How software positively and negatively effect business across the world

In an information economy, value is ascribed to intangible products that exist in computers simply as “bits” representations of 1 and 0. Bits can be stored, reproduced, and moved at almost no cost, so the normal rules of economics, based on the scarcity of material goods, do not apply. However, information is costly to create, capture, process, and maintain. As a result, a concept of intellectual property is required to protect those who create or own information. The principal mechanism used to protect intellectual property rights is the license. This is a legal agreement that allows a purchaser to use information but, usually, not to resell it or share it, either in its original or in adapted form.

Both data and software are information, so both are equally vulnerable to unauthorized use, which deprives the originator of the financial return on the effort required to create, collect, or maintain its product. Licenses are used most often, but not exclusively, to protect revenue streams, directly or indirectly.

Software licenses have additional purposes that are related only indirectly to immediate revenue. Software includes embedded methods, algorithms, and ideas that are valuable beyond their use in a particular program. For this reason, much software is distributed without the source code that would make such content apparent. Most software licenses include clauses that forbid reverse engineering, a means of reconstructing the source code from an executable program.

To protect software users from the consequences of a software licensor not being in a position to support their product, some licenses include an agreement to place the source code for the software they license in escrow, where a third party holds the code and will divulge it only in preagreed circumstances. The secrecy implied by software licensing has been criticized for ...