First published in FEED, 8/18/1999.

As the software industry cracks down on its customers, the software itself is opening up. Open Source software, the freely available alternative to commercial software, is making inroads in the corporate world because of its superior flexibility, adaptability, and cost. Despite this competition, the commercial software industry has decided that now’s the time to make licensed software less flexible, less adaptable, and above all, more expensive. A proposed new law, called the Uniform Computer Information Transactions Act (UCITA) would give software manufacturers enormous new powers to raise prices and to control their software even after it is in the hands of their customers. By giving the software industry additional leverage over its customers, UCITA will have two principal effects: first, it will turn software from a product you buy to a service you pay for again and again. Second, its restrictions will greatly accelerate the corporate adoption of Open Source software.

All trade groups aspire to become like OPEC, the cartel that jacks up oil prices by controlling supply. The UCITA working group is no exception: UCITA is designed to allow software companies relief from competition (companies could forbid publishing the results of software comparisons), and to artificially limit supply (any company which was acquired by a larger company could be forced to re-license all its software). The most startling part of UCITA, though, is the smugly named “self-help” clause, which would allow a software company to remotely disable software at the customer’s site, even after it has been sold. This clause could be invoked with only 15 days notice if a software developer felt its licensing terms were being violated, making the customer guilty until proven innocent. UCITA’s proponents disingenuously suggest that the use of “self-help” would be rare, as it would make customers unhappy — what they are not as quick to point out is that the presence of “self-help” as a credible threat would give software companies permanent leverage over their customers in negotiating all future contracts.

Unfortunately for cartel-minded software firms, the OPEC scenario is elusive because software isn’t like oil. Software has no physical scarcity, and the people who know how to create good software can’t be isolated or controlled the way oil wells can. Where UCITA sets out to make software a controlled substance, the Open Source movement sets out to take advantage of software’s innate flexibility of distribution. By making software freely available and freely modifiable, Open Source takes advantage of everything UCITA would limit — Open Source software is easy to get, easy to modify, and easy to share. If UCITA becomes law, the difference between Open Source and commercial software will become even more stark. Expect Open Source to do very well in these circumstances.

Economics 101 tells us that people make economic decisions “on the margin” — a calculation not of total worth to total cost, but of additional worth for additional cost. For someone who wants a watch for telling time but not for status, for example, the choice between a $20 Timex and a $20,000 Rolex is clear — the $19,980 marginal cost of the Rolex knocks it out of the running. In the case of Open Source vs. commercial software, the differences in cost can be equally vast — in many cases (such as the Apache web server) the Open Source solution is both cheaper and better. Cartels only work if there is no competition, a fact the UCITA group seems not to have grasped. If UCITA becomes law — that could happen as soon as December — the commercial software industry will be sending its customers scrambling for Linux, Apache, and the other Open Source products faster than they already are.