So there’s been lots and lots of discussion about the economics and equitability of MacHeist over the past few weeks (see below for a list of the more popular commentary).  Many points have been argued on both sides of the coin; here is a brief summary of some of these points:

It is my argument that MacHeist is a completely fair ordeal, no matter which way the krona crumbles.

What’s fair is fair

Many of the points heistractors (which is a word I just made up to describe detractors of MacHeist) like to raise concentrate on the equitability of the deal MacHeist made with the developers.  According to Gus Mueller, MacHeist offered each developer $5000 in a “take it or leave it” deal to be part of the final bundle (no word yet on what the freebie suppliers received, if anything).  That means MacHeist can sell as many copies of the final bundle as they want at $49 (or less, as users get up to $10 off for completing heists), and the developers still only get $5000 out of the deal, with the intent being to recuperate with upgrade revenue.  As of this writing, there is 1 day and 21 hours remaining to buy the bundle; 9,380 copies have been sold, for a total of $104,495 raised for charity.  Since the money raised for charity is 25% of the bundle price, that means MacHeist has sold $417,980 worth of bundles, with their own revenue totalling $313,485.  Certainly not a bad deal for the MacHeist guys, but how much of this do they really get to keep?

I don’t think everyone has factored every possible expense into this equation.  Phill and company don’t get to keep every penny of that $313,485.  To begin with, they have to pay the developers.  At $5000 for 10 developers, that comes out to $50,000 and possibly more for the freebie developers or “more equal” developers like Delicious Monster and MacroMates, as hypothesized by John Gruber.  This leaves them a generous $263,485.  Now, let’s consider website costs.  I couldn’t determine an exact number, but there could be up to 10 different domain names alone associated with MacHeist, so this could run upwards of $300 for hosting, especially considering the bandwidth MacHeist.com itself has brought in.  Let’s say $500, for the sake of argument, leaving $262,985.  Then there’s all the sites that participated in some way with the heist, either by including puzzle pieces or by letting users access something like Squirrelmail or the MacRumors tip submission form… did they receive a stipend as well?  My intuition says no, but for the sake of argument, let’s say MacHeist had to pay $3000 to other sites to get them to participate.  That brings us down to $259,985.  What about all the cool artwork Adam Betts created for the site?  I’m guessing he also contributed his time freely, but let’s say he charged $2000 for his services; that brings us to $257,985.  Now, after we’ve deducted all of that, we can split the proceeds three ways for a net of $85,995 per directorate member.  This could be considered a year’s salary for each of them, and it’s certainly nothing to sneeze at.

But the question remains, is this fair?  Are Phill and company planning to squander this money, or will they use it as funds for the next thing they come up with?  I really don’t think it’s anyone’s business what they do with it, but it would definitely be a good source of funding for their next project.  So we end up with $313,485 (less expenses) split three ways, with over $100,000 going to charity (come on… how can you disregard this?) vs. potentially $3,346,221.20 split 10 ways, give or take, for the developers, with none of it going to charity.  In this scenario, the users and the charities are the winners.

Fairness is in the eye of the beholder

As it turns out, developers are smart people.  They knew how much money they would receive for participating, and I’m sure they knew Phill and company were planning to unlock Newsfire and Textmate after a set amount had been raised.  I can say for certain that if I were a software developer, I would sign nothing unless all the details were laid out in front of me, including projected goals for revenue, and I’m sure all the developers learned this information.  So we can assume they knew what they were getting into, and how much MacHeist would potentially earn compared to what the developers themselves would receive.  And you know what?  They said yes anyway.  I imagine the combination of the fun of participation, the thrill of solving the heists, the promise of charity donations, the thousands of potential new customers, and the benefit MacHeist has provided to the shareware community added up enough for the developers that refusing would be passing up too great an opportunity.  They all considered the deal “fair” enough to join in.

This begs the question:  who is this really unfair to?  Is it unfair to the heist player, who got a 92% discount on $600 worth of software?  Is it unfair to the charities, who collectively have earned over $100,000 by doing absolutely nothing?  Is it unfair to the developer, who agreed to participate knowing full well what he’s getting himself into?  No, no, and, um, no.  So who is it really unfair to?  It can’t be the developers who were asked to participate but turned the offer down; they have absolutely nothing to do with any of this unless they take part in the heists and purchase the bundle.  I wouldn’t imagine it’s unfair to bloggers and journalists who have even less to do with it, since they don’t even have a product to include (or not) in the bundle.  Who, then?

Other points worth addressing

So we’ve determined that MacHeist is fair from a financial standpoint, even giving each of the directorate $90,000 in the process.  But there are still some points I should address before wrapping this up.

Courtesy of Jack Sauer

You can’t pirate a free app

Some people have made claims that the applications released freely through the various heists and mini-heists are vulnerable to piracy, especially those lacking any registration at all (some apps were downloadable in an “unlocked” mode while others could be registered for free with the right serial code or coupon code).  Bupkis.  Free is free, is free.  If a developer chooses to release a version of their application with no registration system, then what is there to pirate?  Software piracy is defined as reselling or redistributing for free a piece of software that was either legitimately paid for or cracked.  The MacHeist loot is neither.  Hence, not piracy.

Support costs will not boom; if they do, there are bigger issues afoot

Good developers know how to properly support their applications, or they pay good money for people to support their applications.  A good developer should be able to support any number of users, no matter how many licenses he has actually sold.  If a developer finds himself drowning in support requests, there’s a bigger problem afoot and he needs to find a better solution, whether by changing his method of help or by hiring someone to provide technical support.  Adding 10,000 new users won’t change any of this.  If a developer starts drowning in support requests after knowingly signing up for MacHeist, their support methodologies are flawed and should be reformed.  This would be the same had every single heister bought a full retail license for their applications.

MacHeist isn’t simply lining its own pockets

Honestly, I don’t think Phill Ryu’s intent was to rip anyone off.  Yes, it’s true he’s making a lot of money off MacHeist, but he’s doing it for many of the right reasons:  promoting and supporting independent and possibly unknown software and developers; donating lots of money to charity; and providing a great opportunity for many potential non-buyers.  Had he wanted to rip off the Mac user and developer communities, he would have sold each app for $5 or $10 during the heists and charged $99 for the final bundle, with only 10% going to charity.  Yes, it’s true he could give a bigger cut to charity than he’s currently stated (and if I were him, I probably would), but the money he nets is likely going to defraying costs and providing funds for the next project.  Plus, I really don’t see how it’s a bad thing to make some money off this event… he put lots of hard work into setting the whole thing up, designing the puzzles, gathering support from developers and participating websites, and so on.  It’s money well-spent and well-earned.

And that’s a wrap

So to sum up, is MacHeist fair?  From the perspective of the users and the developers who participated, yes.  Afterall, software is a somewhat intangible asset with wildly varying associated costs.  It’s not like building a car or a piece of furniture, where there are specific costs associated with materials, labor, and manufacturing facilities.  Software developers can choose any price they want based on the current market and what they feel is fair (there’s that word again), so if these developers think giving away a bunch of apps for nickels on the dollar is fair, that’s their choice.  Is it piracy?  No.  Is it all just a big scam?  No.  Is it a great opportunity for all involved, especially the charities?  Yes.  Will I be participating in MacHeist 2?  You’d better believe it.