02/16/2013 06:01 pm ET Updated Apr 18, 2013

Renting, Buying, and Stealing: The Future of Software Applications

It's never been harder, or easier, for a developer of software applications to make an honest living. And it's never been more confusing, or simpler, for consumers to figure out how to get access to cool new tools and critical old ones for their computers, phones, and pads.

Last week the Computer History Museum released the source code for Photoshop 1.0, the ancient monochrome ancestor to our favorite tool for doctoring the images of super models and Iranian stealth fighters.

I could not resist the opportunity to download the code, written in Pascal and Assembly Language for the original "classic" series of Macintosh computers. I would have loved to have this code back in the late '80s when I worked for an Adobe competitor named Letraset GDS. And I almost had it! I was a lowly product manager back then but the Letraset business development guys were supposedly wining and dining the Knoll brothers. The deal didn't go down and Letraset got ImageStudio, which was better than Photoshop, because it handled grayscale images. 8-bits of glorious gray.

In the end Adobe did a much better job of listening to users and managing its developers. Within a couple of years Letraset GDS was shutdown, I was laid off, and Photoshop went on to rule the digital image market.

Looking upon the 179 source code files of Photoshop 1.0 I am reminded of how peaceful developing software used to be. Back then we didn't have armies of venture guys coaching us, agile development processes, or instant access to users over the Internet. Coding was much like painting or writing poetry: Best done in peace and quiet after long reflection without a looming deadline.

The business-side of software has always been a difficult one. Right from the get go it was hard to persuade consumers to pay a living wage for software applications. Today only major apps like Adobe Photoshop and Microsoft Word can charge sustaining prices. Most of your small developer shops have to content themselves with a $10 to $50 price point. For software engineers who are not part of a corporate giant this means software isn't something you do full time and long term.

Even Adobe and Microsoft are having a hard time selling software applications. Bundling was the big marketing innovation in the '90s. Microsoft Office, Adobe Creative Suite, Claris Works, and Lotus Symphony were all designed to improve the value equation for consumers and businesses. Today the big trend for application software is renting. Microsoft and Adobe are gently moving their user bases over to subscription-based models where updates are free and the monthly fee is easy on the credit card. Ownership of software is fading away.

Given that users really have a hard time paying for the value of a digital asset in analog dollars it's not surprising that software applications have always been pirated. Almost as soon as Photoshop 1.0 was release it was "shared" among friends. Even after anti-piracy counter measures were put into place, (unique serial numbers and network detection), the piracy continued until it seemed that the only people paying for Photoshop were non-profits and Adobe employees.

As a software application developer I had a very complicated relationship with piracy. I would prefer that a user actually use my software than not use it at all. Unfortunately there are bills and marketing people to pay. In the '80s we experimented with shareware while radical elements created the free software movement and open source. Since Y2K I have become radicalized myself and strongly support open source and free community-based applications like Firefox and OpenOffice. I even worked at LimeWire, a P2P network, an application built for sharing and often abused. I know, it sounds like I'm conflicted, because I am conflicted.

Today, the majority of the software applications that we use are either free, ad-supported, or bought cheaply in various application markets attached to our computing devices. I like the ad-supported model because the consumer doesn't have to pay directly and advertisers need a channel to tell you about their awesome products and services. Sometimes advertisers go overboard with intrusive ads and users respond with ad blockers. It's another one of those never ending escalating tech wars that never ends well for either side.

I like the idea of the app market even more than ad-supported. Valve has a great store for games while Google and Amazon are trying to replicate Apple's iTunes store success with mixed results. I recently purchased a novel little word processor, Ulysses, from the iTunes store for my Mac. It's a semantic text editor, which means it's more like a code editor for human readable text and clearly separates the process of formatting from the process of writing. It only cost me $11.99 and I can install it on all my Macs via iCloud. But I can't run it on my Windows or Linux PCs. And I worry that at $11.99 per sale the developer doesn't have a sustainable business.

All the current app markets share several problems that they need to solve to make independent software application development a viable business. There isn't a single app market that works on all platforms, software applications are very hard to find (don't ask me how I found Ulysses, it was totally accidental), and the economics make no sense at all. Apple takes a 30 percent cut from everyone, big and small, and the prices users pay bare no relation to usage or cost of development.

I am very hopeful for subscription models, which are starting to work for movies (Netflix), TV (HuluPlus), and music (Spotify). Subscribing to software applications should help level the playing field and ensure the software engineers can afford to keep improving their software.

I'd like to see an independent software application consortium emerge where users can subscribe to a pool of productivity tools and utilities for a small monthly fee. If management overhead was kept low most of the subscription fees earned could go back to the developers based on actual usage and not brand name. If the engineers open-sourced their source code then they could "swarm" on the popular products and get paid for commits and bug fixes. While my idea might sound like "software socialism" our current system of venture-backed get-a-billion-users-or-die software capitalism isn't leaving software users with much choice and focusing too many software engineers on revenue and not innovation.

If the Knoll brothers tried to develop Photoshop 1.0 today it would probably be redirected into a social network app,"Photoshoping with Friends," and gamified so that you had to buy paint to to win.