Monthly Archives: July 2007

Freecycling old IT equipment

freecycle.orgMy grandfather was a hoarder. He had an entire barn full of rusty old tools. I think I might have inherited some of his hoarding instinct, because I hate throwing stuff away. ‘You never know when you might need it’. Worst of all is throwing away stuff that I think other people could use. But, as I run my business out of my house, space is limited and something has to give.

I recently took a perfectly good 21″ ‘fat-screen’ monitor to the rubbish tip because I didn’t have room for it and I couldn’t find a home for it. Previously I have had major problems finding homes for desks and other equipment that were surplus to requirements. But I have now found a way to avoid consigning serviceable stuff to landfill: www.freecycle.org .

Like most great ideas Freecycle is beautiful in its simplicity.

  • You subscribe to your local Freecycle mailing list.
  • If you have something you want to give away you post an “offered” email.
  • If you see something offered that you are interested in you contact the offerer.
  • You can also post “wanted” emails.
  • Your first email to the list must be an “offered” email.

That is pretty much it.

High Wycombe, my local town, has a group with over 3000 members and the mailing list averages over 40 posts a day. Items offered this week include mattresses, TVs, desks, a 6′ tall plant, a complete set of the encyclopedia Britannica, surplus cat food, ‘Sex and the city’ videos, Beano and Dandy annuals, and various IT equipment including a cordless mouse, a laptop, a USB hub, a monitor, and a modem. So far I have given away a set of roller blades and 2 huge Java programming tomes I am never going to read.

Freecycle started in the US in 2003 but has quickly spread around the world. According to the freecycle.org website there are currently 4,076 communities with 3,673,413 members. You can find your local group here. If there isn’t one near you then maybe you should start one? Get full details from the freecycle.org website.

Cost effective software registration with ejunkie

ejunkieMost small software vendors don’t want all the hassle of taking payments direct from customers, so they use a third party registration service. Registration services provide payment processing plus additional services, including handling of:

  • licence key emails
  • coupon codes
  • affiliate payments
  • taxes
  • invoice sales

But these services don’t come cheap. According to this calculator some registration services charge as much as 15% commission on every £20/$40 sale. 15%! I find that quite staggering. 10% is more typical, but personally I don’t intend to give 10+% of my hard earned income to anyone, except my wife and the government. To add insult to injury some of these services also try to upsell questionable ‘offers’ to your customers. For example KAGI upsell a licence look-up service for which the software vendor gets a, frankly insulting, $1. I understand from reading the macsb forum that the upsell will be added automatically to the shopping carts of all software vendors selling downloads and will be checked by default. You then have to opt out if you don’t want it. Personally I think every software vendor should offer licence retrieval for free. And don’t even get me started on Digital River/SWREG and their Reservation Rewards ‘offer’.

PayPal and GoogleCheckout are much cheaper, with rates of approximately 3.4%[1] and 2.25%[2] respectively on a £20/$40 sale. But PayPal and GoogleCheckout are just payment processors and don’t provide all the additional services most software vendors need. They provide extensive APIs so you can ‘roll your own’ service, but this sounds like a lot of work reinventing the same old wheels.

Alternatively you can use a third party to provide additional services on top of PayPal and/or GoogleCheckout. I use ejunkie which provides most of the services you would expect from a fully-fledged registration service from just $5 per month[3]. The savings can be considerable, for example (all figures approximate):

number of $40 licences sold per year

yearly costs
10% commission registration service PayPal +e-junkie[4] GoogleCheckout +e-junkie[5]
1,000 $4,000 $1,420 $1,060
5,000 $20,000 $6,820 $5,060
10,000 $40,000 $13,660 $10,060

If you can offset your GoogleCheckout processing fees against your Google adwords spend your monthly costs could be as little as just the $5 ejunkie fee.

On the whole I have been very happy with the service I have received from e-junkie, once I got it all working. It has been very reliable and the support has been very responsive. ejunkie does seem to be more geared to selling downloads (e.g. e-books and MP3s) than licence keys and the documentation is thin in places. Consequently I had a few issues trying to bend it to my particular requirements. I will try to find time to cover these issues in another article.

You can find out more about ejunkie and try their 1 week free trial here.

Other possible third party integration solutions are PayLoadz and Linklok. For those of you who prefer a more traditional registration services, I have heard some good reports about Plimus and Avangate on various forums. Neither of these companies has been bought out by SWREG owner Digital River (yet). I haven’t used any of these services myself.

It remains to be seen whether pressure from PayPal and Google forces registration companies to reduce their fees, add more services or just puts them out of business.

Thanks to Patrick for first alerting me to ejunkie.

Full disclosure: The above ejunkie links are affiliates links. If you follow these links and sign up with ejunkie I will get a commission. It is not a lot, but I won’t need many people to sign up to cover my ejunkie fees completely.

[1] PayPal rates vary according to volume. Currency conversions cost an extra 2.5%.

[2] Google have sweetened the deal by offsetting processing fees against adwords fees until the end of 2007. This means the rate is effectively 0% if you have a moderate spend on Google adwords each month.

