The History of Shareware & PsL

(As seen through the eyes of Nelson Ford, founder of PsL.)

Two Guys Invent Freeware

Prior to the introduction of the IBM PC in 1981, user groups and BBSs for other computers (CP/M machines, Radio Shacks, and Apples) passed around user-written software for which the programmers did not expect any payment, mainly because the programs were small, simple programs that could not be considered marketable and for which the authors offered no support. Pre-1980 user groups and BBSs were also notorious passers-around of pirated commercial software.

In 1982, a couple of programmers, Andrew Fluegleman and Jim Knopf (dba: Jim Button), had written a couple of major applications (a communication program and a database program, respectively) on their new IBM PCs. Not wanting to invest the time and money in trying to get these applications into stores, they decided to take advantage of the pirate distribution networks by allowing their programs to be copied, but putting a request in the program’s on-disk documentation for the user to send money to the author to finance the ongoing development and support of the programs.

Fluegleman called this Freeware and trademarked that name, meaning that nobody else could market their software as Freeware without his permission. This wasn’t very good for the new industry, but the name Freeware wasn’t quite appropriate anyway since the software wasn’t really intended to be free.

As had been done with the public domain software distributed in the 1970’s, Fluegleman also distributed the source code for his program and pretty much lost control over it when dozens of programmers distributed “improved” versions of Fluegleman’s PC-Talk.

While Fluegleman did little to continue to develop and promote PC-Talk, Knopf did a lot more with PC-File and eventually built his database program publishing into a multi-million dollar company. Meanwhile in 1983, another programmer, Bob Wallace, came out with a word processing program, PC-Write, which he also developed and promoted into a very successful business.

While there were numerous smaller programs and utilities, such as Vernon Buerg’s wildly popular LIST program, these three major applications were popular with many major businesses and established the credibility of Freeware as a source of high quality, well supported software.

They paved the way for other, even more successful programs (and tens of thousands less successful programs) to be marketed the same way.

Freeware Becomes Shareware

In 1984, I had a column about Freeware and public domain software in a popular computer magazine. While the Freeware name was widely used, it was trademarked and could not be legally used by others. The alternative phrase at that time was User Supported Software, which was too cumbersome.

We had a contest in the magazine to find a new name for Freeware. The most popular choice was shareware, which was a name Bob Wallace had applied to PC-Write.

With shareware being the most popular choice, I asked Wallace if he had any exclusive claims on the term and he said no, that he had picked up the name from a column in an old, pre-IBM-PC computer magazine column.

So the announcement was made that shareware was the winner. Eventually, as PC-Talk was no longer being distributed, the term freeware lost its original meaning and in the following years, it fell into popular usage to mean software for which no shareware fee was asked, although such software was not necessarily public domain.

Although some people refer to freeware (and even shareware) as being public domain, the reality is that none of the shareware and very little of the freeware is truly public domain. Since a copyright automatically accrues to any software which is distributed, for a program to be public domain, the programmer has to specifically label it as such.

Freeware, then, includes some public domain software, but most freeware is software which can be “freely” used without payment to the author, but for which the author retains the copyright to the software.

The Beginning of Shareware Disk Vendors

In 1982-1983, distribution of freeware/shareware programs was free – done by swapping disks at user groups and by downloading from free BBSs.

In early 1982, we started a user group called HAL-PC (“Houston Area League of PC Users”). During 1982 and most of 1983, we tried numerous methods of giving free copies of our shareware library to members.

But as the volume of programs to be reviewed, tested and organized grew and the number of user group members and BBS callers also grew, both software librarians and BBS sysops began charging to defray the costs.

In California, a fellow by the name of Richard Peterson, got a copy of the software library of a local user group and advertised it in PC Magazine for sale for $6 per disk. User group members and BBS denizens thought this was the equivalent of charging for free air, but people without access to local user groups or BBSs welcomed the opportunity to get the software. Peterson called his company PC-SIG. This was the first company to nationally advertise shareware disks for sale.

