Tuesday, June 12, 2007

Hey! Guys in Dockers! Over Here!

Geeks love to hassle the guys with the MBAs and the "strategy" resumes. And plenty of geek entrepreneurs have showed the MBAs a thing or two making a fortune with code-first-ask-questions-later software and websites. But sometimes the technology isn't the problem and some strategy would be helpful.

In particular, I was chatting with a co-worker last week about how to set up a mass system for buying and selling used software licenses. In most countries and most U.S. jurisdictions, the "right of first sale" says that if you have a software license, you can resell your rights under that license to someone else. That's the legalese behind buying an old game from a bored gamer on craigslist. As an IP sale, it's not about the disks or even the activation key, but about the license. The seller has to relinquish the right to use the software (usually) and anything that comes with that (like support). The buyer gets it.

For big expensive licenses, like that 16-CPU perpetual Oracle license you no doubt have lying around, there are companies ready to help broker a deal. Actually there are a handful of companies ready to wheel and deal. At the consumer or low-value, low-volume level, there are some funkier ones. But there is no ebay for buying my aunt a "used" but legit copy of Word 2003.

Clearly there's a market here, and a look at the current players suggests it's not efficient or transparent. How can we get a web-based open market to work?

In this arena, it's reasonable to suppose most buyers are "legit" because most or all of these software packages could be acquired illegally for free if the consumer were not inclined to pay. It's trickier on the sell side since, in the extreme case, a seller can offer to sell a license for anything at all without possessing it in the first place. Most software licenses have no physical redemption token like a bearer bond, stock certificate, or paper money. So a buyer pays up, and the seller says, "You've got a deal, you're now the owner of a Foobar 2.0 license."

So we need some kind of clearinghouse ... but a clearinghouse for what? And how to keep it digital so we don't need a Netflix-grade DVD sorting facility to bag Microsoft Bob disks?

We're going to need digital tokens and a tracking scheme that software vendors want to participate in. Why would they want to do that? One argument asserts that a product is more valuable if a buyer knows it can be resold (think cars). And a uniform, open key registration and verification scheme could help fight software piracy without requiring each vendor to pay to maintain their own system.

The point is, I need a strategy guy (or gal) to line all the pieces up. The tech is trivial -- we have auction systems and reputation systems and crypto and tokens and all that. What we need is a scheme that arranges interests, incentives, and rewards in such a way that enough players get in to bootstrap the market.

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