Wordprocessors are a commodity. When you buy MS Office, you don't buy a word processor but a whole bunch of integrated features and applications. The fact that control+b makes selected text bold is not in any way valuable (15 years ago this was a key feature): it's a required commodity that you can get for free from many software products. Yet MS has to ensure this feature never breaks in ms office and must keep maintaining this and similarly invaluable features forever.

With open source the costs for solving this problem are shared. IBM understands this and is basing their business model on the notion that sharing cost for developing software commodities is a better idea than inhouse, proprietary development. They invest because they need the commodities, they share because they know others are willing to invest too. Ultimately this reduces the cost of commodities that IBM needs to offer value to their customers.

MS competes with itself and all other software companies. Ultimately, Bill Gates' billions won't be enough to sustain this business model. Until that time, the money will keep on pooring in. But there will be a time that MS will either adapt or disappear. Considering that most of their traditional revenue generators are now commodities, that time might be not so far in the future. MS struggle to find replacement revenue generators has so far been far from succesful (xbox, msn, windows media, tablet edition). Basically the PC market has already converted from a growth market to a replacement market. Each replacement is driven by new features, not by old features.

The implications of software commodity...

[Anonymous Coward]

...have nothing on the even greater implications of hardware commodity and its impact on web server scaling.

software == bullets, snipers not a commodity

[puzzled]

The fact that software is approaching $0 in cost doesn't mean there are less jobs for software people, it just means that a great deal of what was purely IT 'territory' is now going to be dual role, with software developers having to know a portion of the business as well.

The large employers with their vertical silos inside the organization will fight (and loose) this change, while smaller employers everywhere are already reaping the benefits. Stop billing yourself as a 'software' guy and go get some background in operations accounting, marketing, logistics, whatever, but the days of the separate priesthood are numbered - your choices are a.) on top of the wave b.) not very palatable fish food.

I'm a sniper and while the target rich environment of the pre bubble economy is gone there are plenty of profitable things left to 'shoot'.

Re:software == bullets, snipers not a commodity

[Anonymous Coward]

Stop billing yourself as a 'software' guy and go get some background in operations accounting, marketing, logistics, whatever

I find it surprising how anyone could anyone think to call themselves a 'software' guy without these backgrounds? What exactly does this 'software' of yours do? I find that writing accounting, marketing, and logistics software requires me to become proficient in these backgrounds and many more. If your understanding of the software begins and ends with the source code control system, you're missing the boat. Development is about understanding the world through the solutions you code.

Re:software == bullets, snipers not a commodity

[puzzled]

You're preaching to the choir - but there are so many companies where developers are isolated from the problems they solve by inept management ... I've been a victim of it too many times to believe my experiences are unique.

Re:software == bullets, snipers not a commodity

[Anonymous Coward]

In fact this is the basis for an entire software design methodology commonly seen in Java projects, where you have 1 architect, 1 business analyst, and a whole bunch of peon programmers. The individual developer never sees any part of the business process except "Write a Bean which updates the Customer table". This sort of piece work was practically designed for outsourcing (both domestic and foreign).

Re:/.ed

[Anonymous Coward]

> It means that sites will get slashdooted within the first 30 seconds of being posted.

As oppossed to within the second 30 seconds?

After reading the article

[Anonymous Coward]

If I see the word "commodity" one more time today, I am going to puke.

Re:After reading the article

[Ohreally_factor]

I'll buy your puke for whatever puke is going for on ebay.

Re: Empires... empires... empires...

[bill_doors]

Since the beginning of the humankind, empires always has tried to repress freedom movements... fortunatelly empires always fall... is just matter of time... :)

Strongly disagree

[Sean80]

I can't get to the article - it appears to already be /.'ed. However, I must say I strongly disagree with the assumption that software is a commodity. I think what Open Source has done is place into question the approach which the software industry takes. In my view, this does not in and of itself make software a commodity.

As others have already noted - and which was noted in "IT doesn't matter" - is that the issue with packaged software is that everybody can buy it for a reasonably small price. In so much, it by definition becomes a commodity. However, packaged software covers only a small portion of the market for software. In-house solutions and so forth could not be considered a commodity if they provide a sustainable competitive advantage for some particular company. Imagine a software toolkit which allowed a company to estimate, with 99% accuracy, the future movements of markets in which they compete. It would be laughable to consider such a piece of software a commodity.

So what's the point of all this. I think what Open Source has done is pressure the big software houses to become more innovative than ever before. It's not good enough to come up with a good idea (a la MS Office or MS Windows) and tack feature after useless feature onto it just to get people to upgrade. Companies then need only buy software upgradesto "keep up with the Jones." However, there isn't any competitive advantage in this, and the economics of IT has borne that statement out - nobody has ever really revolutionized their companies using IT. What the software houses need to do is envisage IT products in terms of months of useful life, and not years, or even decades. The key issue here will become: "how long can this piece of software give me a competitive advantage before everybody has it?" Exclusive contracts with software houses will become the norm, before software is released "to the masses." Software products will be canibalized within months by the same company that originally produced it. Sales cycles will decrease to days, rather than months or years as it stands now.

