I assume they're talking about the fact that software can be replicated at no cost but is constrained by pricepoints, encrypted code, licensing agreements, versioning flags, and so on. It's been artificially constrained in code.

Correct. Although the constraints often involve code, they don't have to. Enterprise license agreements are ultimately enforced with threat of legal action, coin-op arcade games by a physical mechanism, for example.

Software costs ~0 to copy and distribute absolutely perfect copies, world-wide. To drive the price up you create artificial scarcity, mostly rooted in IP law.

Important note for HN readers: 'driving the price up' is a net benefit for programmers. Artificial scarcity is why you get paid big bucks.

Interestingly, data is legitimately scarce. But that's a discussion for another time...

> Artificial scarcity is why you get paid big bucks.

You are assuming that my software is distributed.

Look 50 years ago you got a catalog from sears. You mailed a check, someone opened it, your order went to the warehouse, the check went to the bank, your items got picked packed and shipped.

The software I spent a good part of my career writing got rid of a LOT of people from that scenario. The hardware and software combination that is the ATM got rid of many tellers. MP3's killed record stores.

If you find a programer old enough, they will insult you by saying "I will replace you with a very small shell script". Many of us built software to replace people, many of us continue that. Our value is literally reducing costs and "enabling scale" at a massive discount. For those of us that do this sort of work, we are massively underpaid when compared to the manual processes that are replaced or never have to happen.

Copy and distribution costs are just a part of the cost. Development and maintenance does require real flesh and blood people spending their days working on developing, building, and deployment. That part costs money.

The artificial scarcity applies to copies of an individual piece of software, rather than the scarcity of different pieces of software.

Once you build it, almost the only way to achieve scarcity is through IP law.

You tacitly assume that I am not aware that software products have an R&D cost, and you are (insultingly) wrong. Of course they do. And without artificial scarcity that R&D cost will not be recouped. The default state of software is an open source model, where the "developing, building, and deployment" doesn't cost money because there isn't any.

Copy and distribution costs for movies in a digital age are non existant. Are movies using artificial scarcity?

That movies are almost impossible to buy DRM-free should give you a hint ?

Yes.

Quality software is scarce, though. Even in a world without copyright, or a world in which copyright does not apply to pure information like source code, it would still be difficult to produce short effective code (because finding short effective code is NP-complete!) and so some of us would still be employed without difficulty.

> Important note for HN readers: 'driving the price up' is a net benefit for programmers.

Well no, if it is hard to get software written people just won't bother. Most programmers will benefit from a commoditise-the-complement strategy where everyone is using software and need to hire programmers to tweak it to their exact needs.

The money is in support & hardware. Trying to primarily compete on software price is pretty risky; Open Source is quite competitive. The big paying companies in software (Googles, etc, of the world) don't particularly leverage IP law in their strategies. Even with players like Microsoft, artificial scarcity of their traditional primary products (Windows, Office) would be the kiss of death to the company.

I think there is some economic theory that states the price of products will tend towards the marginal cost over time. I haven't seen anything that makes me think software is any different.

I don't think there is much profit in hardware, most companies seem to work on razor thin margins.

> I don't think there is much profit in hardware, most companies seem to work on razor thin margins.

Consider that Apple is America's most profitable corporation. They do squeeze people with software restrictions; and it is a core part of their strategy. But the focus of Apple has never been 'our software is rare', it has always been 'faster processor, thinner phone, better screen'. The artificial restrictions on the software aren't at all beneficial to the software or the programmers; they are part of a strategy to make the hardware more valuable. It is a strategic element to help their hardware resist the commodification of smartphones.

If they had inferior hardware then the restricted software strategy would see them crushed under the booted heal of groups like Samsung.

Apple does seem to be the exception, that's why I did say "most companies".

The big paying companies in software aren't in the software business, they're in the data business. The software is a (very cheap, to them) loss leader.

There is a ton of free software. Price is not up just because of IP law. It's up because running and maintaining Wikipedia for example has a price even though most of the stack is free.