In a landmark victory for the free or “open source” software movement, a U.S. federal appeals court in Washington State has ruled that just because a software programmer gave his software away didn’t mean its use couldn’t be restricted.

Essentially, the court held that software could be distributed under licenses that allowed users to freely use the software… subject to certain conditions such as requirements to give credit to the developer and follow the developer’s instructions.

This ruling is not only meaningful for open source software developers but also confirms the rights of Internet marketers who provide ebooks, articles, royalty free images and music, and other content under conditional free licenses.

Source: John Markoff, “Ruling Is a Victory for Supporters of Free Software”, The New York Times, August 13, 2008

eMarketer reports that online marketers will spend $40 million on developing, distributing and promoting widgets in 2008, a huge jump over the $15 million they invested last year. But unless they’ve done their math, they may actually be losing money on this form of marketing.

A widget is a small software application or “applet” that can be installed on and integrated with a social media site, a web browser or your desk top. As a marketing tool, a widget is generally intended to provide some kind of nifty service whilst also facilitating viral marketing.

All well and good, but eMarketer points out that marketers paying widget developers to create their widgets on a fee-per-install basis are often paying between $1 and $5 each time a user installs the marketer’s widget onto their social networking page or elsewhere. This may be significantly more than the value they derive from the average user (depending on the time frame in which they measure value)!

So while a widget may be exceptionally popular… the cost of having it widely installed may cancel out or significantly outweigh the revenues derived from those widget users. eMarketer also notes that installation is no guarantee of use - just because someone downloads and installs a widget, it doesn’t mean they actually use it… let alone buy the marketer’s products or services. Moreover, because some widget advertising is sold on a fee-per-install basis, it may be tempting for some widget makers to use deceptive tactics to get people to install widgets they’re unlikely to use.

My strong recommendation to Internet marketers: do your math. Consider your alternatives in terms of paying widget developers on a fee-per-install basis or hiring software developers on a regular software development fee basis. Then consider whether you’re likely to break even or profit from your widget, based on the potential value of your average customer over the relevant timeframe (e.g. a year or perhaps their lifetime).

Source: eMarketer, “Widgets vs. Budgets?”, eMarketer, July 15, 2008