An open letter to hobbyists by Bill Gates (1976) | Hacker News Reader

An open letter to hobbyists by Bill Gates (1976)

cryptnet.net

59 pointsjanogonzalez41 comments

Regarding the commercial BASIC project mentioned in this letter - Gates facilitated non-student Allen coming onto the Harvard campus, to use a computer they did not have permission to use for their commercial project. The computer they were using without authorization was one which was being used by the US military. Like Mark Zuckerberg in later years, Gates was called up before the Harvard Ad board for this.

From Paul Allen's book "Idea Man" -

"Returning to Aiken late one night after a fast-food run, we were stopped by the campus police and asked for our IDs...Harvard split the computer’s maintenance costs with the U.S. Defense Department, based on usage. I’d relied on Bill’s password account for my work on the simulator, which ate a lot of processor time. When the January bills came due, Harvard’s share was up conspicuously, with one student the prime culprit: William Henry Gates III. (he appeared before the university’s administrative board that summer...)"

At the time of that letter, how much of their software being sold was developed at Harvard? And did they specifically sell any software they developed while at Harvard (and on Harvard's dime)?

Gates of course has given Harvard tens of millions of dollars. Harvard got an amazing return on its computing bills.

My software title "FileSearchEX" is so pirated that I can no longer continue to work on it full time. Indeed, search engines show more "free crack here" links than legitimate ones. Imagine going to the supermarket and having "free" eggs next to the $5 carton ... which would you choose? I know what 90% of them go with.

You should sell it to Microsoft instead of the users.

As someone that writes a lot of code, both commercial product, contracts and FOSS, the two responses that make sense are: better copy protection or copy encouragement. One side boosts revenue while the other makes customer acquisition easier. Usually the later is used first and later on gradually shift to the former.

Rife theft is a huge opportunity to convert unpaid to paid users.

While it sucks to not be able to work on it full time any more, it boggles my mind that it'd be possible to earn enough from a tool like that to work on it full time for any amount of time in the first place. Not meant as a criticism of you - in fact if you've managed to do that, hats off, clearly you must have done something right with it.

There always have been, and continue to be, people making perfectly good money from this sort of software. I'm not sure why you're surprised, given that people make profitable fart apps for phones, and that it is apparently rational to bury people with money to run any number of fundamentally useless startups.

While we are at it, any advice of how to market such software? I mean, when there is more or less saturated market.

Thanks!

> "Who can afford to do professional work for nothing? What hobbyist can put 3-man years into programming, finding all bugs, documenting his product and distribute for free?"

Yes who can do professional interpreters for free. Guido van Rossum could not possible put 3-man years into programming, finding all bugs, and document his product for free.

This is after all what this letter is about. An interpreter for a programming language, and the complain is about hobbyist and other non-commercial entities using it without paying money for it.

I don't think anecdotes are that helpful at understanding Gates's message here. Yes, today there are open source versions of pretty much all developer tools (and that's something to celebrate, since I remember when a "cheap" C compiler was $500). But there's still plenty of software that has no open source equal; if we had a world where nobody paid for software, much of it wouldn't have ever been written.

When looking back at letters like this, its important to be at least aware of the context. I don't think ignoring the context of the letter is helpful at all in understanding why it was written by Bill Gates.

Taken outside the context, one can surely have a discussion about how much software would be made if developers can't use government help as basis for their business model.

Guido was a salaried employee of CWI at the time. he made money for his efforts. in fact, he has always been paid to work on Python, at least part of the time.

I think that in the long run, Microsoft profited from piracy. My rationale is that piracy gave a market advantage to the OS with the widest selection of "free" software. So long as folks could copy MS-DOS and Windows software from their workplace, there was little incentive to consider any other OS.

It also cemented their file formats as the industry standard. The network effect is still strong even today.

This cannot be understated. Different company and a smaller niche, but proprietary file formats have plagued the GIS industry for decades. The most widely used format (shapefile) is about as terrible as it gets as far as functionality goes, but it is used everywhere. There has been a mounting effort to persuade governments to use open formats for publishing data, but it has been slow going.

From the letter:

*> Why is this? As the majority of hobbyists must be aware, most of you steal your software. Hardware must be paid for, but software is something to share."

I'll have to dig around but I recall reading a few articles about 60%+ windows OS being pirated, this number is much lower in US and other developed markets, but is as high as 93% in some[0].

