The History of Shareware Through the Eyes of PSL Founder Nelson Ford

December 6, 2024

Shareware and the History of PsL

Through the eyes of PSL founder Nelson Ford

The two invented freeware

Before the IBM PC was released in 1981, user groups and BBSs for many different computers (CP/M machines, Radio Shacks, Apple) passed around the software they wrote without asking for anything in return. Most of the programs were small and simple, and the authors never expected them to be marketable, and they didn't provide any support. In the early 1980s, they also did dirty things like passing around pirated copies of commercial software.

In 1982, two programmers, Andrew Fluegelman and Jim Knopf (known as Jim Button), wrote a communications program and a database program for the new IBM PC. Rather than take the time and expense of getting them to retail stores, they decided to use the pirate channel to distribute their software. In exchange for allowing users to copy the software, they would post a request on the disk to send them a payment to help cover the author's further development and support costs for the program.

Fluegelman called it Freeware and trademarked it, so that no one could sell it as freeware without permission. However, the name Freeware didn't really suit him, because Fluegelman didn't intend it to be free.

As was done with public domain software sales in the 1970s, Fluegelmann included the source code for his programs, but as multiple programmers began offering improvements to Fluegelman's PC-Talk, it became difficult to control the code.

Fluegelmann did little to improve or promote PC-Talk, while Knopf focused on improving and promoting the PC-File software, which he built into a multi-million dollar business with the database program. Meanwhile, in 1983, another programmer, Bob Wallace, built PC-Write, a word processing program that became a huge commercial success.

Although many smaller programs and utilities were produced, such as Vernon Buerg's popular LIST program, these three popular applications were well received by large corporations and established a reputation for high quality and well-supported freeware.

From freeware to shareware

In 1984, I was writing an article about freeware and public domain software for a popular computer magazine. The name freeware was in common use, but the term was trademarked and legally could not be used by anyone else. The alternative at the time was 'User Supported Software', which had a heavy connotation. So the magazine ran a contest to come up with a new word for freeware. The most popular word was shareware, a term used by Bob Wallace in PC-Write.

Shareware was the most popular choice, but when I asked Wallce if the term had any proprietary meaning to him, he said no, and that it was taken from a magazine article about an old-fashioned IBM PC.

The first place in the word contest was announced as "shareware." Since PC-Talk was no longer in circulation, the term "freeware" lost its original meaning and, a few years later, came to mean software that was free of the shareware fees that we use today, even though such software was not necessarily in the public domain.

Some people refer to freeware (and even shareware) as public domain, but in reality shareware and most freeware are not public domain. Once software is on the market, it becomes copyrighted, but to put it in the public domain, the author must mark it as such.

Although some freeware is in the public domain, the reality is that most freeware is treated as software that can be 'freely' used without paying the author, even though the author holds the copyright.

The beginning of shareware disc vendors

From 1982 to 1983, freeware and shareware programs were freely available, with users exchanging disks with each other or downloading them from free BBSs.

In early 1982, we started a users group called HAL-PC (Houston Area League of PC Users), and over the next year we tried various methods to distribute free copies of shareware to our members.

But as the number of programs that had to be reviewed, tested, and organized continued to grow, and as the number of user group members and BBS users continued to grow, software managers and BBS system operators began to pass these costs on to the users.

In California, a man named Richard Peterson placed ads in magazines offering copies of software libraries from local user groups and selling them for $6 per disk. User group members and BBS users saw this as a price on what should have been free air, but people who didn't have access to a local user group or BBS were happy to get software this way. Peterson's company, PC-SIG, was the first company to advertise shareware disks nationwide for sale.

At about the same time, in my shareware articles in Computer Magazine, I encouraged people who did not have access to user groups or BBSs to write in and order programs, and to pay for disk copies. When the magazine ended in 1984, we continued to take orders for programs, and filled them under the name of the Public Library. Later, we changed the name to the Public Software Library to distinguish it from the Public Library, which was a library. We also started publishing PsL News, the first shareware magazine.

PsL-News was a subscription publication that published monthly reviews of new and updated freeware and shareware products. PsL-News was published monthly from 1984 to 1996, at which time the distribution of shareware diskettes had given way to CD-ROMs, and the magazine publication was replaced by PsL's monthly distribution of CD-ROM disks.

In the early 80's we did software library services for the HAL-PC group (which eventually grew to over 10,000 members and is now the largest user group in the world, with its own offices and libraries). Old-time PC users resented the idea of having to pay for software that was free, and authors like Jim Button didn't approve of someone else selling it for them (though Jim seemed to think HAL-PC was an exception).

However, other programs proved successful for the shareware vendors, and eventually programmers realized that the vendors were releasing lots of programs that no one had ever seen before, and that the programmers were actually making money from them.

