In the parlance of economics, "Rent" is defined as money one makes on some product or service above and beyond the cost of producing it. Importantly, it refers to money one makes on something that is not destroyed during consumption, and where true ownership does not change hands, so that, having rented it to one person, it can be rented again. It seems to me Blogspot, that software is clearly an area where the money is clearly made through rents.
In subscription based software services, this point is pretty clear. A consumer pays a periodic cost for access to the software, the value of which disappears after the service contract ends. Traditional software also fits this bill. Since the marginal production cost of producing the next unit of software is zero, the software per-se can be thought of as a single good. From this perspective, we see that once "sold" to one person, an identical unit can be "sold again". The important thing, however, is that, at some point, the money made on marginal units is over and above the production cost, which makes it "rent".
But how does this affect the political economy of software production houses? Suppose a software company endeavors to produce one product, without any updates (yes, no place would do that, due to the increased sales and rents that come with making the update, but stay with me anyway). During production of that software product, the productivity of the designers, developers, QA, etc. is vital. They and their knowledge constitute the true capital of the company, and embody its value in future sales. Once the product is released, however, this productivity and knowledge offer diminishing returns. In a perfectly fluid market where every employee makes their local marginal utility at all times, salaries of these workers would drop, and some, perhaps all, would be laid off. In fact, were it not for the fact that knowledge gained during development constitutes important capital going into an update release, we could imagine the entire development profession being made up of temporary contractors.
Given our example, however, after release, the software house almost immediately becomes a building full of rent-seekers. Developers would immediately change their goals from productive software outcomes to that of convincing the owner that he or she warrants a cut of the continued sales of the program they produced (for which time they've already been paid). This is pure politics and shenanigans.
Now, stepping outside the thought experiment back into the real world, Blogspot, my point becomes this: Even if software houses DO plan updates, or DO offer subscription services, to what degree do these phenomenon show up anyway? Just because the marginal value of continued development is not Zero does not mean that it approaches the value of the work done to produce the first release. And to that degree, one would expect more rent-seeking behavior out of developers than before. The difference in expected productivity might change the nature of the behavior from (in the Zero value case) one of complete fantasy to (in the Normal case) one of exaggerated claims. However, the behavior would still be there.
How do those whose salaries are already tied to current and future sales (investors, owners, perhaps upper management) respond to this realization? Do they realize it at all? That I often wonder.
PostScript:
Of all my letters to you Blogspot, this one seemed the most "out there" to me. Well, maybe not .. See page 23 of the leaked Valve employee manual:
The relevant quote is on page 17:
"Valve is not averse to all organizational structure—it crops up in many forms all the time, temporarily. But
problems show up when hierarchy or codified divisions of labor either haven’t been created by the group’s members or when those structures persist for long periods of time. We believe those structures inevitably begin to serve their own needs rather than those of Valve’s customers. The hierarchy will begin to reinforce its own structure by hiring people who fit its shape, adding people to fill subordinate support roles. Its members are also incented to engage in rent-seeking behaviors that take advantage of the power structure rather than focusing on simply delivering value to customers."
PostScript:
Of all my letters to you Blogspot, this one seemed the most "out there" to me. Well, maybe not .. See page 23 of the leaked Valve employee manual:
The relevant quote is on page 17:
"Valve is not averse to all organizational structure—it crops up in many forms all the time, temporarily. But
problems show up when hierarchy or codified divisions of labor either haven’t been created by the group’s members or when those structures persist for long periods of time. We believe those structures inevitably begin to serve their own needs rather than those of Valve’s customers. The hierarchy will begin to reinforce its own structure by hiring people who fit its shape, adding people to fill subordinate support roles. Its members are also incented to engage in rent-seeking behaviors that take advantage of the power structure rather than focusing on simply delivering value to customers."
