4 ms·

The value of software, copied or bespoke designed, is not in the bits but what it allows me to do. The value of a new mobile game is fairly low to me, even if a

The value of software, copied or bespoke designed, is not in the bits but what it allows me to do. The value of a new mobile game is fairly low to me, even if a small team spent 5 years creating it, but the value of a service like Google Docs is high because I rely on it daily for my work. The value is further increased because I'm relieved of having to update, patch and secure the software, the vendor providing this as a service which I'm very happy to pay for. Millions of other people having access to Google Docs does not diminish the value I derive from it, in fact it increases it. There's a saying about "a man knowing the price of everything and the value of nothing", that you might want to consider. By the way, if your toilet-as-a-service is always magically clean, nice smelling and stocked with a never-ending supply of toilet paper, I might very well be interested :)

Aaargh20318 9y ago
> The value of software, copied or bespoke designed, is not in the bits but what it allows me to do. Water allows you to live. Should the water company raise the price to €1000/liter ?
- fellellor 9y ago
  If the water company created the water, then yes. Also, if you are in a position to "pirate" all that water then it is your duty to do so, whether it hurts the company or not. I think a lot of these relationships are very adversarial and people, companies included, don't have much of a choice in the absence of a wide reaching and binding understanding.
  - Aaargh20318 9y ago
    > If the water company created the water, then yes. Thank you for proving my point: if it's scarce (only one company can make it) it has value. So the argument that the value comes from 'what it allows you to do' (not die) is bogus. Water allows you to survive so if utility determined the prices water would be extremely valuable, but it isn't. $1000 water is ridiculous, but I'll bet that if I drop you in the middle of the desert, after 24 hours you'd be willing to pay $1000 for a liter of water. Yet it's the same water, you need it to survive wether you're in middle of the desert or at home. Clearly utility has nothing to do with value.
    - fellellor 9y ago
      Yes. This is one way to fix a price, when said price can be enforced. On the other hand, if I could do so, I'd just beat you up or worse and take that water. Which is what ends up happening when you see instances of piracy and IP violations around the world. Eventually pricing also has to take into account, the point at which robbing you would not be worth the hassle for me, and we'd all be better off conducting a transaction. For example, GoG and Steam in the video game business.
- wayn3 9y ago
  There should not be "THE" water company. There should be many of them. Then we don't have to discuss which price is fair. Maybe some of them want to sell water at 1k/litre. Others won't. The market will figure it out. This is price fixing. If microsoft and apple collude to fix the price of an engineer, you outcry. If you discuss what utilities should cost, prices fixed by monopolies is somehow ok. That's why politics doesn't work. Not a lot of people have the balls to vote on principles instead of what they want for themselves.
  - JoeAltmaier 9y ago
    Utilities are formed when the product is necessary but selling it would be hard (low marginal value). Like water and electricity. In the rural area where I live, we wouldn't have electricity without a federally created cooperative. And we don't have water utilities at all - I have my own well and septic system. Like all my neighbors. So in a sense there are many water companies?
    - wayn3 9y ago
      If you have lots of small companies that do not compete with each other, for whatever reason, we are still talking about monopolies. If utilities are operated not for profit but as a form of charity, pricing of their services should be determined by how much they need to charge in order to stay in business (as low as possible). -> that makes arguing over pricing based on value irrelevant.
      - JoeAltmaier 9y ago
        Well, all but the 'charity' part. My cooperative is benefitting ourselves. Is that 'charity'? Anyway, agreed.
        wayn3 9y ago
        I don't mean "charity" in a demeaning way. If you operate a business, and a business is really anything that engages in trade but is not a real person, and that businesses purpose is not solely the optimization of profits, then it is, at least in part, a "charity". There's nothing wrong with that. I'm just saying that a monopoly that is not maximising its profits acts in a charitable way. Either by choice or by force. Kinda irrelevant.
- yabatopia 9y ago
  There's plenty of supply of water. Charging that much money wouldn't make any business sense, too much competition.
  - Aaargh20318 9y ago
    There is plenty of supply of $POPULAR_ARTIST music too, or copies of Microsoft Office. That's the point I was trying to make. Only scarcity determines the value, not 'what it allows you to do' (not die). The only reason they are selling the CD's for too much money is because there is no competition due to a government-granted temporary monopoly. The scarcity on that market it completely artificial.
- Androider 9y ago
  Water is a commodity (unless you live somewhere where water is scarce, where it may very well cost €1000/liter), software is designed for a specific function and is not interchangeable at random. If I purchase software to perform business function X, the value derived is from the function it performs for me, entirely independent of the cost and time required for you to create the software in the first place. If the software took you 5 years and €1M to produce, I as a customer will balk at any cost-plus price as my expected business value of using the software is say only €0.5M. But if you spread your costs over a hundred customers by copying (and maybe servicing) the same software, you can charge €0.1M from 100 customers, giving you €9M profit after your expense, and allowing each customer to derive around €0.4M business value. The value for both the producing and consuming side of the software was significantly increased simply by copying some bits :)