About the same time, my shareware column in a computer magazine had prompted a lot of people without access to user groups or local BBSs to write and ask for the programs, for which we also asked a disk copy fee. When the magazine folded in late 1984, we continued to get requests for programs and continued to fill them under the column’s name of The Public Library, later adding (software) to the middle of the name to avoid confusion with our local book library. We also began publishing the first magazine about shareware, PsL News.

PsL News is a subscription-based publication containing reviews of all the new and updated freeware and shareware program released each month. PsL News was printed monthly from the end of 1984 until March 1996. By that time, shareware diskette sales had been replaced almost entirely by CD-ROM sales and the printed magazine was converted to a magazine on disk using the program reviews from the Monthly PsL CD-ROM.

In the early ’80s, we also provided a software library service for HAL-PC. (It eventually grew to over 10,000 members – presently the largest user group in the world – with its own offices and library.) The idea of anyone charging for “free” software infuriated many of the old pre-PC people, and some authors (including Jim Button) did not allow distribution of their programs by anyone who charged for them (although our group was granted an exception by Jim).

However, enough other programs came along to allow shareware vendors to prosper and eventually, programmers recognized that the vendors were getting the programs out to a lot of people who otherwise would have never seen them, resulting in substantial additional income to the programmers.

In 1985, Public Brand Software was the next major distributor to start up and was the best of the high-volume vendors who saturated the market with catalogs. Other high-volume vendors that followed were Software Labs and Reasonable Solutions. These companies poured hundreds of thousands and even millions of dollars a year into advertising shareware.

In order to put out catalogs which could be mailed economically, most high-volume dealers had only a few hundred programs in them. At PsL, we had always accepted any good working program, no matter how tiny the niche it fit into. We had a huge catalog of thousands of programs. This resulted in a catalog too large to mail out, so PsL reached fewer customers, but we gave exposure to thousands of programs which were not included in the catalogs of the other dealers. In addition, PsL’s comprehensive collection made PsL a popular source of shareware for BBSs and other shareware vendors, both of whom extended PsL’s reach by redistributing the programs to their users.

So both high-volume/small-catalog dealers and low-volume/large-catalog dealers (pretty much limited to PsL) had their place in the shareware market.

While PsL and the high-volume dealers dominated the shareware distribution market, during the late ’80s, hundreds (if not thousands) of small shareware vendors sprang up. With no real computer knowledge or other expertise required, anyone with a few bucks could buy shareware disks from another vendor, print out a “catalog”, and sell copies of those disks to others. Most of these “shareware vendors” sold at computer shows and flea markets.

The Association of Shareware Professionals

During 1985, I surveyed shareware programmers regarding the formation of a trade organization. Based on their response, during 1986, I organized a conference for early 1987 in Houston, Texas of virtually all of the top shareware programmers (including Bob Wallace of PC-Write, Tom Smith of Procomm, and Jim Button of PC-File who went on to become the first ASP Chairman of the Board), vendors (PC-SIG and Public Brand), and BBS sysops.

From that meeting was formed the Association of Shareware Professionals, a trade organization of shareware programmers which later expanded to include vendors (distributors) and BBSs. Thanks to a lot of effort by everyone involved, the ASP became very successful and played an extremely important role in the evolution of shareware.

About the time of the formation of ASP, fast-buck shareware distributors were springing up daily, most of whom advertised “Get Free Software”, much to the chagrin of authors who expected users to pay, and to the dismay of the users who only found out about the expected payments after paying the distributor’s disk fees to get the software.

At the same time, programmers had problems of their own making. Many programmers crippled their software to the extent that users could barely try it. Some documentation indicated a belief that all users were cheats and thieves out to steal the software. Some used silly and unprofessional tactics such as “putting a hex” on people who used the software without paying. And many programmers lost interest and quit supporting their programs if they got poor initial response, leaving users wary of sending payment to ANY programmers. Finally, users had no where to turn when faced with an unsurmountable dispute with a programmer.