Finally, for-profit companies will need to mobilize to head off the threat of Open-Source. Intrinsic motivation is a hard battle to fight, and software companies will need to fundamentally change the way they approach HR issues and corporate reporting hierarchies if they want to compete with a legion of programmers who write code because they want to and they enjoy it. Monetary compensation schemes simply can't bring that level of devotion to a task.

Yes, the software industry as we know it, and the software it produces, will become a "commodity." Companies that understand how to avoid this will just blow away their competitors by bringing fundamentally brilliant software products to market. And you know what? The customer, as always, will win, over and over again.

Bravo to Open Source for forcing this upon the industry.

Re:Strongly disagree

[jfdawes]

One of the points the article makes is that a resource becomes a commodity when demand becomes high enough. There was also some implication that the high demands causes standardization. Essentially he's saying that MP3 players are already commodities, whereas custom built software for specific, individual projects are not.
Saying "software is a commodity" doesn't make sense, the word "software" covers too many things - sort of like saying "gas is a commodity". The gas you by from 76 is a commodity, the gas that comes from mexican food sure isn't.

Re:Strongly disagree

[Anonymous Coward]

> One of the points the article makes is that a resource becomes a commodity when demand becomes high enough. There was also some implication that the high demands causes standardization.

And that point assumes that there's not a monopoly on supply, a la' the De Beers diamond cartel. Monopolies/Oligopolies break the commodities model.

Re:Strongly disagree

[Etyenne]

What the software houses need to do is envisage IT products in terms of months of useful life, and not years, or even decades. The key issue here will become: "how long can this piece of software give me a competitive advantage before everybody has it?" Exclusive contracts with software houses will become the norm, before software is released "to the masses." Software products will be canibalized within months by the same company that originally produced it. Sales cycles will decrease to days, rather than months or years as it stands now.

This completely goes against the fundamental of software development. Producing quality non-trivial software is a long process. There's no way you can optimize it to the point of being able to satisfy a sale cycle measured in days.

Finally, for-profit companies will need to mobilize to head off the threat of Open-Source. Intrinsic motivation is a hard battle to fight, and software companies will need to fundamentally change the way they approach HR issues and corporate reporting hierarchies if they want to compete with a legion of programmers who write code because they want to and they enjoy it. Monetary compensation schemes simply can't bring that level of devotion to a task.

This conveniently ignore the fact that most Open-Source programmer are being paid to write OSS. Linux distributors and integrators , academic, corporate users are all employer of OSS programmers. Being paid for and enjoying programming is not mutually exclusive, though.

google cache of original text

[AmVidia HQ]

here, which OSDir likely copied from.

Lots of words ... summary

[rjstanford]

Well, after reading all the way through the article:

1. Commodities are things that can be exchanged for one another. They are able to be sourced by and consumed by multiple entities.
   
2. UNIX programs are commodities in a way due to the standardization of the core POSIX APIs.
   
3. Document formats, such as the Microsoft .DOC format, are going to change to allow documents to be used more as commodities.
   
4. This is both good and inevitable.
   

It really didn't say a whole lot else. I mean, it was an interesting introduction, but I found myself looking for a page 2 on which the point would be made. Hrmph.

The Implications Are...

[dzelenka]

... you can't handle a slashdot'ing!

According to Netcraft:

The site osdir.com is running Apache/1.3.24 (Unix) PHP/4.1.2 mod_ssl/2.8.8 OpenSSL/0.9.6c on Linux.

Re:The Implications Are...

[ch-chuck]

The site osdir.com is running Apache/1.3.24 (Unix) PHP/4.1.2 mod_ssl/2.8.8 OpenSSL/0.9.6c on Linux.

On what, a 486/33 with ISDN? I'm sure the above on a dual Opteron with an OC3 would hold up just fine.

Commodification of Data, more like...

[valence]

This article is interesting, but rather than the commodification of software, it's more the commodification of data that's really being discussed. His examples and ideas really concern data format standardization and that standards are what allow data to become commodities.

In that sense, I agree completely... demand for "market" in distributable music spurs the popularization of a standard and an infrastructure for distribution (e.g. peer-to-peer networks). And I definitely agree that software should be written to take advantage of economies provided by using standardized data.

Of course, it's kind of obvious that demand precedes standardization, since standardization takes effort and some kind of demand must exist (even if it's just a, "Hey, wouldn't it been keen if...") before people will get off their duffs to figure out, formalize, and make available a standard.

Re:Commodification of Data, more like...

[MyHair]

Of course, it's kind of obvious that demand precedes standardization, since standardization takes effort and some kind of demand must exist (even if it's just a, "Hey, wouldn't it been keen if...") before people will get off their duffs to figure out, formalize, and make available a standard.

I disagree with you there. I think standardization is an emegent process, not a design process. Did Apache become the ubiquitous web server by creating a standard? Maybe the better question is did the HTML / HTTP design become standards by design or emergence? We had FTP, NNTP, UUCP, SMTP, Gopher, Archie, etc. before HTML & HTTP. I think it's the ideas that drive consumers are the ones that become the standard; they aren't standards arrived to by demand.

