textfiles/law/disk-fee.txt

                           Public (Software) Library

                          The Great "Disk Fee" Fallacy

    A lot of people, including users and programmers, have no idea what
    costs and work are involved in providing a software library service.
    As a result, some programmers specify that no group can distribute
    their program for a disk fee or they may set a limit of anywhere from
    $3 to $10.  So what does shareware distribution cost?

    In 1983, a blank formatted disk cost a minimum of $3.  The equipment
    for copying the disks cost many times more than it now does too.  So
    the actual cost of making a disk copy, including time and depreciation
    of equipment, was probably about $4.  On a disk fee of $5, that left $1
    to invest in getting more software and keeping the library organized.

    Of course, in 1982 through most of 1984, the quantity of good
    PD/shareware programs was very small and the programs were simple, so
    the acquisition and maintenance costs of the library were pretty low.

    Today, a disk with tyvek sleeve and label costs as little as $.25 and
    equipment is also a lot cheaper.  The current total cost of making a
    disk copy is only about $.75 to $1.00, leaving $4 out of a $5 disk fee
    for other costs:

                                  The Costs

    Order Processing:

    As the number of orders increases, the economics of providing disk
    copies changes.  We used to be able buy disks for $3 and sell them to
    local members for $3.50 because we were making the relatively few copies
    on equipment we had purchased for other purposes and doing the copying
    while watching TV or reading, so time and depreciation was "free".

    As volume increased, we had to hire people to answer the phone and take
    orders, to pick up the mail and process the orders, to make the copies,
    to verify the copies and compare them against the orders, package the
    orders, weigh and stamp them and take them to the post office, often to
    wait in line a long time.

    All these staff people had to have equipment purchased for them:
    computers, desks, chairs, office supplies, folding machines, postage
    meters, scales, and on and on.  In addition, you have to have space for
    these people to work in.

    While the cost of disks have dropped, they must be ordered in large
    numbers and stored. Ordering disks, mailers and other supplies,
    checking shipments, storing, dealing with bad inventory (on nearly
    every order), etc., takes a lot of time.

    People want to order by phone and that means taking credit cards and
    paying a percentage of revenues to the card companies.  Bad checks,
    refused COD orders, "lost" or damaged orders, bad disks, and staff
    errors also contribute to high overhead.  Where we used to be able to
    take orders on our relatively inexpensive "personal" phone line, now we
    must pay for multiple "business" lines and 800 numbers, as well as an
    expensive telephone system.

    Printing costs for free newsletters, flyers, and catalogs are another
    big expense.


    User Support:

    Users don't like to read.  All the information we can give a user is
    already committed to writing somewhere, yet we get calls all day, every
    day from people who want us to listen to a recital of their personal
    wants and needs and recommend the perfect program for them.

    Or they call to tell us that they have tried typing READ.ME and "it
    won't come up - what should I do?"  Or they have never heard of the DIR
    command.  If you are a shareware author and don't get a lot of these
    calls, it's because we are fielding them for you.


    Advertising:

    A lot of shareware authors seem to have recently discovered that the
    libraries that advertise have the greatest distribution, and the
    greater the distribution, the greater the number of shareware payments.
    (Hey, Fluegelman was right!)  So authors who a year or two ago didn't
    like the idea of distributors advertising now are encouraging them to
    do so.

    Advertising is extremely expensive.  As of 1/89, a one-third page,
    black and white ad in PC magazine on a 12/year frequency rate is over
    $7,000.  That is over $84,000/year for one ad in one magazine.  If the
    authors whose programs are listed in these ads tried to buy that same
    space themselves, most of them would probably be bankrupt in a year.


    Library Maintenance:

    This includes (1) acquiring new programs and the latest versions of old
    programs as soon as they become available, (2) testing the programs for
    quality and to see if they run or if they have hidden bombs or are
    really crippled demos, (3) reviewing the documentation for copyright
    restrictions and writing the authors, (4) comparing the programs to
    others, (5) writing reviews to inform users about the new programs and
    updates, (6) organizing the software in the library by subject matter,
    (7) updating catalogs, (8) going back over old programs from
    time-to-time to make sure they are still of value, (9) investigating
    users' bug reports.

    In my opinion, for all of this to be done well, there should be one
    experienced, knowledgable librarian for every 200 disks.  Unfortunately,
    I don't know of a single library with the funds available to pay enough
    to attract the qualified people to work for them. PSL tries to solve
    this problem by having librarians who do the work in their specific
    area of expertise at their homes in their spare time. We pay them a
    very large percent of the revenues for each disk sold from their area.

    Even with this financial incentive, it is extremely difficult to find
    someone who both wants to be a librarian and has the time and determi-
    nation to follow through.  (If you are interested, call me.)  We have
    had countless individuals apply, get the disks from us to work on, and
    we never hear from them again.  Our most recent attempt was with a
    gentleman who agreed to work on the programming disks.  He has had them
    since October 1988 and when we later contacted him for a progress
    report, he said he hoped to be done by March 1989.  Of course, during
    the time from October to March, we have added dozens of new programming
    files, so he is way behind even before he finishes.  He admitted that
    when he agreed to take on the job, he had no concept of how much work
    was involved. (March has now passed and we haven't heard from him.)

    Anyone who thinks that being a shareware distributor is just "easy money
    made off the sweat of others," as one programmer put it, is welcome to
    join us and rake in some of that "easy money".


    The $3 Disk Guys

    In the April 1989 issue of PC Computing, we counted seven full-page ads
    for shareware distributors, all within about a dozen pages of each
    other.  Most of these are selling the disks in the range of $2-$3.50.

    Most of these will probably disappear in a year or two, unless they
    have someone with deep pockets backing them up.  It seems highly
    unlikely that all of these companies, whose ads and shareware
    collections seem to be clones of each other, can each get enough
    business to survive. (We have a file drawer full of materials from
    distributors who have come and gone over the years.)

    To anyone with the money to spend on advertising, shareware distribu-
    tion must look like easy pickings.  All they have to do is buy the
    disks from another cut-rate distributor for $2 a disk, copy the other
    company's ad, and they're in business.  Most of them don't know what
    they are selling and don't care.

    The $3-guys have only a fraction of the number of programs PSL has.
    Most do not bother with programs that are too small to be on a disk by
    themselves.  Or at best, they may have a few utility or games collec-
    tions that never get updated.  Most do not test the programs or write
    to the authors, violating many copyrights.  (Some even show pictures of
    pirated programs in their ads.)

    A few programmers, no doubt influenced by this influx of quick-buck,
    cut-rate distributors, say that distributors who charge more than $3 a
    disk cannot distribute their programs.  Ironically, the programmers who
    track where shareware registrations come from always find that they do
    not come from these cut-rate guys, but from groups like PSL, PC-SIG and
    Public Brand who charge $5 or more per disk.

    People who are too cheap to pay for value received from a shareware
    distributor are not likely to pay for value received from a programmer.


    We hope that we have not offended anyone by our straightforward talk.
    If you have any comments about the subject, we would like to hear from
    you.