Artificial Scarcity - Altair BASIC and the Open Letter to Hobbyists

After the Altair 8800 was featured in the Popular Electronic magazine in January 1975, Gates and Allen began writing Altair BASIC. They showed it to Ed Roberts of MITS, which was successful and led to MITS signing a contract with Allen and Gates to license it from them and allow them to market it. To demo it, MITS had the MITS-MOBILE that would drive around to do demos of the Altair and it's BASIC. On the June 5 demo occasion, a paper tape containing a pre-release version of Altair BASIC disappeared into the hand of Steve Jompier, who gave it to Dan Sokol who had access to a high-speed tape punch to copy it. By the next Homebrew Computer Club meeting, they have made 50 copies which appeared at the meeting. The genie was out of the bottle, with people picking up these copies and making further copies, eventually leading to this issue being written about in the Computer Notes and later the Open Letter to Hobbyists by Bill Gates:


Open Letter to Hobbyists (from Wikimedia Commons)

As you can see in the letter, it considered copying as theft, a common theme used by the copyright industries later including the word "piracy".

Now, it wasn't entirely the hobbyists' fault. MITS priced Altair BASIC so that when it was purchased with two of their 4K Dynamic RAM boards, the price was only $75, while without the hardware the price was a whopping $500. Unfortunately, dynamic RAM boards was in general problematic on the Altair (later S-100) bus for several reasons. As a result, Robert Marsh designed a 4K Static RAM board for the Altair bus and started Processor Technology to market it. Of course, those who bought that board instead of MITS's board had to pay full price. Instead, many copied the Altair BASIC from somebody else. Eventually, Ed Roberts acknowledged the problems in the October 1975 Computer Notes. The full price for Altair BASIC was reduced to $200. The price of the memory board was reduced from $264 to $195 and existing buyers got a $50 refund.