In 1985, Public Brand Software was a major distributor and the leading bulk vendor of catalog sales. Other bulk vendors that followed were Software Labs and Reasonable Solutions. These companies spent hundreds of thousands, even millions of dollars a year, on advertising shareware.

To make catalogs economical and cheap to mail, most large dealers listed only a few hundred programs in their catalogs. PsL always had a good program no matter how small the request, and had a catalog with thousands of programs in it. As a result, the catalogs became too large to mail and many customers could not reach them, but they carried thousands of programs that other dealers did not carry. Furthermore, PsL's easy-to-understand product lineup gave the company a good reputation as a good source of shareware for BBSs and other shareware vendors, who then promoted the programs to other users.

Thus, the large dealers with thin catalogs and the smaller dealers with thick catalogs like PsL each had their place in the shareware market.

While PsL and the big dealers dominated the market in the late 80's, hundreds, then thousands, of small shareware vendors appeared. Anyone with no computer knowledge or other expertise could buy shareware disks from other vendors for a small amount of money, create a catalog, and sell copies of the disks. These vendors sold their products mainly at computer shows and flea markets.

Association of Shareware Professionals

In 1985 I surveyed shareware programmers about trade organization forms, and spent the next year preparing for a conference in Houston, Texas in 1987. The conference brought together top shareware programmers such as Bob Wallace of PC-Write, Tom Smith of Procomm, and Jim Button, who created PC-File and later became the first president of ASP, as well as vendors from PC-SIG and Public Brand, and BBS system operators.

Out of that meeting grew the Association of Shareware Professionals, a trade organization for shareware programmers that would later include vendors and BBSs. Through the efforts of all involved, ASP became a success and played a very important role in the development of shareware.

Around the time ASPs were organized, a wave of quick money shareware sellers appeared, advertising things like 'Get free software', much to the chagrin of authors who expected to be paid, and much to the dismay of users who, after paying the cost of the disc to get the software, found themselves having to pay more.

At the same time, programmers were having problems with their products. Some of the software was so broken that users could barely test it. Some documentation even went so far as to say that all users were software thieves and cheating. Some even took the ridiculous and unprofessional step of 'putting curses' on users who didn't pay. Many programmers lost interest in their programs and stopped supporting them after initial poor user response, and users became more and more hesitant to send money for the programs. Eventually, users were unable to overcome the problems with the programmers and were left with nowhere to go.

ASP members agreed to keep their shareware bug-free, respected their users, promised a certain level of support, and promised refunds if the product did not meet their expectations. Furthermore, if a program bore the ASP logo, users were assured that the creator would provide support and replies. And if you couldn't resolve a problem with an ASP member, you could turn to the ASP Ombudsman.

Other ASP accomplishments include protecting the shareware industry in ways that individual members could not have done as effectively. In one case, ASP stopped the PC-SIG from trademarking the word shareware, and in another, they helped change the wording of an earlier Congressional bill that had not been friendly to shareware programmers.

The next step that ASP members took was to take action against vendors who were misleading users into thinking that shareware was 'FREE'. So ASP organized a vendor membership and established rules regarding fair disclosure to customers and respect for programmers' rights regarding shareware.

In return, ASP vendors could distribute the ASP programmer's software and enjoyed benefits such as the availability of a CD-ROM with the program on it.

Additional benefits to programmers include the exchange of shareware marketing information on the ASP forums at CompuServe, free links to members' web pages on the ASP website, a monthly newsletter, and low prices for ASP member software vendors and BBSs.

Credit Card Revolution

One problem programmers faced was that it was difficult for small mail-order companies to obtain credit card merchant status. The only payment methods programmers could accept were checks or money orders. Before the advent of ASP, users had to mail in checks to register their shareware, and the mail would often get lost or returned.

This made users hesitant to send money for shareware. Large corporate shareware users also had an obstacle: getting a check request that authorized payment for a program they were already using was much harder than getting a credit card charge back.

Even if a shareware programmer could get credit card acceptance, most of them had day jobs and couldn't afford to hire a staff to take phone orders all day, but some very successful shareware programmers decided that they would rather focus on their programs than deal with the day-to-day business.

In 1989 PsL began accepting orders by credit card via 800# (toll free number) as well as fax and e-mail orders for a small fee.

This service, now used by over 2,000 shareware authors, greatly increased the number of orders placed. Now, instead of mailing a check, users could simply call PsL and place their order with the security of a credit card. Also, many business people found it easy to order with a credit card, since getting a company to approve a check request when registering their shareware was too much of a hassle. In addition, over 1,000 shareware authors registered their software through PsL's web ordering service.