ASP members got their own house in order first, agreeing not to cripple their shareware versions, to treat users with respect, to promise a minimum level of support and a money-back guarantee. In addition, users who saw the ASP logo on a program could be more assured that the author of the program was actively supporting the program and responding to users. Also, users could turn to the ASP Ombudsman if a dispute with an ASP member could not be resolved.

Another thing that ASP did was to protect the shareware industry in a way that individual members could not have done as effectively, if at all. In one case, ASP stopped PC-SIG from getting a trademark on the word shareware. In another case, ASP got a change in the wording of a bill before Congress which would have been detrimental to shareware programmers.

Next, ASP members turned to doing something about vendors who were misleading customers about shareware being “free”. ASP created a vendor membership with rules for vendors regarding fair disclosure to customers about shareware and regarding respecting the rights of programmers.

As benefits, ASP vendors could distribute ASP programmers’ software and received other benefits such as a CD-ROM with the programs on them.

Additional benefits to programmers included the ability to exchange information about shareware marketing on the ASP’s forum on Compuserve, a free link to the member’s Web page on the ASP’s Web site, a monthly newsletter, and a low-cost way to get members’ software to vendors and BBSs.

The Credit Card Revolution

One problem that programmers had was the difficulty in small mail-order companies getting credit card merchant accounts. That meant that programmers could only accept payment through the mail by check or money order. In those pre-ASP days, a lot of users had the experience of mailing checks to register shareware, only to never receive anything or at best, to receive the check back in the mail.

This made users wary of sending payment for shareware. Shareware users in big companies had another hurdle – getting a check request approved to pay for a program you already have is a lot harder to do than to get reimbursed for an expense on your credit card.

Even if all shareware programmers had been able to get credit card merchant accounts, most of them had other, full-time jobs and could not afford the staff to take phone orders all day. In other cases, some very successful shareware programmers preferred to continue working on their programs rather than get involved in day-to-day business operations.

In 1989, PsL began offering a credit card order service with an 800# and other means to take orders (FAX, email, etc.) for a small fixed transaction processing fee.

This service, now used by the authors of over 2000 shareware programs, vastly increased the orders programmers received. Now people could call PsL to order with the security of a credit card instead of blindly sending a check in the mail. Plus, many business people could easily order by credit card when getting a check request approved by their company could be a real roadblock to registering shareware. In addition, the authors of over 1000 shareware programs allow registration of their programs via PsL’s Web order service.

Just as anyone could become a “shareware disk vendor” in the ’80s, we are seeing that everyone with a credit card merchant account and a Web site is getting into shareware order processing. Many of these have already disappeared, taking the programmers’ money with them, but several have prospered, although some offer only Web-based ordering, which can be automated and requires little or no staff or investment, unlike 800# ordering which requires a significant outlay for operators, office space, etc.

The End Of Shareware Disk Vendors

In 1993, at PsL we saw a rapid decline in shareware diskette sales and responded by producing a monthly shareware CD-ROM. We started this enterprise with great trepidation because other vendors and BBSs had been spending as much as $1000 per month (or more) to get all the new programs from us each month on floppies, and we were offering the same thing on a subscription basis for under $20.

To our relief, the CD turned out to be a big hit even though this was before everybody had CD-ROM drives as most people do now. In comparison, PC-SIG had been selling a CD-ROM (not a monthly and not subscription-based) for hundreds of dollars and it still managed to be one of the top-selling CD-ROMs on the market.

Our timing was good as floppy sales continued to drop drastically for all vendors and other vendors were closing down or going bankrupt. PC-SIG shut down abruptly and without explanation, leaving their magazine subscribers in the lurch. Public Brand sold out to Ziff-Davis who put out a few more catalogs before giving up on diskette distribution of shareware.

Between the spread of CD-ROM drives among users and the availability of countless low-cost shareware CD-ROMs plus the increasing impact of the Internet, companies distributing shareware on diskettes have disappeared, although at PsL, we continue to distribute on diskette to the few individuals who do not have CD-ROM drives.

