The 2nd economy and the implications for software companies

Last week I wrote of Brian Arthur's article on what he termed the ‘second economy’ that was, all the electronic transactions that go on in our economy automatically in the back ground without undue human interaction and that this ‘economy’ was growing rapidly. In that blog I canvassed the potential social impact if future productivity growth comes predominantly from this sector rather than the traditional economy where productivity means job creation.

There is a second area of interest with the second economy and this the impact on software pricing for the software industry. Traditionally pricing has been based on a ‘per-seat’ basis, this is easy to calculate, usually on a ‘named-user’ or concurrent user basis. But what if your software does not have any physical users, or more typically your software if a successful greatly reduces the number of people an organisation needs thereby reducing your revenue base? While companies such as Oracle who own the database technology have long used ‘processor’ metrics in their processing it has been fraught with difficulty (processor technology is evolving rapidly) and would be much more difficult for a pure application company to administer and police. The answer would seem to be some form of transaction pricing as used by some of the EDI vendors (per-user models make no sense in their industry). Are the software vendors and their customers up to it?