As far as Windows vs. UNIX API, I think that was/is also emergent. People weren't demanding a GUI before they were there; the GUI appeared and demand jumped. At the time, Windows was the cheaper way to go compared to X/UNIX or Mac.

Admittedly I'm not clear on how DOC became the ubiquitous document format.

Re:Commodification of Data, more like...

[MyHair]

Damn, I missed the Preview button and hit Submit. Sorry.

This article is interesting, but rather than the commodification of software, it's more the commodification of data that's really being discussed. His examples and ideas really concern data format standardization and that standards are what allow data to become commodities.

He does mention data formats, but he talks about APIs, too, and makes a decent point that the UNIX API will be the commodity API.

And maybe I just read this into his article because it's what I think, but software should be a commodity because it's widely useful. Most businesses larger than a couple of people really benefit from accounting software. Email and HTTP user agents are nearly commodity now, and chat and VoIP may be getting there. These are all very useful but there's no reason for consumers to allow one vendor to corner the market in the long run, yet for the moment Microsoft has leverage in the web browser and mail agent markets; then again if you look they are really giving the user agents away and/or bundling them to promote their server and OS products.

I think eventually consumers (business and personal) will get tired of the MS bullying and demand real commodity user agents and data formats. At least I hope so.

By the way, I love to bash Microsoft but it's not like they're the only one trying to tip the balance in their favor. They just happen to be on top right now. Netscape wasn't exactly Glinda the Good Fairy, either. And IBM is fuzzy and huggable nowadays but they could be scary long term.

Then again maybe IBM is buying the commodity software angle because they stand to reap the benefits making a large portion of the hardware the commodity software runs on. Which processor API do you think is a more commoditizable spec to write to: PPC or x86? Hmmmmm....

What historical context?

[192939495969798999]

How long has Shakespeare been around? 400 years or so? How about sugar? Well over 1000 years, right? My dad was in the room when the "first" computer program (calculating PI to 1000 places on the ENIAC) was run, and he's still using computers today. Any commoditization of computer software in the last, say 10 years, is surely coming on too fast to be compared with "historical context" that spans tens or hundreds of generations of humans. I would say that MAYBE 50-100 years from now, people could look back at today and make a statement like that, assuming that OSS doesn't go away in 10-15-20-30-40 years. There is just too much change right now to say anything concrete about where software is "going" (although I concede it's interesting to think about).

Re:What historical context?

[MyHair]

Any commoditization of computer software in the last, say 10 years, is surely coming on too fast to be compared with "historical context" that spans tens or hundreds of generations of humans.

But look at how much things have changed in the past three or four generations. The industrial age has increased production of food and materials for much of the world. Travel became much easier and common among all classes of people. ...

Whoops, I meant to back up a bit further and mention Gutenberg's press first. It enabled mass communication in ways not previously possible.

Okay, back to our recent ancestors: Trains, planes and automobiles. Telegraphs, phones, motion pictures, TV, the internet. We can now have live audio-visual conversations with people on the other side of the planet or even in orbit around our planet.

Pop Quiz: Ronald McDonald, Chernobyl, Neil Armstrong. What percentage of the world's population do you think doesn't know what each of the three of those refers to? These are all from the past 50 years. Okay, 50 years allows for a lot of old-fashioned news telling. How long did it take for most of the world to know about 9/11 or the Northeastern blackouts?

The point being that I believe it to be obvious that todays rapid communications must have an affect on the commoditization process. I don't know how long software commoditization will take, but I don't think we can put it in historical context.

I used to believe that many technologies like TV, computers and phones would merge into one multifunction device eventually. Now I believe that computer technology will evolve into discrete single purpose devices with simple interfaces. And they will eventually be intuitive or at least simple to use like a microwave or phone or car. (Windows users may run into troubles operating Macintosh computers, but Chevy drivers can operate a BMW with no extra training.)

But I also believe that we are in a chaotic[1] time in IT. I suspect vendors are milking as much money out of stepwise "improvements" as possible, and I exect OS and app design to continue evolving for a while. I *think* my career as a network administrator is secure for the next 30 years or so, but I'm not entirely sure. Some time after that I expect what we use PCs for today will be simple to use devices that don't need ongoing supervision and maintenance.

[1] Chaotic Evil vendors and Chaotic Good/Neutral/Evil software projects, for you D&D types.

Commodity the way gasoline is a commodity

[Latent Heat]

Software is a commodity in the way a gallon of gas is a commodity -- if to run my car I had to pump in exactly 10 gallons of gas, and then I had to add exactly 10 ounces of a detergent additive, and there were several incompatible brands of detergent additive on the market, and everytime I wanted to fill the tank I had to read labels and figure out if I had the right kind.

I am thinking that OSS is a commodity in the sense that computer hardware was a commodity in the pre-PC days of CP-M and the S-100 bus. Jerry Pournelle had this mantra "iron is expensive, silicon is cheap" that a person would "invest" in a boat anchor cabinet, a good power supply, and an S-100 backplane and then plug in boards with memory, processors, and peripherals and upgrade the silicon while keeping the boat anchor iron.