Aaargh20318 9y ago

> The value of software, copied or bespoke designed, is not in the bits but what it allows me to do. Water allows you to live. Should the water company raise the price to €1000/liter ?

fellellor 9y ago
If the water company created the water, then yes. Also, if you are in a position to "pirate" all that water then it is your duty to do so, whether it hurts the company or not. I think a lot of these relationships are very adversarial and people, companies included, don't have much of a choice in the absence of a wide reaching and binding understanding.
- Aaargh20318 9y ago
  > If the water company created the water, then yes. Thank you for proving my point: if it's scarce (only one company can make it) it has value. So the argument that the value comes from 'what it allows you to do' (not die) is bogus. Water allows you to survive so if utility determined the prices water would be extremely valuable, but it isn't. $1000 water is ridiculous, but I'll bet that if I drop you in the middle of the desert, after 24 hours you'd be willing to pay $1000 for a liter of water. Yet it's the same water, you need it to survive wether you're in middle of the desert or at home. Clearly utility has nothing to do with value.
  - fellellor 9y ago
    Yes. This is one way to fix a price, when said price can be enforced. On the other hand, if I could do so, I'd just beat you up or worse and take that water. Which is what ends up happening when you see instances of piracy and IP violations around the world. Eventually pricing also has to take into account, the point at which robbing you would not be worth the hassle for me, and we'd all be better off conducting a transaction. For example, GoG and Steam in the video game business.
wayn3 9y ago
There should not be "THE" water company. There should be many of them. Then we don't have to discuss which price is fair. Maybe some of them want to sell water at 1k/litre. Others won't. The market will figure it out. This is price fixing. If microsoft and apple collude to fix the price of an engineer, you outcry. If you discuss what utilities should cost, prices fixed by monopolies is somehow ok. That's why politics doesn't work. Not a lot of people have the balls to vote on principles instead of what they want for themselves.
- JoeAltmaier 9y ago
  Utilities are formed when the product is necessary but selling it would be hard (low marginal value). Like water and electricity. In the rural area where I live, we wouldn't have electricity without a federally created cooperative. And we don't have water utilities at all - I have my own well and septic system. Like all my neighbors. So in a sense there are many water companies?
  - wayn3 9y ago
    If you have lots of small companies that do not compete with each other, for whatever reason, we are still talking about monopolies. If utilities are operated not for profit but as a form of charity, pricing of their services should be determined by how much they need to charge in order to stay in business (as low as possible). -> that makes arguing over pricing based on value irrelevant.
    - JoeAltmaier 9y ago
      Well, all but the 'charity' part. My cooperative is benefitting ourselves. Is that 'charity'? Anyway, agreed.
      - wayn3 9y ago
        I don't mean "charity" in a demeaning way. If you operate a business, and a business is really anything that engages in trade but is not a real person, and that businesses purpose is not solely the optimization of profits, then it is, at least in part, a "charity". There's nothing wrong with that. I'm just saying that a monopoly that is not maximising its profits acts in a charitable way. Either by choice or by force. Kinda irrelevant.
yabatopia 9y ago
There's plenty of supply of water. Charging that much money wouldn't make any business sense, too much competition.
- Aaargh20318 9y ago
  There is plenty of supply of $POPULAR_ARTIST music too, or copies of Microsoft Office. That's the point I was trying to make. Only scarcity determines the value, not 'what it allows you to do' (not die). The only reason they are selling the CD's for too much money is because there is no competition due to a government-granted temporary monopoly. The scarcity on that market it completely artificial.
Androider 9y ago
Water is a commodity (unless you live somewhere where water is scarce, where it may very well cost €1000/liter), software is designed for a specific function and is not interchangeable at random. If I purchase software to perform business function X, the value derived is from the function it performs for me, entirely independent of the cost and time required for you to create the software in the first place. If the software took you 5 years and €1M to produce, I as a customer will balk at any cost-plus price as my expected business value of using the software is say only €0.5M. But if you spread your costs over a hundred customers by copying (and maybe servicing) the same software, you can charge €0.1M from 100 customers, giving you €9M profit after your expense, and allowing each customer to derive around €0.4M business value. The value for both the producing and consuming side of the software was significantly increased simply by copying some bits :)