[0] http://www.nationmaster.com/graph/cri_sof_pir_rat-crime-soft...

edit: site seems to be unavailable. Link @ archive.org:

https://web.archive.org/web/20100316174220/http://www.cryptn...

But it is not about windows OS. In 1976 there were no windows OS. It's about this: http://en.wikipedia.org/wiki/Altair_BASIC

I know.

Was just stating the problem that plagued them in 1976 is still persistent today.

Though on re-reading my previous comment I can see that I was not clear on that.

“Hardware must be paid for”, but if you're lucky, the government pays for it and you can ‘borrow’ it when no one's looking.

Software piracy, no matter where I or anyone stands on it, is part of the economy. It's a forced sale price of zero just as FOSS. The interesting bit is there may be support costs, server costs and other indirect costs associated with pirated software. This hampers a shop's ability to release more versions and keep quality up. (Although it seems like there's always another version of VMware Fusion every time I turn around despite there being barely any investment into its development.)

And also there are interesting situations like DoD and BestBuy. Obviously the profit motive prevails after they've paid their fines and cut POs for maintenance agreements on X thousand seats.

Hypothetically, it would make financial sense for some high value products with a small market to intentionally "leak" to warez groups. It's easier to discover and monetize such obligated customers than fight year long sales cycles and/or pilot deployments.

Why was Gates hectoring the hobbyists?

1. The hobbyists had a culture of freely sharing code, which Gates was trying to break up (now known as Linux, Github, C)

2. Software was about 5 years away from Congress making software definitely copyrightable in the US [1] (there had been some court decisions)

1. https://en.wikipedia.org/wiki/Software_copyright

Fascinating write-up which puts the economics of proprietary vs open source in full view. Gates was unhappy in the letter because it was hard to make money charging license fees in arrears. In my business, I charge for a lot of development up front.

The lesson I take away from this is that conventional software licensing, while it addresses a legitimate need in some areas of software (the need to diffuse development costs), means effectively not only shifting risk onto the developer but increasing it by orders of magnitude. The sort of risk that one has from investing in a feature for an open source project is far less than the risk that a software house takes in building the next version, because they take on all risk, centralize it, and then hope to make it back through control. This doesn't reduce risk for the end user though by very much.

Bill Gates experienced in 76 what now is quite obvious: any content + computer = unlimited number of copies.

Photocopiers and books never stopped authors. It's all about the packaging and the full-service offered. A book is nice because it is bound, or comes with extra goodies. If your software is just software, well, step up your sales game.

"stealing" You keep using that word...

Oh good. Yes. Let's please bring this up for the infinity-ith time. It is particularly relevent and useful to be mention when discussing an almost 40 year old letter. Thank you so much for making a useful contribution.

Is there a better word for using non-free software without a license?

You're only losing opportunity cost. Not COGS. Meanwhile, the user who is pirating your software might be someone for whom the price is prohibitive or who would otherwise not be a user at all if there weren't a cracked alternative. So the the loss to this "theft" is actually much lower because (1) there was no price associated with materials for the software -- it costs you the same to produce one copy as it does a million and (2) the majority of cracked copies of the software wouldn't have resulted in a sale anyway.

(1) is debatable. The cost of living during development and the loss of potential savings count for price. If you estimate that as, say, 50k for a year-long project, then you need to do 50k of sales to break even on your investment. That shouldn't be a high number for a niche product that gets used, but I think it tends to be in software.

(2) I agree with. It doesn't matter what's best if your product doesn't sell. I think developers need publishing labels (read: app stores) to monetize. Users might pay not pay for note-keeping applet, but they might pay for a fork of it in their GitHub account that's been audited for security & privacy by a reputable publisher. Social P2P software can also be designed to exchange receipts of purchase on connection. Users would be able to disable it, but failing to publish a receipt for software would be awkward in business contexts.

Re: Your response to point (1). My statement stands. A development cost of $50k is a development cost of $50k regardless of how many copies are sold. Pirated copies do not cost the developer extra production expenses the way stolen physical merchandise would. If someone stole copies of Excel from a Best Buy, there would be costs associated with the packaging, DVD production, distribution, etc. that would need to be absorbed in order to replace the lost product. The only added cost per item online is the bandwidth cost, but that is absorbed by the person distributing cracked software rather than the original developer.

Yes: copyright infringement. US law also calls it that and not theft[1].

Also note the disparity: if you pay for software, you don't own it, you license it; but if you get it without paying, some call it theft.