This putting a computer together from parts required someone who knew what they were doing, and Pournelle plugged the idea of "system integrators", dudes who would in essence sell you generic hardware, but in their markup they were selling you a service of knowing what hardware was compatible with what and where to get the drivers for everything.

For all the talk of Linux weenies and lusers, the average Linux distro really is not an end user product, but it seems that the Linux savy could pull together pieces parts of software and put together systems tailored to the requirements of specific customers. You know, open and free software, but the money is to be made in providing services, and the service is being the propeller head who knows what software is out there and what works with what, and what configuration tweaks will make a customer happy.

The PC kind of changed Pournelle's model. The silicon was cheap, but the iron (cabinet, motherboard, power supply) started coming from Free China and later from Not-Quite-As-Free China and it became cheap, and with the business model of Dell, it is pretty much cheaper just to replace the whole system than poke around with doing your own upgrades.

As far as the software, the software has kind of moved away from this mix and match model as well. Sure, a Windows install may be as hard as some Linux distro installs, but who even installs software -- you buy the computer with Windows, Office, and networking already installed from Dell. So I guess the system integration has become a mass market instead of a cottage industry.

I am thinking that for Linux to catch on, there has to be some patron, some "angel", some big player to do the system integration and sell ready-to-run systems to the mass market. Is it Wal-Mart and Lindows? Is it SUN and their "Java workstation?"

'Commodity'

[mynameis (mother ...]

You keep saying that word, but I do not think it means what you think it means...

Yes, usually a commodity is something cheap that has lots of competition- but that isn't the point. A commodity is 'something that is used to make other stuff(tm)'.
The point is that the good sold is used as an input to make other goods.

That used to be a 'big deal' when people with invisible hands were groping[for 42]... Now, ehh...

Oh, and I say Windows is not a commodity because it's not a good :)[neg. marginal utility=a 'bad']

Re:'Commodity'

[rm007]

I think you were closer with the first part of your answer i.e. usually a commodity is cheap and has lots of competition. It is not necessarily something that is used to make other stuff - that is a raw material or an intermediate product. A commodity is an undifferentiated product for which the output of any one producer can not be meaningfully distinguished from that of any other producer. The point is, therefore, that the producer has little or no pricing power in the absence of a producers' cartel or other market distorting mechanism.

Re:'Commodity'

[mynameis (mother ...]

No- in fact you are diametrically off.

Individual goods can be vastly demand-elastic compared with the composite market for that good, and NOT be a commodity.

The point is, therefore, that the producer has little or no pricing power in the absence of a producers' cartel or other market distorting mechanism.

The point that denotes a commodity is not the overall elasticity of the market. That's my point.

In a desire to be balanced- The reality of how the term is used connotes lack of differentiation and the general ability to buy the thing in bulk. However, once again, I am probably making an error by acknowledging depth that only obfuscates that point.

To be clear: really elastic demand for a given good relative to the aggregate for all of 'those' goods, doesn't a commodity make.

Additional notes:
-a commodity can also be other forms of stuff than component pieces or raw materials; an example that comes to mind would be tools/machines.

-FWIW/FYI Elasticity is the %[change in quantity demanded] for a %[change in price]. So when something elastic gets 1% more expensive, the quantity sold decreases by >1%.

Re:'Commodity'

[mynameis (mother ...]

Look, to help nip this in the bud:

a The word commodity is used today to represent fodder for industrial processes: things or substances that are found to be valuable as basic building blocks for many different purposes. b Because of their very general value, they are typically used in large quantities and in many different ways. Commodities are always sourced by more than one producer, and consumers may substitute one producer's product for another's with impunity. Because commodities are fungible in this way, they are defined by uniform quality standards to which they must conform. These quality standards help to avoid adulteration, and also facilitate quick and easy valuation, which in turn fosters productivity gains.

Ok, that is a direct quotation from the article. He has already strayed from 'factual' definition ["used today to represent"] and failed miserably to avoid absolutes. Yet it is clear that (a) is his offered definition of 'what is a commodity.' He then makes grand and sweeping statements (b) about the [observed] attributes of 'commodities' (a).

All this crap gets very deep and very complicated real fast. Trust me- if he is mentioning 'productivity gains' and Marx, then commodities are not defined by their being "substitut[able]... with impunity". If you don't want to believe me, some keywords: 'division of labor', 'use-value exchange-value based pricing', 'theories of value', 'labor theory', Marx, Smith, Stuart, 'surplus value', 'labor power'...

Re:'Commodity'

[rm007]

Agreed, that (a) the author's conclusions about productivity gains is a complete non sequitur and (b) this should be nipped in the bud, so I will lay aside my own essay in micro-economics, which as you might guess, would have focused a great deal on the elasticity of demand. In the end we would both be right because there are a number of different definitions of *commodity* depending on where you are in economics, and I suspect that we are both too busy for this and would be modded to the floor.

Re:'Commodity'

[Anonymous Coward]

but that isn't the point. A commodity is 'something that is used to make other stuff(tm)'.

