SaaS, Ads, And The Deadly Sins of Software

Hi, Andy here. I want to bring your attention to the depressing fact that there are really only two ways to sell software. Well, three, but hardly anybody uses the third. I am, of course, talking of subscription services (SaaS) and advertisement/data driven.

Software as a Business Model

Before people could write software for a living, you had to sell things. Tangible objects that performed a certain function, whose parts cost money, which further cost more money to assemble into a product.

Two people exchanging a bag of money for a house
Two people exchanging a bag of money for a house
Transactions before software

Licensing as a Subscription (SaaS)

One way to do this was selling a license to use your software instead of selling the software directly. With this, you could charge existing customers annually to keep using the same piece of software every year. This was the beginning of selling software goods as a subscription.

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A comparison of WPS Office subscription plans

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That’s not all of them though. You’ll notice I didn’t mention any web browsers, or any social media platforms. That’s because there were some visionaries early on, who realized there was lucrative software that people would not pay to use, because there were already free analogues that didn’t require computers. Before browsers, there were (and still are) libraries. Before social media, there were telephones and contact numbers scribbled on a notepad. These already existed for free, and people would be unwilling to pay to replace something free and known with something paid and unknown.

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Every action you perform is tracked and logged, cross-platform, and cross-device. All to better sell you bird feeders.

Externalities

While there is nothing wrong with subscription or ad-based businesses, it does create problems when other markets are influenced and inspired by them:

Conclusion

When you do any engineering for long enough, software or not, the idea of optimization begins to leak into other parts of your life as well. And when those engineers start companies, it only makes sense to start by optimizing for profitability, leaving us with “monthly subscription cost per user” and “sell user data and show ads” as the most successful business models for a software company to embrace under capitalism. Capitalism likes to play on our greed and gluttony, buying and selling things that aren’t needed provides profits. However, it isn’t sustainable, and feels wasteful and first-worldly.

Appendix:

I’m making a few generalizations here, which I will mention for completeness. The only thing off the top of my head that’s managed to stay afloat off of donations alone is Wikipedia. I also haven’t addressed market-based services like Uber, Amazon, Airbnb, and the various delivery services. These platforms charge a fee by enabling transactions using their sites, and therefore don’t sell software as their goods, so I won’t mention them here.

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Hi! I’m Andy. I try to make things that haven’t been made before. Check out my personal projects at https://andykong.org/

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