Who should set the price for the original sale of digital products? 2

[diogenes10]

This started with a conversation in another thread.
The other thread is already quite long, this is off topic in that thread, and it may be considered a business rather than ethics item, in which case i did not want it to get the other interesting thread pulled.

There are economic issues here in terms of cost and return.
However I believe that posters in various threads also start from a premise that it is an ethical issue in regard to such things as the quantity of profit, the incentive to make the manufacturing processes as efficient as possible, the functionality of the product and marketing techniques such as increasing the quanity of items in one package to justify a higher price regardless of quality, functionality, etc of the total package.

 

[lionelhill]

As a matter of interest, pursuing the life-saving drugs one (but software relevant too):

(1) Anyone could go out and analyse that drug, find its active ingredient, and manufacture it. The thing that stops them is that it is patented. This patent is a thing that society provides, along with courts to enforce the patents. Therefore the public and society have given something to the company who developed the drug: security to make some profit from their work and investment.

(2) If society has done its bit, maybe it's reasonable for society to want something in return? Would it be OK for a government, running both a health service and patent system within their country, to say something like "charge less, or we will disallow your patent"? I think this would be a logical position to hold, though potentially very bad for basic drug research.

(3) Most things in the end are pragmatic. If we make life too hard for software developers, or for drug manufacturers, they'll give up and become insurance salesmen instead. Which do you think is most useful?

 

[CajunCenturion]

As I said in an earlier post, ethics can only come into play if there is some element in the equation, outside of the normal free market. The situation your in diogenes10 is an illustration of just such an external element, but in this case, its dependency. Your company now finds itself dependant upon these software vendors, and as such, is by virtue of that dependency, subject to the whims of the vendors. You also indicated, that your situation came about because of the planned obsolescence policies of some vendors. If these policies are planned, then they should not come as a surprise. If the vendor is doing exactly what they indicated they were going to do, is it unethical? Perhaps. Did they force you into your dependant position? With Microsoft, one could certainly argue they did through illegal monopolistic practices, and as such, behaved unethically (and illegally). The Justice Department is dealing with that issue (although I am not satisfied they are handling it very well, but that’s not this topic).

Nevertheless, the dependency factor does alter your company’s perception of the value of those digital products, as you place a rather high value on your survival, since your survival is, at least for now, dependant on those products.

I do not think that the government should ever get into the business of negotiation with respect to patents and price fixing.



Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[diogenes10]

re: the way business is
and
re: are the investments forced

I agree that's the way business appears to have worked for sometime. The issue here is whether some of that current working is ethical. In "moving on" it seems to me that it is quite possible for companies to engage in unethical behaviors in the guise of "keeping up with competition" or creating "state of the art" products.

I believe I read awhile back that one of the releases of a major office product included the complete software for a game. I don't know that this was actually the case because I never verified it for myself, but let's assume for a moment that it was. Driven by the need to meet quarterly revenue expections of Wall Street et. al., we got the pitch for the chrome exhaust extenders, the fuzzy dice, the addon seat belts with the spiffy spring loaded roll uppers, the underdash air kit, AND the continental kit ALL in ONE package at a LOW upgrade price (or the full price if you weren't lucky enough to be a previous owner). Many people probably had to buy new systems to support the bloat some of which had absolutely no bearing on their ability to be productive. And many users probably had no need for any of the stuff that was changed.

Were they forced to buy?
I use a side stream office product. It is relatively inexpensive and meets my needs very well. However the company I work for has a supplier of business services that uses a main stream office product. Their service requires us to provide them information monthly. They have created a spiffy macro in the main stream product to handle this report. They're big enough to say "use this or buzz off". Well the pragmatic decision is that you have to buy the mainstream office product to do one job. But then you have to have the hardware capable of supporting it and so on.
While not exactly forced to buy-the decision to continue in business and pay yourself and your employees, and attempts to make rational decisions about services needed by the business can "force" you into purchases that you would not otherwise make, of products that were probably created with at least partially unethical business motives.

 

[sleipnir214]

The "dependency factor" can also be part of a software vendor's overall marketing strategy.

Take Mi¢ro$oft as an example. The bundling and hyper-interdependency of all the software they produce means that those running their software have an easy time of integrating systems -- so long as no one tries to add third-party software to the mix. This is probably why Mi¢ro$oft is trying its damnedest to place a piece of their software in every niche market out there.

Scientists have repeatedly warned the First World that it is dependent on a set of food crops that is not genetically diverse enough. The right single disease ccould cause the death by starvation of millions of people.

