3.2: Commercial Software

Commercial Software

Commercial software, or seldom payware, is computer software that is produced for sale or that serves commercial purposes. Commercial software can be proprietary software or free and open-source software. 

When software is sold in binary form only (“closed source”) on the market, exclusive control over software derivatives and further development is additionally achieved. The reverse engineering reconstruction process of complex software from its binary form to its source code form, required for unauthorized third-party adaption and development, is a burdensome and often impossible process. This creates another commercialization opportunity of software in source code form for a higher price, e.g. by licensing a game engine’s source code to another game developer for flexible use and adaption.

This business model also called “research and development model”, “IP-rent model” or “proprietary software business model”, was described by Craig Mundie of Microsoft in 2001 as follows: “Companies and investors need to focus on business models that can be sustainable over the long term in the real world economy…. We emphatically remain committed to a model that protects the intellectual property rights in software and ensures the continued vitality of an independent software sector that generates revenue and will sustain ongoing research and development. This research and development model … based on the importance of intellectual property rights [was the] foundation in law that made it possible for companies to raise capital, take risks, focus on the long term, and create sustainable business models…. An economic model that protects intellectual property and a business model that recoups research and development costs have shown repeatedly that they can create impressive economic benefits and distribute them very broadly. 

While less common than commercial proprietary software, free and open-source software may also be commercial software in the free and open-source software (FOSS) domain. But unlike the proprietary model, commercialization is achieved in the FOSS commercialization model without limiting the users in their capability to share, reuse and duplicate software freely. This is a fact that the Free Software Foundation emphasizes, and is the basis of the Open Source Initiative.[citation needed]

Under a FOSS business model, software vendors may charge a fee for distribution and offer pay support and software customization services. Proprietary software uses a different business model, where a customer of the proprietary software pays a fee for a license to use the software. This license may grant the customer the ability to configure some or no parts of the software themselves. Often some level of support is included in the purchase of proprietary software[citation needed], but additional support services (especially for enterprise applications) are usually available for an additional fee. Some proprietary software vendors will also customize software for a fee. Free software is often available at no cost and can result in permanently lower costs compared to proprietary software. With free software, businesses can fit software to their specific needs by changing the software themselves or by hiring programmers to modify it for them. Free software often has no warranty, and more importantly, generally does not assign legal liability to anyone. However, warranties are permitted between any two parties upon the condition of the software and its usage. Such an agreement is made separately from the free software license.

References

Commercial software. (2021, July 31). Retrieved from https://en.wikipedia.org/wiki/Commercial_software

Open Source Software. (n.d.). Retrieved from http://www.oercommons.org/courses/op…-software/view