[3] The monthly fee depends on number of products. $5 per month covers 10 products and 50MB of storage.

[4] Based on 3.4% PayPal fee + $5 per month ejunkie fee.

[5] Based on 2.25% GoogleCheckout fee + $5 per month ejunkie fee.

Business of Software wiki

fogbugzJoel Spolsky has announced a Business of Software wiki based on FogBugz 6. You can view/edit the wiki here.

“The point of this wiki is to bring under one roof as much high quality, useful information as possible about the business of software, whether it’s microISVs selling desktop software, Web 2.0 sites or even the big enterprise kind of outfits.”

This will become a useful resource for software entrepreneurs if enough people contribute. I have added an article from this blog to do my little bit.

47 hats

47hatsBob Walsh (microISV owner, Business of Software forum regular/moderator, blogger and author[1]) has just launched his new microISV consultancy 47 hats. I don’t know how he finds time to sleep!

I have thought about branching out into providing consulting to other software companies myself (micro and macro). It is part of the motivation for starting this blog. But I am really too busy with PerfectTablePlan at present. Anyway I am sure there is plenty of work to go round and I wish Bob the best of luck with his new venture.

[1] Bob’s affiliate link.

I will be talking on usability at ESWC 2007

eswcThe schedule for the European SoftWare Conference 2007 has just been announced. This is a 2 day conference in Köln, Germany in November aimed at microISVs, shareware authors and other small software companies.

I really enjoyed ESWC 2006 and I am looking forward to it. It will be nice to get away from the computer[1], talk to people I met last year and meet some new people. I will be giving a talk titled “Increasing conversions through better usability”.

[1]Except that I will be taking my laptop to check support emails, of course.

Interview

adriana iordan.jpgI was flattered to be asked to do an interview by Adriana Iordan of Avangate (pictured left). How could I refuse given that the previous 3 interviewees were Bob Walsh (author of “Micro-ISV: From Vision To Reality” [1]), David Boventer (founder of ESWC) and Eric Sink (top software blogger and almost legendary founder of SourceGear)? Adriana, if you could interview Joel Spolsky, Bill Gates and Steve Jobs next, that would be perfect. ;0)

The interview is here.

[1] This is Bob’s affiliate link. If you follow the link amazon.com are currently offering Bob’s book together with “Eric Sink on the Business of Software” for $36.28. They are both well worth a read for any budding software entrepreneur. The price is nearly double (pounds for dollars) if you buy them from amazon.co.uk. How can Amazon justify that sort of price difference?

SWREG customers beware

swreg upsellIf you are a customer of the ecommerce provider SWREG you should beware that they may be upselling highly questionable ‘discount’ schemes to your customers. From a post on the Business of Software forum:

This unannounced change was placed at the point of order completion where and leads to a $10/mo discount coupon scheme unrelated to the sold shareware. The way the offer is presented is deceptive – after the order is complete, they show a button with the word “Continue” on it. It looks like you are supposed to press the button to complete your order. Instead, you end up paying for something you probably didn’t want – and it’s a recurring charge.

Another posting suggested this only happens if your customer is in the USA.

I am not based in the USA and haven’t bought anything from SWREG recently myself, so I can’t personally verify the above. But these comments are backed up by posts I have seen on other forums from unhappy vendors and their unhappy customers. If you are using SWREG I suggest you buy a copy of your own software and see for yourself (you can always refund the payment later).

Assuming the above is true – what are they thinking? Either they don’t see anything wrong with it (which is very worrying) or they know its completely unethical, but are doing it anyway (which is even more worrying). It reeks of desparation to me. I thought their upselling of a registration backup service was highly questionable (I think vendors should provide this service for free), but at least it was clear what you were getting.

Vendors looking to move from SWREG to a different ecommerce provider might like to consider companies not owned by SWREG’s parent company Digital River. I use e-junkie.com with PayPal and GoogleCheckout. Other people have recommended Plimus and Avangate. You can compare processing fees here.

Google Adwords ‘placement performance’ report

Google Adwords placement reportYou can now find out what sites your Google content ads are appearing on, using the new ‘placement performance’ report. This will alllow you to spot under-performing sites in a content campaign. To exclude a site from your campaign click the ‘excluded site(s)’ link at the top of the appropriate campaign page.

My placement report for June shows that PerfectTablePlan has had 25,309 impressions and 0 clickthroughs from myspace.com. Does that make it officially the least cool software ever? ;0)

Business of software conference

business of software conferenceThe Business of software conference has recently been announced. It has got a fantastic line-up of speakers. I would sign up in a heartbeat if I lived in the USA (and maybe even try out for software idol). But California is too far for me to justify the expense and the time away. Pity.

However I will very likely be going to ESWC 2007 in Germany in November.

Software piracy

barrier_reef_2.jpg‘Software piracy’ is a colourful term for people using your software without paying the appropriate fee for all your hard work. It includes using cracks (versions with the security removed), keygens (software that can generate valid licence keys) and sharing licence keys in contravention of the licencing terms. Parrots, eye patches and attacking ships rarely feature prominently.

