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Culture

A tale of music, open source, and fortune telling

The "value revolution" is underway. Will the traditional software companies wake up one day to discover that their "records" have given away to peer-to-peer downloads, as it were? I think we'll see that much sooner than anyone is expecting.

The problem with the future is that it's, well, the future. Most of make lousy prognosticators, despite our wealth (or poverty) of experience.

Such was the case with the music industry, which stared its digital future in the face and...blinked. The Guardian traces the arc of its unfortunate fall. The problem, as Charles Arthur writes, is that the future often comes far too soon for our liking:

All in all, there's a lot of hostility towards the record industry, but if you put yourself in the comfortable position of that record exec - which John Lanchester, at the London Review of Books in 2002 described as being "reluctant to move from this [CD sales] model in the same way, and for the same reason, a python is reluctant to move when it has swallowed a goat" - then you can understand why. Some technical change is overwhelming. You can be rude about the record industry for not reacting fast enough to downloads, but the fact is that that overwhelming change happened years before it expected.

I believe that Software as a Service and open source are doing much the same thing to the traditional software license model.

Software license revenue gives way to maintenance revenue Forrester Research

The traditional license model was already well into decline before open source and SaaS started knocking on the door. Why? Because the disconnect between a fat license fee and actual value delivered was already well reported and understood by CIOs. "Why should Oracle create once, monopolize everywhere?" was the the appropriate question when every other industry largely commodifies raw materials and focuses on ongoing, human-powered innovation and service to generate a purchase order.

We look out into the future and suppose that this shift will take years, even decades. I think this is a mistake.

I see the shift every day as my company sells more and more subscriptions, as do the companies (SugarCRM, MuleSource, Loopfuse, etc.) I serve as an advisor. It's happening, and it's happening at an increasingly torrid pace.

The "value revolution" is underway. Will the traditional software companies wake up one day to discover that their "records" have given away to peer-to-peer downloads, as it were? I think we'll see that much sooner than anyone is expecting.

You see, customers always win in the end. Always. Because they're the ones with the money.