The same cautionary statement can be made about software. The smaller the set of vendors whose software you use, the more vulnerable you are to the whims of any member of that set.



Keep in mind, too, that "software obsolescence" is a relative term. Relative to a commercial software vendor, "obsolete" can mean anything from "we've discovered so many bugs that it was better to start from scratch on a new version than patch the old" to "we need to increase our revenue streams". Relative to an end user, "obsolete" really means "the current version of the software can no longer do what I need it to do". Unfortunately, too many end-users are using the wrong definition of the term in making upgrade decisions.

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TANSTAAFL!

 

[CajunCenturion]

diogenes10 - I'm curious at whom you blame the most for the unethical behavior.

Is is your supplier who forces you to adopt to their standards in order to do business with them?

Or is the vendor from whom you much purchase the software to meet your supplier's standards?

Or are they in cahoots with each other?

Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[diogenes10]

"Unfortunately, too many end-users are using the wrong definition of the term in making upgrade decisions"

However this may not be by the end-user choice - because of the dependencies issue.

The end user has some application programs they are using that meet their needs. They are choosing to ignore this software vendor's updates because they deal with things this end user doesnt need to do. Uh Oh - big time payroll reporting change. The software vendor no longer supports your version. The software reseller gives you limited help - under duress and for payment. The operating system supplier has been trucking along on their planned obsolesence path and no longer supports your operating system, so the application developer doesn't either. So, you get the application system update, which requires the operating system update, which requires the hardware update, all of which requires more training. The government is happy, the operating system vendor is happy, the application software vendor is happy, the reseller is happy and the end-user is - well put-upon and put-out.
To the extent that the operating system vendor has made unethical business decisions or even ethical business decisions that look only to their interest rather than the "supply chain approach" -- "the best interest" of all parties, there is a bunch of direct and indirect no-value cost dumped into the system. AND, in my opinion, it is value determined by the seller, forced upon an unwilling buyer who has no choice in the matter.

 

[sleipnir214]

And exactly what part of all that do you see as unethical behavior?


The orphaning of a product is not necessarily unethical, because no vendor can possibly indefinately support every version of every product.

To celebrate its centennial, Ford in 1999 produced 6 new 1914-version Model T automobiles. As this article describes,

http://popularmechanics.com/automotive/collector_cars/2001/6/new_model_T/print.phtml

, even Ford had to go to third-party vendors to find the parts to do it -- Ford longer makes the parts.

If the vendor has made the retirement schedule explicitly clear, then the consumer has been given enough information to make intelligent decisions on whether to continue using older products. For example, I can find out from a link on this page,

http://support.microsoft.com/default.aspx?scid=fh;en-us;lifecycle&LN=EN-US&x=5&y=6

, that support for the Mi¢ro$oft ActiMates Telebubbies "Dipsy" toy will end September 30th of this year.


A reseller's supporting an older product only for a fee is not unethical unless they are violating some contractual requirements. They can't be expected to support every product indefinately, either. It would be unreasonable for me to expect my local Ford dealership to stock Model-T parts.


The fact that the vendor's actions have inconvenienced you or made you angry also does not necessarily make the actions unethical, either.



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TANSTAAFL!

 

[lionelhill]

CajunCenturion,

on the matter of governments getting caught up in patent and price negotiations, in theory I agree with you, it is undesirable. But we're fortunate in software that usually our products don't mean life and death to millions. In a case where a product does mean life or death to real people, their government may well be forced into getting messy hands negotiating prices. If a lot of your populace have a deadly disease, and only one company sells a remedy, and you can't afford the price they are demanding (and know you could have it made locally cheaper), then you DO have an ethical problem on your hands:

which is better, to steal someone's idea, or to let someone else die because you didn't?

So far, the situation's not arisen in software, but it has in drugs, and put this way, the question becomes harder for a government to keep out of.

That's what I was getting at....
Best wishes,
Li

 

[sleipnir214]

I have a better idea.

The government investigates the pricing of drugs. If it determines the pricing is too high, it then assess a Windfall Profits Tax.

The U.S. federal government did it during the Carter administration.

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TANSTAAFL!

 

[CajunCenturion]

I understand what you're saying lionelhill, and it certainly can be problem, but I just don't believe that Price Regulation is the answer. There are other ways that the government can deal with the issue, sleipnir214 offering one suggestion.

Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[diogenes10]

sleipnir
The first thing i was trying to do with the above was to respond to the comment about users using the wrong definition of obsolescence in making purchasing decisions.
And also kind of an answer to guestgulkan as to why you can become unable to continue using legally owned software in some situations.
In the example above, an external event forced a company to make some decisions. This company declared a product obsolete and replaced it. (Another company in the same situation found an entirely different solution that did not involve replacing software.) Where I'm seeing the issue of ethics entering in is in the amounts of cost to the user of implementing a decision.
Has the software developer abandoned a product instead of modifying it for sound technical reasons instead of just the "different name" approach for marketing?
Have they put in features of genuine use - or are they marketing show?
Is the code appropriate to the job or does it include irrelevant hidden items that unnecessarily increase hardware requirements and costs.
Has a market dominant company managed the costs which its sales value is supposed to cover in a manner responsible to the users of the product?
Do all users of the product have an opportunity to obtain the same price or are there users without a voice that are subsidizing those with a voice?

Because of the interdependencies you spoke of, these decisions all create costs/value in the transfer price/value which the purchaser is required to cover.

I think I would agree that there is nothing wrong with a reseller charging to support an older product. I think it becomes a little more questionable on a new product when they've sold it to you and made money on the sale. If I were in a decision making capacity I think this is an issue I would quickly get crossways with some folks over.
There is also an issue with resellers when modifications are needed and options are available-I think there is a grey area when the reseller presents you with an elegant solution that makes them more money instead of the simple solution that also meets the user's need but makes the reseller little or no money.

 

[guestgulkan]

I think the bottom of the previous post illustrates the salesman V buyer competition.

With 'shrink wrapped software' you usually have to go with what it says on the packet - or by magazine reviews, or word of mouth.
You can expect NO modifications from the original supplier because these items are sold 'as seen'

In special-to-order situations it is somewhat different.
The salesman is trying to make his target(s) the buyer is trying get the lowest price possible.
Usually neither of these people are 'technical competent' in the product in question.
The salesman has his pre-defined speech and the buyer unless he knows what he is on about can be easily fooled.
In this situation I would have someone who knows the actual technical requirements be present during these discussions who can ask the right questions and query any vague or ambiguous points.
Any requests for modification which falls outside the 'standard options' will most likely be very expensive.

Buyer beware..

 

[sleipnir214]

diogenes10:
In specific, unfortunately, no one but you even knows what software or what vendor we're talking about, so commenting on the ethics affecting your specific case is pointless.

In general, you raise some interesting questions, but all they do is play a what-if game, the ethics of which are obvious in every case. I do not know, and it appears you also do not know, the actual reasons for abandonment of the software in question.


Is it ethical to charge for support for new software? Yes, because nowhere is it written in stone that a vendor must provide any kind of free support. Provided that the vendor has not led the end-user to believe that support would be provided that will not be, I don't see an ethical condundrum here at all. I find it completely reasonable that an end-user be responsible for finding out the support options on any software to be purchased.

Can it be ethical to present a more elegant solution when a simple one would be cheaper? Yes. Without knowing your specific situation it's difficult to comment, but this could easily fall under Blackwell's Law of Strategic Laziness, which states "In the long run, it always requires fewer total resources to do it right the first time."

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TANSTAAFL!

 

[diogenes10]

sleipnir (re above)and cc (re where's the worst problem)

I saw a remark in another thread to which I objected. In fairness-it was a remark made in passing. Discussion was definitely irrelevant there so I tried this thread. I have wound up redefining my question twice and being painted into a corner trying to defend whether there is even a legitimate question. In doing that I have attempted to use personal examples rather than draw from threads and attitudes on this site I think are relevant in order to avoid giving offense, developing "in your face" exchanges, and shifting to a critique of a particular transaction rather than considering the ethics of whether purchasers should have a say in setting the value for the transaction. It looks like I haven't done too well in any regard. There either isn't a question or I'm not knowledgeable and skilled enough to frame it properly.

All
Thanks for taking the time to comment.

 

[edfair]

Sure , there's a question. And you've done well. So, you've painted yourself into a corner, big deal, it's imaganary paint.
This one was interesting enough I hilighted it to D&D and rewarded what I thought was some well thought out positions.

Unfortunately , not enough people will see it.

Ed Fair
Any advice I give is my best judgement based on my interpretation of the facts you supply. Help increase my knowledge by providing some feedback, good or bad, on any advice I have given.

 

[sleipnir214]

diogenes10:
As my signature line reads, if you want the best answers, you should ask the best questions. There's no fun in both asking the question and answering it myself.


Want the best answers? Ask the best questions:

http://www.catb.org/~esr/faqs/smart-questions.html

TANSTAAFL!

