The great software IP writedown

Around a year ago I asked whether the cost of building software had just dropped 90%. A lot has happened since then, and I've become more interested in the knock-on question: if building software is that much cheaper, what is the software itself actually worth? Was software/SaaS a historic economic anomaly? One thing that has become obvious to me researching this topic is that software is very much an outlier in terms of ability to extract outsized profit margins, and I think this fact underlines why the industry faces such existential challenges presently. Typically in history you had three main ways of making "outsized" profits: Firstly, you had monopolistic behaviour, with Standard Oil being the textbook example. While there are no doubt significant market competition concerns in software and SaaS, I would argue most software businesses, at least by number if not revenue, do not operate in a monopoly. Secondly, you had network effects, restricting new market entrants. Again, the…

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