Changes In Shareware

In the early to mid 1980’s, experience indicated that to make money writing shareware, you had to create a major application for businesses, such as a word processor (PC-Write), communication software (PC-Talk), or a database program (PC-File).

Obviously, being the first to name your program something starting with PC- was considered a status symbol. But other programmers followed with similar programs with very good success, most notably the communications program Procomm, whose publishers later took the program out of shareware and made a fortune. Meanwhile, authors of games and utilities met with relatively little success throughout most of the 1980’s.

In the early 1990’s, competition in the retail software market was forcing down the prices of major business applications while the prices of similar shareware programs had been increasing over the years.

With the growing popularity of Windows and with major companies like Microsoft offering suites of applications (integrated word processing, graphics, spreadsheet, database) at relatively low prices, the shareware publishers of business applications watched as their sales shrunk.

PC-Write, PC-File, and other major DOS-based business apps virtually disappeared from shareware while the publishers of games and utilities became the new leaders in the shareware industry. Scott Miller of Apogee Software popularized a method of marketing games as shareware that made games the leading money-makers, not just in shareware, but in all the software market.

The method involved releasing an action-adventure game as shareware with only the first few levels of play. Additional levels of play could only be purchased from the software publisher, not acquired through shareware channels.

Unlike some programmers’ attempts to cripple their software to force payment, leaving users frustrated and angry about supposed shareware which could not be completely used and evaluated, the shareware versions of Apogee’s games were complete and playable so that users got hooked on the games and wanted more.

Doom, Duke Nukem, and Quake are the most successful of the games marketed this way.

Meanwhile, members of the Association of Shareware Professionals, whose members had agreed not to cripple their programs, modified their stance to allow time-limiting and other limitations which would allow users to fully try their programs, while not allowing them to use the programs indefinitely without paying.

Not all programmers felt the need to limit their programs, however. Some of the most successful programs, such as WinZip, prospered with nothing more in the way of prodding users than a shareware startup screen in which the shareware concept is explained and ordering information given.

Internet’s Impact On Shareware

Online services like Compuserve and America On Line never seemed to have any impact on shareware distributors and BBSs. Given the slow modems and higher online costs of the 1980’s, it was cheaper and easier to get shareware on diskettes or from a local (preferably free) BBS, if you were lucky enough to have one of any quality in your town.

But the combination of cheap high-speed modems and even cheaper Internet access has caused a significant impact on shareware. (Although the ever-increasing size of files has offset a lot of that impact. It is not uncommon to see 5MB-10MB or even larger files on the Web.)

Internet users are getting the same kind of free ride as did owners of those large satellite dishes before broadcasters began encrypting everything and charging them for it.

While not totally free, $10 or less per month for unlimited access is the next best thing, and is possible only because the whole Internet system is built on computer systems and public phone systems for which Internet users do not have to pay the true, proportionate cost of their use.

While some former disk-based shareware distributors and pay-BBSs have tried setting up shop on the Web and charging for access, they are competing with popular sites who distribute the same programs and charge nothing for access. (Which would *you* use to get the same program – one you have to pay to join or one you can get onto for free?)

The free sites hope to make money from advertising on their sites, the income from which is based on the number of visitors to the site. A recent issue of Net magazine says that such sites have found advertising revenues to be less than stellar. For example, just recently a site called Best Zips, which had hoped to generate enough ad revenues to support a shareware download site, had to give up and shut down.

Still, consumer demand appears to be growing for online ordering with the ability to immediately get an unlock key or a registered version online without having to wait a week for the mail. And once a user has tasted that instant gratification, how are they ever going to be satisfied again waiting weeks for software to come in the mail?

Copyright © 2000 Public Software Library, Ltd. ALL RIGHTS RESERVED.
PSL and PUBLIC SOFTWARE LIBRARY are registered trademarks.