[1]: http://en.wikipedia.org/wiki/Copyright_infringement#.22Theft...

Keep in mind that the details surrounding copyrighting of software weren't solidified until the Copyright Act of 1976, which didn't go into law until 1978.

So at the time this letter was written, Micro-Soft's software didn't receive the automatic copyright protection we know of today.

I think he means it like stealing a credit card number opposed to stealing a car. The original owner still has the credit card number but the information has still been stolen.

So what the hell happened to 8080 and 6800 APL? That would have truly changed the landscape. It wasn't quite the low hanging fruit Basic was though.

There was a good write up of the context surrounding this letter in Steven Levy's book, Hackers (http://en.wikipedia.org/wiki/Hackers:_Heroes_of_the_Computer...).

It pissed off lots of people in the community and seemed to be against the spirit of what the hackers were doing at the time (writing and sharing code).

I recall another programmer being irritated by the letter and writing his own basic interpreter and asking $5 for it (which was far less than what Gates was asking).

Book is worth reading for the historical context of computing if you weren't around to see it.

####

Edit [Relevant part of wikipedia page]: Tiny BASIC: Altair BASIC was an interpreter that translated instructions from the BASIC programming language into assembly instructions that the Altair 8800 could understand. It was developed by Bill Gates and Paul Allen, the founders of Micro-soft, specifically for the Altair 8800 and it would fit in 4K of memory. Unlike previous hackers and against the Hacker Ethic, Micro-Soft and MITS felt that people should pay for BASIC just like they paid for any add-on card. Many hackers had in fact put in orders for BASIC, but still had to wait for the order to be shipped. During a show put up by MITS, someone got hold of and copied a paper tape containing Altair BASIC.

The tapes were duplicated and passed around freely before the commercial product was even shipped to customers. Gates and Allen did not appreciate this turn of events since they were actually paid commission for each copy of BASIC that MITS sold. Gates responded by writing an open letter titled “Open Letter to Hobbyists” that considered the sharing of software to be theft. Tiny BASIC was a similar interpreter that would fit in only 2K of memory as it supported a subset of the functionality of Micro-Soft BASIC (which itself was a subset of Dartmouth BASIC).

It was developed by Dick Whipple and John Arnold in Tyler, Texas and distributed freely in PCC magazine. Many more people sent in improvements and programs developed in Tiny BASIC to be published. This eventually led to the creation of Dr. Dobb's Journal edited by Jim Warren that distributed free or very inexpensive software in response to Gates' claims of theft. Tom Pittman was someone else who did not take kindly to Gates' words. He wrote a version of Tiny BASIC for the Motorola 6800 microprocessor.

Although he sold it to AMI for $3,500, he retained the rights to sell it to others and decided to charge only $5 for it. He received many orders and even money from people who had already gotten a copy and simply wanted to pay him for his efforts. Pittman also wrote the essay “Deus Ex Machina” on the AI and hardware hackers and what tied them together. Lee Felsenstein and Bob Marsh banded together to create a fully contained computer for an issue of Popular Electronics that they called SOL that sold for under a thousand dollars.

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> I recall another programmer being irritated by the letter and writing his own basic interpreter and asking $5 for it (which was far less than what Gates was asking).

What price was Gates asking for?

I did a quick calculation using:

http://www.dollartimes.com/inflation/inflation.php

$5 in 1976 works out as just over $20 in 2013.

HNer wmf has left a comment below:

> Yes, today there are open source versions of pretty much all developer tools (and that's something to celebrate, since I remember when a "cheap" C compiler was $500).

If this was in 1976 - $2000 for a cheap C compiler. I had a quick look at the price of the Intel C/C++ compiler - $699, but the annual renewal fee is $249. In 1976, that would be roughly $175.

Her is an article with estimates of the development cost of the Linux kernel.

http://www.linuxfoundation.org/sites/main/files/publications...

I had a quick peek for an estimation of the cost of a compiler, but no luck.

It looks like he eventually got paid ;-)

Damn. I read "to lobbyists".

me too, the first time... Such a sad state of the world....

For those who aren't familiar with this saga, Richard Stallman went on to found the Free Software Foundation about 10 years later and, in my opinion, has proven to Gates that you don't need to make software proprietary in order to make money.

Frankly, if I were choosing which of Richard Stallman and Bill Gates had demonstrated a more effective way to make money, I'd probably go the other way.

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