 

[CajunCenturion]

There certainly is a legitimate question diogenes10, and it's quite a tough one as well. You've raised some good points, as have others, but one of the beauties of this forum is that, as long as we behave and stay on topic, we have the opportunity to look at these questions from many different perspectives. Rarely is anyone complete right, nor completely wrong, and opinions vary widely, as each of us views the situation from differing perspectives. This question has multiple facets, and multiple levels, and the related ethics may be different between the various levels and facets. Not everyone judges things from the same perspective, nor is on the same side of the fence. It can be quite thought provoking, and challenges each of us to objectively consider our own positions. Some may even change.

Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[diogenes10]

Ed, Sleipnir, CC

Thank you for kindness extended - I appreciate it.

 

[diogenes10]

CajunCenturion
I owe you an answer to your question about who I blame the most. This kind of stuff is slow going for me and I wasn't able to think on it earlier. I dont know how you keep so many of these kinds of threads going so adroitly.

Well the vendors and suppliers are certainly in cahoots from a marketing perspective.
I recently attended a meeting in which a vendor presentation to convince attendees of the need for CRM software and the merits of their particular solution was bolstered by the presence of factory functionaries. I took the literature and a report back to my boss. He just walked into my office today reading an article lead which went something like CRM plagued by dropping orders and elusive measurement of ROI. I allowed as how they hadn't covered that.
But at that point the issue is probably still marketing stuff and as GG suggests the potential buyer needs to work on becoming technically informed.

Someone's comments about perspective were an important reminder. I can only imagine what it would be like from perspective of user with hundreds or thousands of stations to cover. My perspective is that of a small company. One of the premises of many answers has been "free market". I don't know if that has limited choices of solutions-but for this discussion-taking that idea and looking at a large supplier of operating systems, a large supplier of application software, a small vendor/reseller, and a small purchasing company, I see the vendor and the purchaser as more equally matched and a possibility of value/price adjustments happening on both sides through negotiation. I would perceive the larger suppliers as unlikely to make any concession to the small business and the large entity's price becoming the small entity's value by force.

A background example outside software -- large service supplier relating to other entities. A number of years ago I kept records for a charitable organization. The leader of our group worked for a government entity where he happened to manage a large quantity of money. The government entity, the charitable organization, and I all happened to bank at the same bank. Our charitable group was quite small, we made inquiry about service charges. We got 1 small adjustment. We did not discuss details, but the other fella told me basically that in his job he got most to all of the charges dismissed. Me -- well you guessed it. Ethical-I don't know. I think there was at least potentially a cost shift there that did not please me. I see a parallel to that in some of these software issues.

I guess I am then adding to that judgement 3-4 months of reading a variety of fussing about large company prices and technical issues and saying the supplier(s) is who I'm more likely to blame.

But-there is a missing element in your question - the user/purchaser on the other side. They - as a group - are not exactly pure either. This gets us to the yoyo.
Not going back to the dawn of history perhaps-maybe just back 100-150 years we have American focus on expanding country, developing business, and I dont know what else. But business was very powerful sometimes at the expense of others. I'm not capable of filling in all the details but with a broad brush starting with assorted labor movements and going on to court actions respect for labor and purchasers was forced into the equation as an offset to money, power, and the rights of a supplier stemming from provision of the product or service. That has now gone so far in America that in some cases the business on the other side of the table is now in danger. The suppliers do have some legitimate concerns too about the ethics and power of the purchasers/users.

 

[edfair]

Whenever you have excesses on either side, you generally get corrections. And lots of times it is not just buyer/seller but more force from 3 sides. The third side can be govt., competitive issues, financial or technological change.
Using US railways as example, competitive issues led to mergers, more power to some, monopoly excesses, and ended with govt intervention. Same type of result with the oil companies. And we are in the process in the operating system environment.

User/purchasers are willing victims mostly. You may recall the windows95 midnight releases and the flood of buyers that spent hours waiting in line to get their copy. Never mind that the system was buggy, they just had to have it. And the stores used the attention to run all sorts of specials to move product to this captive audience. And the machine manufacturers were able to captilize on the need for bigger faster machines, and the memory companies loved it.

Now the corrections have set in. Memory is cheaper now because of financial problems (increased production and lack of demand), boxes are cheaper now for the same reason and with the economic downturn the next upgrade cycle has been disrupted somewhat.

Ed Fair
Any advice I give is my best judgement based on my interpretation of the facts you supply. Help increase my knowledge by providing some feedback, good or bad, on any advice I have given.