I guess you won't argue that matches are commodity. And these are consumer goods. Rest aside the special case of building-stuff-from-matches hobbyists ;-)

Your definition is way of. It doesn't contain some important points:

- A good doesn't need to be an input factor to be a commodity

- You need 'many' producers of the good

- The good produced by them is considered equal

The wikipedia has some good definitions. http://en.wikipedia.org/wiki/Commodity

Re:Commodity

[PunTrollCritic]

That's because I saw his very first post and created this account instead of criticising him anonymously. Read all his posts. They all suck beyond belief. Trust me, we are not the same person.

Re:Commodity...

[Anonymous Coward]

I think it means that developing software is in the toilet. You make any money by being an installer, an admin or by selling tweaks--competing with people who are also doing to same with the software you developed.

The main effect

[Anonymous Coward]

The main effect is that software is cheaper.

And if software is cheaper, people will buy more and in greater varieties.

What's the problem here?

If I have to spend $200 on Windows XP and $450 on MS Office, that doesn't leave a whole lot to go around to other vendors.

But if Windows was $100 (as it should be) and office was $130 (as it should be), then MS would not be so rich, but there would be lots and lots of other software vendors making money.

Software is (or should be) art

[jmac880n]

While I agree with most of this posting, I would go further.

Software production, in my experience, is NOT a freely-interchangable commodity., because programmers are not of equal ability.

In other words, software quality is not so much a function of the process used to produce it, as it is a function of the insight of who produced it. I see "software engineering" (and approach it) more as art than as a production problem. For example, while some art is displayed in museums, to be viewed over and over again by all, other art is bought by private parties, and never seen again..

I believe we should study the economics of art to understand how software fits into the marketplace.

The fact is that many would like software to be a commodity. But when you treat programmers as plowhorses, you end up with lousy art. Just like the parent posting suggests, those companies that see the difference will produce gems that will outshine the rest.

Re:Software is (or should be) art

[Ohreally_factor]

50 million* third world programmers say you're wrong.

The economics of art are exactly the opposite of what we are dealing with. Fine art is based on unique objects (at best, limited editions). Outside of the fine art world, you're again dealing with mass produced products.

The exception is performance art. Are you suggesting that one can make a living as a programming performance artist?

*I just pulled this figure out of my ass.

Meditation on the breakdown of the commodity model

[Ohreally_factor]

You're on the right track here. A commodity is usually defined as physical substance, such as food, grains, and metals, frozen orange juice, etc. which is interchangeable with another product of the same type. Equating Folgers with ground coffee is pushing it, but technically you are correct. The restaurant or diner is selling a hot brown liquid.

Commodity also implies both mass supply and mass demand, although these are rarely in equilibrium.

Calling software a commodity implies that it is interchangable. As Linux and F/OSS has grown and developed, it has become increasingly possible to substitute Linux and F/OSS for proprietary software.

Another quality of commodities is that they are priced pretty strictly by the market. Except in unusual cases where someone corners the market (and thus has monopoly control), the normal pressures of supply and demand determine price over time. If prices are high, others will want to profit, and begin producing the commodity. If prices are low, some producers will leave the market, decreasing supply. (Of course there are many other factors, such as the weather, that lead to shortages and surpluses. Trade groups can also collude to keep prices artificially high, basically operating as a monopoly.)

Because F/OSS can be distributed freely (as in free beer), and electronic distribution is so cheap as to be nearly free, it's somewhat of a misnomer to call it a commodity. When it is "sold" it is usually bundled with something else that gives it value. Hardware gives it value, IT sevices (development, administration, and consulting) give it value. The reverse is also true. It gives hardware value, even though it itself is free.

"Normal" commodities can be bought and sold on various commodity exchanges. Futures can be bought and sold. Physical objects can be exchanged. Also, because commodities are physical, there is a finite amount, even when there are huge surpluses. There is potentially an infinite number of copies of Linux, so demand will not outpace supply. Again, the limiting factor seems to be the supply of hardware and of support services.

Hmmmmm. Anyway, in case you couldn't tell, I'm thinking about all this as I type, so I don't have any conclusions or insights. Just more questions, really. Really a great topic. Too bad I couldn't RTFA.

absurd

[drwho]

The whole idea of software being a commodity is absurd. Intellectual property can't be a commodity. By defenition, intellectual property has no physical form, which is why there are so many laws protecting IP owners from those who would copy it ad-infinitum. A commodity is a thing that is physical, and one unit of it is interchangeable with another. There's probably better ways of expressing this, but maybe that will be my doctoral thesis or something.

pretentious drivel

[Anonymous Coward]

"Those who would control the production and distribution of commodities typically seek not so much to harness network externalities, but rather, economies of scope. This economic phenomenon leverages consumer demand not by creating network critical mass in order to reap profits from exponential network growth, but rather by reusing the underlying commodity in many different ways. The rather obvious implication of this observation is that resources that can be used in many different ways are likely to attract more investment, and to penetrate society more fully, than resources that are very special-purpose. This, of course, will impact the choice of standards; an item that is low-level, simple, and easily integrated with other items is more likely to be useful as a building block than a special-purpose, complex, and highly proprietary item."

Blah, blah, blah.
He probably likes to say "utilize" where he could say, "use."
And he probably hangs out with Doc Searls.
And they drink beer and tell each other how SMART they are.