You might think that software piracy is only an issue for the Microsoft’s and Adobe’s of this world. But it is a real issue for all sizes of software vendor, even for small companies selling niche products such as mine. If you don’t believe me check the logs for the crack ‘honey-pot’ page I created[1] (IP addresses obscured to protect the guilty), click the image to enlarge:

piracy_logs.gif

That’s only the people who clicked through on to my honey-pot page. It really isn’t very inviting when displayed in a search engine, so I am sure that there are many more that searched for a crack but didn’t click through.

piracy_search2.gif

A quick look at this small sample of traffic shows that people looking for cracks come from all over the world, not just poorer countries. It also shows that Mac users look for cracks just the same as Windows users. In fact Mac users are a larger proportion of visitors to this page than you would expect from market share alone. I’m not saying that Mac users are less honest than Windows users, just that you shouldn’t be complacent about piracy just because you write software for the Mac.

I know from cookie tracking that some of the people who look for cracks go on to buy a licence (yes, I know who you are). Ergo, if there is a crack for the latest version out there it would definitely be costing me sales. So what can a vendor do to minimise sales lost to piracy? The first step is to understand the motivations of the people involved.

People crack software for many reasons. Some undoubtedly do it for commercial profit, e.g. so they can illegally sell the cracked version. But I understand the main reason is the challenge of cracking the software and resulting kudos from the cracking ‘community’. Some of the crackers are skilled and use sophisticated tools that emulate the computer environment, allowing them to quickly find and remove your security code. Although there is quite a lot you can do to make a crackers job more difficult, this is just going to make cracking your software more of a challenge and therefore more desirable to some. It is highly unlikely that the best security is going to defeat a skilled cracker for long. If Microsoft and Adobe can’t write uncrackable applications, what chance have we got? Trying to defeat piracy from the supply side is a fools errand. Just make sure your security is good enough to foil an unskilled cracker – if your average customer can bypass your security you are really in trouble.

On the demand side people use cracked software simply because they don’t want to pay for it. But they can end up paying in other ways. If we look at the costs and benefits in the wider sense:

costs of legitimate purchase:

  • purchase price
  • time taken to purchase

benefits of legitimate purchase:

  • use of current version
  • free upgrades

costs of pirate version:

  • time taken to locate crack
  • risk of malware in crack
  • risk of prosecution
  • guilty conscience?

benefits of pirate purchase:

  • use of current version

If your software is successful it will almost certainly be cracked at some point. Perhaps repeatedly. Congratulations! Somebody thought your software was worth cracking. We can’t stop cracks appearing. The best we can do is to make sure the benefits minus costs is greater for a legitimate purchase than a pirate version. Ways in which we can tip this equation in our favour are:

  • having cracks removed – Demand that ISPs remove cracks as soon as they appear (likely to be a lot more successful if the ISP is in Europe or North America). To find out when cracks appear you need to check your web logs regularly for unusual activity. For example a sudden flurry of downloads from countries that don’t normally buy your software could signal that a crack has appeared. You can also set up a Google alert for ‘<app name> crack’.
  • make existing cracks hard to find – Register your software with lots of download sites. Many of them search engine optimise their pages for phrases such as ‘crack or ‘keygen’ making real cracks hard to find.
  • price appropriately - Price your software at a level people will consider fair. Perhaps offer a ‘lite’ version at a lower cost.
  • make your software easy to purchase - The slicker and simpler the purchase process the less temptation to stray.
  • display the user name – Deter casual key swapping by displaying the licencee name prominently, for example in the splash screen and status bar.
  • use a digital certificate – A digital certificate reassures users that your installer hasn’t been tampered with and is free from malware.
  • release regularly – Crackers generally don’t want to pay for the bandwidth of lots of people downloading your software. so they will usually post patches and direct people to download the original software from your site. The patch is useless as soon as you release a new version and remove the old version. Making new and improved releases available to legitimate users also makes buying a licence more attractive.
  • create a honey-pot page – Make the case for buying your software and try to win over potential pirates. Point out the dangers of using cracks and emphasize that it isn’t a victimless crime.

Whatever we do there is a certain number of people who are never going to pay for our software due to some combination of lack of means (e.g. people in developing countries) and lack of scruples. There is not much point worrying about these people. In fact we could look on them from a ‘glass half-full’ perspective as potential free marketing – even though they are never going to pay for a licence they might recommend the software to someone else who will.

We also need to do our own little bit to educate people that software piracy isn’t a victimless crime. That means doing our best to ensure that our family, friends and work colleagues don’t use pirated software. It also goes without saying that we shouldn’t use pirated software ourselves – that would be the height of hypocrisy.

What we mustn’t do is make life difficult for our paying customers. Complex, intrusive and restrictive security schemes may have a negative impact on piracy, but they will probably have a much larger negative impact on our honest customers. If you are going to use ‘phone home’ or hardware based licensing you had better be absolutely sure there is no chance of false positives. It is hard to think of a better way to annoy an honest customer than to disable the software they paid for and brand them a thief. That would be enough to make anyone turn to crime. Shiver me timbers!

[1] I got the idea of a honey-pot page from another site. Unfortunately I can’t remember the name of the site to give them the appropriate credit.