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Concept
Commercial software
Summary
Commercial software, or seldom payware, is a computer software that is produced for sale or that serves commercial purposes. Commercial software can be proprietary software or free and open-source software.
While software creation by programming is a time and labor-intensive process, comparable to the creation of physical goods, the reproduction, duplication and sharing of software as digital goods is in comparison disproportionately easy. No special machines or expensive additional resources are required, unlike almost all physical goods and products. Once the software is created it can be copied in infinite numbers, for almost zero cost, by anyone. This made commercialization of software for the mass market in the beginning of the computing era impossible. Unlike hardware, it was not seen as trade-able and commercialize-able good. Software was plainly shared for free (hacker culture) or distributed bundled with sold hardware, as part of the service to make the hardware usable for the customer.
Due to changes in the computer industry in the 1970s and 1980s, software slowly became a commercial good by itself. In 1969, IBM, under threat of antitrust litigation, led the industry change by starting to charge separately for (mainframe) software and services, and ceasing to supply source code. In 1983 binary software became copyrightable by the Apple vs. Franklin law decision, before only source code was copyrightable. Additionally, the growing availability of millions of computers based on the same microprocessor architecture created for the first time a compatible mass market worth and ready for binary retail software commercialization.
Common business wisdom is that software as digital good can be commercialized to the mass-market most successfully as proprietary good, meaning that the free sharing and copying of the users ("software piracy") can be prevented. Control over this can be achieved by copyright which, along with contract law, software patents, and trade secrets, provides a legal basis for the software's owner, the intellectual property (IP) holder, to establish exclusive rights on distribution and therefore commercialization.
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