Re:pretentious drivel

[blamblamblam]

Moderators, we shouldn't mod something down just because it's critical. Even by academic standards, the article really is pretty pretentious, however much you agree or disagree with its argument. The author could have done a lot more with a lot less.

uniformity, the unix api, the user

[scotty777]

exactly right: the unix api will dominate OS api's because it is uniform and is "good enough" for people to build on. Notice that he excludes graphic programs.

When we in the open source / free community develop and adopt a simple "good enough" user interface standard the same will happen in graphic programs.

I suggest that "eye candy" interfaces push mass desktop users away from our OS of choice. Push them back to MS word, excel, etc. A very simple and uniform user experience is needed.

in addition, I suggest: a interface standard will lead to more programming work, since a wider array of programs would be understandable to "average joe" users.

Therefor, I suggest that every desktop have two modes, the "hyper vanilla", and the personalized. At the click of, say, alt F1, the mode would toggle.

this would dramaticly ease tech support assistance and tutorial creation.

cheers

Reading the comments

[zangdesign]

The funny thing is, as I read the comments here, everyone speaks of software as if it's a physical thing. Sure, it has a physical reference, but there's nothing you can point to and say, that's software, like you can with sugar or wheat. You can't buy a "pound of software", strictly speaking.

What can be commoditized is time; specifically, the time spent to create software. It can be rationalized, measured, spent, etc., and there is already an existing metaphor for compensating one for these various actions: the hourly rate. Software production costs time and money (or no money, as we'll see).

Read the whole discussion before you blow up.

In a sense, Free Software takes the whole paradigm of time having value and does away with it entirely. With Free Software, one cannot expect to receive money for the time spent. One creates software and turns it loose on the whole world, or some small portion of it and receives recognition (or not) from the receiving audience. Strictly speaking, if you receive money for developing something, it cannot be considered Free Software - somebody paid something for it.

In a sense, it is a slap in the face to software companies and to those of us who work for money. Free Software says that the time and money spent hiring a programmer and designers (or me) to produce a given piece of software was wasted: what y'all spent millions over the course of six months to develop, we can do for free in eight months or a year.

On the other hand, there is an argument to be made in favor of the greater public good. Software is expensive, and specialized software is even more so, perhaps out of the reach of some developing businesses. Certain types of software are important enough that perhaps they should be free, but determining which is an impossible task. An operating system - that's pretty easy; an MP3 player - not so easy. How does an MP3 player benefit the overall public?

To my mindset, money helps smooth over one of the basic problems of humans: ego. If we lived in a world where everything was produced freely and given freely, that would be great. But how do you compensate for that jerk down the road who sits on his ass all day and just takes and takes rather than giving back to society in some form? The answer is you force him to pay for the materials he uses and consumes. That requires money. Sure, he could work it off, but we've already established that he's a lazy bastard and won't work.

Thus, I have to come down in favor of paying for software. I don't think it can be properly commoditized in the same sense that sugar can. In fact, I'm not even sure there's a proper word for that type of a thing. What I do know is that certain forms of Free Software are a kind of slap in the face - saying that the time I spent and the education I paid for are worthless.

These are only my views. Pillory away.

Re:Reading the comments

[PCM2]

You can't buy a "pound of software", strictly speaking. What can be commoditized is time; specifically, the time spent to create software.

I think you're missing the point. A commodity market is one in which there may be multiple suppliers, but the product obtained from each is (in the eyes of the purchaser) undifferentiated. Not all software can be seen this way, but certain software categories can be.

• I might say, "I am going to buy a J2EE application server." Hearing that, you need not assume I mean BEA Weblogic. There are a number of alternatives, and which one I pick doesn't really matter (at this level of decision-making, anyway).
• I might say "I am going to buy a relational database." There is no reason to assume I mean IBM DB2 -- but I might mean that. Whatever.
• I might say, "I am going to buy a disk defragmenter." There's no particular reason why that needs to be Norton Utilities. Etc.

If you have a bunch of products, and they're all perceived as being roughly identical and undifferentiated, then you have a commodity market. All that has to happen is for a free alternative to come along -- similarly undifferentiated, but equal in perceived value -- and the bottom drops out.

Most software isn't quite at that level yet, though. Superficially it may be, but as I drill down in the decision-making process it becomes more complicated. J2EE application servers differentiate themselves not by the base server container, but by the add-ons the vendor supplies to do business processing. Databases do various sophisticated things, such as clustering and replication, and each one does it in a different way, enough so that you could defend a decision favoring one over the other.

Web server software isn't a commodity market, either. Apache isn't successful just because it's free. It doesn't have a lot of competition because it would take a lot of work to produce a product of comparable value, and Apache would still be free. Those that do try to compete, again, have to differentiate themselves -- e.g. Zeus is all about speed.

This article seems to be arguing that the ways in which Microsoft seems to be trying to differentiate its products -- e.g. through the Word file format -- are based on activities so mundane (legible documents) that their markets cannot possibly be defended against commoditization. Maybe that's true, I dunno. To sound the old "impending paradigm shift" trumpet seems a little melodramatic to me, though.