Just as in the 80's anyone could be a 'shareware disc vendor', back then anyone with a credit card acceptance and a web site could process shareware orders. Many took the programmers' money and went out of business, but there were also a few that were very successful because they only handled automated web-based orders and had very little labor or investment, whereas toll-free ordering required a lot of expenditure in phone operators and office space.

The End of Shareware Disk Vendors

In 1993, sales of shareware diskettes and monthly production of shareware CD-ROMs at PsL were falling sharply. We were getting very scared of this business, because other vendors and BBSs were paying $1000 or more a month to get floppies of new programs from us, and we were offering the same thing on a subscription basis for $20.

To their relief, CDs were a big hit, even though this was before most people had CD-ROM drives like today. PC-SIG was selling CD-ROMs for a few hundred dollars and dominated the CD-ROM market.

Our timing was right, floppy sales dropped dramatically and many vendors closed or went bankrupt: PC-SIG closed suddenly and without explanation, and Public Brands was sold to Ziff-Davis, who reprinted their catalog before stopping selling shareware diskettes.
With the increase in CD-ROM users, the realization of low prices for shareware CD-ROMs, and the expansion of Internet users, the companies that sold shareware on diskettes disappeared. Meanwhile, PsL continued to sell diskettes to a few individuals who did not have CD-ROM drives.

Changes in Shareware

By the mid-1980s, experience had taught us that to make money from producing shareware, you needed to produce popular business software, such as a word processor (e.g. PC-Write), communications software (e.g. PC-Talk), or database program (PC-File).
Obviously, it was something of a status symbol for the pioneers who could name their creations starting with 'PC-', but other programmers followed suit with similar programs and enjoyed success. One notable product was the communications program Procomm, whose author later made a fortune by pulling the product out of shareware. On the other hand, game and utility writers had less success in the 1980s.

In the early 1990s, competition in the retail software market was centered on the prices of popular business applications, while shareware programs in similar categories were becoming increasingly expensive.

As Windows grew in popularity, and giants like Microsoft offered relatively inexpensive suites of word processing, graphics, spreadsheets, databases, etc., sales of shareware business applications declined.

PC-Write, PC-File, and DOS-based business applications disappeared from shareware, while game and utility authors became leaders in the shareware industry. Scott Miller of Apogee Software became famous for selling games on shareware. His games became huge hits not only in shareware but in the entire software market.

The strategy was to release only the first few stages of an action-adventure game as shareware, with subsequent stages available for purchase only from the software publisher.

While other programmers would purposely make their software glitchy in order to force users to pay, and then complain that shareware was never fully usable or evaluated, Apogee's shareware products were complete and fun to play, keeping users hooked and wanting more.

Doom, Duke Nukem and Quake were some of the most successful products of this type.

On the other hand, the Association of Shareware Professionals has agreed not to knowingly create defects in its products, and is willing to impose time limits or other restrictions that allow users to try out the product sufficiently, rather than allowing indefinite use without payment.

Programmers didn't always think restrictions were necessary, but hugely successful programs like Winzip drove sales by enticing users far more than the usual shareware start screen explaining the concept and how to order the shareware.

The impact of the Internet on shareware

Online services like CompuServe and America Online were not expected to affect shareware distributors or BBSs. With slow modems and high online costs in the 1980s, it was cheap and easy to get shareware on diskettes, or, if you were lucky, from a local BBS.

However, as faster modems became cheaper and Internet access became cheaper, it began to have a major impact on shareware (although the impact must be discounted by the ever-increasing file sizes; 5-10MB and larger files are no longer uncommon on the Web).

Internet users felt like they were getting a 'free ride', much like owners of large satellite dishes did before all the channels on satellite TV were encrypted.
Although it wasn't completely free, unlimited access for less than $10 a month was a great thing, because the entire Internet system was built on computer systems and public telephone lines, so Internet users didn't have to pay for it.

People who paid for traditional disk-based shareware vendors and BBSs were setting up shop on the Web and charging a fee for access, but they were competing with popular sites that were giving away the same programs for free access. (Which would you rather use to get the same program? Something that cost money to use, or something that was free?)

Free site owners expected to make money from advertising on their sites, and that income increased or decreased depending on the number of people who visited the site. In the latest issue of Net Magazine, it was said that for such sites, advertising revenue is STELLAR?
For example, just recently a site called Best Zips was forced to shut down, even though it had hoped that it would generate enough advertising revenue to support its download site.

Still, user demand seems to favor online ordering, where they can get their unlock key instantly and get the product they registered without waiting weeks for it to arrive in the mail, and once users got instant gratification, why wait weeks for software to arrive in the mail?

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The History of Shareware Through the Eyes of PSL Founder Nelson Ford

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