Re:Reading the comments

[EvilTwinSkippy]

Frankly, by the time you have a "commodity" like component for software it's pretty much obsolete. How long have "relational databases" been around? 5 years or so? And how long will they still be around? We have hundreds of thousands of CompSci grads working on the "next big thing." Defragmenting tools were eliminated by improving the file system itself (ala ReiserFS) or simply by increasing the size of the disk to the point that files never have to be split.

The real commodities are standards. SQL is popular because there is an ANSI standard behind it. SELECT has a structure that all database backends understand. I can develop and INSERT statement that works with everything from sqlite to Oracle/PL.

802.11b isn't a technology. It's a standard. HTTP blew everyone's doors off not because it was sexy, but because it was ubiquitous. Windows took over the desktop because they ripped what they needed to as far as UI standards from Apple and them coupled it with cheap commodity PC's.

Standards are the commodities of technology. Once you have standards, you can build on them to create your "Next Big Thing" because they allow you to tie in everyone elses "Other Big Thing".

Re:Reading the comments

[Talliesin]

"All that has to happen is for a free alternative to come along -- similarly undifferentiated, but equal in perceived value -- and the bottom drops out."
True, though the very fact of being free can sometimes lower perceived value.
Newspapers only bother to charge at all because if they didn't they'd be freesheets, and people can't be bothered reading and don't want to advertise in freesheets (unless the freesheet differentiates itself to counter it's being free, funnily enough).

Re:Reading the comments

[PCM2]

How long have "relational databases" been around? 5 years or so?

Errr, try about 34 years, give or take.

The real commodities are standards. SQL is popular because there is an ANSI standard behind it. SELECT has a structure that all database backends understand. I can develop and INSERT statement that works with everything from sqlite to Oracle/PL.

Whoah! I see what you're getting at, but you picked one lousy example. Yeah, every database supports SELECT and INSERT, but that's about where SQL interoperability ends. Not even all INSERTs are created equal -- for example, if you wanted an auto-incrementing field, you'd need different code to do that on Oracle, MySQL, MS SQL, etc...

Standards are the commodities of technology. Once you have standards, you can build on them to create your "Next Big Thing" because they allow you to tie in everyone elses "Other Big Thing".

...and that was sort of the point of the original article. That Microsoft seems finally to be embracing the (in the author's opinion) inevitable, by backing open standards (for example, XML as a file format for Word).

absurd-Commercial equation

[Anonymous Coward]

IP is the result of this equation: Time+Effort=Value* . This equation has to hold true for IP to be a part of a barter sytem.

"That which affords convenience, advantage, or profit, especially in commerce, including everything movable that is bought and sold (except animals), -- goods, wares, merchandise, produce of land and manufactures, etc."

Note that IP isn't excluded from the above definition, but is a part of. For IP can confer an advantage, give convenience, and generate profit all in the context of commerce.

*Note that services fall under this equation e.g. Mow lawn, fix roof, brush teeth. As well as physical goods.

Braudel!

[danny]

And points for using Braudel's The Structures of Everyday Life (my review).

Danny.

let's just make all copying legal

[aztracker1]

software is made as a good.. by a company.. same as shoes, or socks.. time was put into the design, not including production costs.. this is a far greater percentage of cost for goods with software...

Saying you should be able to copy any software, is as obsurd as saying you should be able to copy currency... if it is legal to copy the goods you didn't create, how about copying money you at least earned?

It exceeded my idiocy threshold right away....

[Anonymous Coward]

Calling a "UNIX executable" (whatever that is) a standardized commodity datatype is so completely confused I cannot continue reading.

By the way, the decreasing critical facility of slashdot moderators is a consequence of "karma entropy." These days its all shits and giggles.

Mod Parent up

[maysonl]

The referenced article really doesn't seem to say anthing meaningfully true. Even AC posts can be insightful.

Author factoid

[chrisbtoo]

Coincidentally, I've just been reading the original Halloween Document so when I saw the author's name, it rang a bell. He was talking about "commoditization"(in the context of protocols) back then, too.

BTW, for anyone who's never read the original Halloween doc, it's well worth a read. There's some amusing stuff in there about things being "stolen" from Unix and put into Linux, and how SCO are likely to be wiped out by Linux before long (and this back in 1998!).

Re:Author factoid

[EvilTwinSkippy]

It's like Newton. "Hey, Liebnitz couldn't have invented calculis. I'm the only genius in the world." Newton went so far as to have his royal society convict Liebnitz of plagurism.

Little factoid, to this day we use Liebnitz's notation. Newton's stunk for everything but physics problems, and his notion of an integral was REALLY crude. Of course the spat drove Liebnitz out of his mind, and turned Newton into a recluse.

And talk about a geek. Newton never got laid, and worse, he was PROUD about of it.

Moral of the story though, Nobody wins.

Historical context of commodities is often short

[Talliesin]

Sugar may have been around for thousands of years (as a harvested resource, millions as a chemical) but its only been a commodity for a few hundred; when the availability of sugar cane, international trading, the slave trade, the fashionability of New World goods (coffee, tobacco, chocolate and cane sugar) the emergence of a large middle class who could afford to buy foods they didn't really need, the military and entrepreneurial adventures of the European Empires, all combined to make sugar a product that had both a high demand and a large number of producers willing to cater to that demand.

Some commodities last for centuries, some for years, but it's not about the product itself, nor about the technology behind creating it once that technology passes a certain treshold whereby it's feasible for new entrepreneurs to enter the market with relative ease. It's all about the demand and the ease with which that demand can be satisfied, which is just as relevant here.

Where the fast rate of change with software does enter the argument is as a counter to the argument that software cannot be a commodity, due to the ease of copying it - the ease of copying it is balanced by the desire for new versions. The question remains though as to whether that balance is weighed evenly enough on each side, and as to whether the individual nature of some software (as a piece of craftsmanship rather than most commodities where you can painlessly replace one example with another) prevents full commodification.

Some Implications of Hardware Commodification

[Talliesin]

The article makes a strange omission in not talking about computer hardware as a commodity. The commodification of hardware that happened with the emergence of PC clones had a tremendous impact on many software companies, especially Microsoft with DOS and later Windows. The important thing in this case is that we have a combination of the commodificaiton on one product (once IBM no longer had a monopoly you could replace any piece of hardware with hardware from a rival company, hence price and rapid cheap transport became a bigger factor in the business models of these companies, and the PC was a commodity) with the lack of commodification of another (while there was some choice for many application domains, many people were forced, or at least thought they were forced, to go with MS DOS and later with MS Windows as the OS). In this case the commodification reduced the total cost of ownership of a Windows system, enabling Microsoft to charge more for less when it came to their part of the package.

There are factors that prevent software from becoming a commodity. First and foremost is the fact that software is a piece of craftsmanship, rather than a harvested good, which is protected, by copyright and sheer issues of convenience, from being completely copied as a rival commercial product before it becomes obsolete.
Another is that, while copyright prevents the distribution of direct rivals (i.e. exactly the same item) by other legitimate businesses, the ease of copying means that free copies will soon be available, either legitimately or illegitimately depending on the license. Commodification itself tends to lower prices, arguably to the point of being "elastic" (completely at the mercy of the forces of supply and demand) but it depends upon one being able to rely on some return for your investment. Free software cannot be a commodity.

Yet another is the direct interference to prevent the commodification of software. Given the article's beginning with Marx it's worth considering Marx's prediction that the cost of labour would be elastic. This was proven false (at least in the context of industrialised countries of the last century) and ironically was partly a self-defeating prophesy; workers - inspired by Marx himself, amongst others - formed trade unions and won various guarantees regarding conditions and pay and as such made the cost of labour inelastic. Similarly there are many people who want to prevent software being a commodity - either because the wish to maintain profitable monopolies, or because they wish to remove the commercial aspect of software use. Like the trade unions it's likely that neither group will be completely successful (especially since they are pulling in opposite directions), but like the trade unions it may well be enough to keep commodification from ever completely happening. For bad or good we don't have much protectionism from governments anymore, but we have a lot from vested interests.

There are cases where commodification does happen to a certain degree. Ironically one of these is the case of games. Too much of the market games are the most individual type of software there is, they will make a point of buying one and not another. However another important section of the market they really will do the equivalent of "buying half a pound of software" - the important market that are relatively uniformed but who buy the games as a gift. This had quite a strong effect on the games market in the 1980s especially with the emergence of budge software houses that would sell items at STG 1.99 or STG 2.99.

There are also cases where commodification doesn't happen where one might expect. The PC clone became a commodity but Apple have managed to improve their lot by de-commodification of the computer. You buy a PC clone because you want a computer, you buy an iMac because you want an iMac. This is a matter of marketing, but it has strong effects (similarly the PC itself has become less of a commodity now that the average buyer has opinions, not matter how well-info

Publish or perish

[ImWithBrilliant]

One creates software and turns it loose on the whole world, or some small portion of it and receives recognition (or not) from the receiving audience.

Replace the word software with journal submissions or peer-reviewed articles for a similar, time-tested approach in academia.

Software may be free...

[jhines0042]

Software may be free some day. But I'm willing to bet that there will still be a critical need for people who know how to use software to get a job done.

Not every problem will be solved by the open source community because most problems that exist in the real world are not solved by basic applications. Basic applications support the solving of big problems. But Complex applications solve specific problems.

I also would be willing to bet that problems will always outnumber solutions.

Stutz gets it backwards

[guygee]

Stutz say "the presence of multiple producers stokes the furnace of competition (although perhaps only after protectionist governments and corporations are shouted down by consumers and crafty businesspeople)" However, in part of the research world that I work in, involving 3D geo-realistic and geo-specific databases for real-time simulation and training, it is the "crafty businesspeople" who have resisted commodification, pushing their own proprietary standards, hoping to make THEIR standard THE de-facto standard, while the government (DoD) has mandated real standards (e.g. sedris.org and the HLA).

Re:Stutz gets it backwards

[Talliesin]

Well as far as commodification goes a de-facto standard fits the bill for standardisation as much, if not more than, a real standard. Given that though you are right, the free-market apologists and corporations are the real protectionists.

yes, so it is

[ShallowThroat]

blah balh trying to get karma back from bitch mods blah blah