Anomalocaris canadensis. Credit: Paleozoo
I got no sleep last night, which means I'm awake early thinking through things I can't fix. One haunted topic is how software creation is going through a value collapse and despite all the vibe coding poasts on the subject, I'm still not sure most people in the industry have yet worked out what that means and what comes next.
Pop economics gives a tidy answer to what makes something valuable. It's scarce or hard to produce (or both). Price roughly reflects the cost of making something, plus whatever premium scarcity allows. When barriers to production are high, supply stays limited. A limited supply X real demand = higher value.
This value holds until something disrupts the barriers. When production suddenly becomes cheap or easy, supply floods in. When that supply reaches a saturation point, then prices must slide toward the marginal costs. When the costs approaches zero, inevitably so does the price.
Even if buyers can't evaluate quality directly, the fact that something was hard and expensive to make is a useful proxy. A handmade suit is probably better quality than a fast-fashion one. Software that took a team of expert engineers a year to build probably solves a problem thoroughly. This labour signal communicates some value before you've experienced the product. Are scarcity and labour signals are about to stop applying to software, and how can they not?
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Before language models, writing software required significant and genuine expertise, time and capital. Most users didn't need to understand how code worked to understand that it was bloody hard. You'd hire a developer, or teams of them, pay them a boat load of money, and they'd spend months working on something hard. That effort was visible and it priced the market.
There was a real scarcity of people who could write code well. Years of training, accumulated pattern recognition, architectural instincts. That stuff took time to develop. You couldn't shortcut it to the level that shipped reliable, scalable AAA software. That constraint is now going, or gone.
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Vibe coding collapses all these the barriers and the labour signal will be the first to break. Anyone with taste, a bit of domain knowledge, a decent prompt, and a tokens budget can now ship something functional in days. A weekend vibe-coder can produce something that looks and behaves comparably to months of professional work. Maybe not enterprise-grade distributed systems perhaps (well, not yet), but something functional. Something good enough to solve a problem. Something good enough to sell (well, for now).
Buyers now know this (or they're learning this). Once that's more-widely understood, the implicit premium attached to "software exists, therefore someone worked really hard on it" disappears, never to return.
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We've seen this arc before, and music is the richest analogy.
Pre-internet, making and releasing music was genuinely expensive. Recording, pressing, distribution, promotion all cost real money and required real experts and gatekeepers. Fewer artists got through, but of those who did, a meaningful proportion could make a half-decent living. Then DAWs, MP3s, P2P sharing, and MySpace arrived almost all at once. Anyone could record and release a professional-sounding track for next to nothing.
The filters collapsed almost overnight.
The result was more musicians, more music, more creativity, more voices than ever before. Genuinely wonderful in many ways. And proportionally, far fewer artists able to make a sustainable living from their work.
Skip forward, and the long tail is now very long and very thin. Most musicians make music despite the economics. The joy is real; the money usually isn't. The entities making money are the streaming platforms, the ticket vendors, the merchandisers, the distributors. As in every gold rush, it's the shovel sellers that make the money.
What's interesting is that the music industry didn't flatten into equality when the barriers dropped. It sorted into three distinct tiers:
At the top, a tiny number of artists enjoy massive commercial success, but even that gets propped up by brand deals, sync licensing, touring. Streaming royalties alone rarely sustain even the very famous ones.
In the middle, a hollowed-out tier survives on direct-to-consumer relationships: Bandcamp sales, Patreon subscriptions, merch drops, ad reads. Less glamorous, but honest work. The model is: find the people who value what you make enough to pay you directly, and sustain that relationship.
Then the low end long tail—the vast majority—where the day job pays the bills and nights and weekends go to the thing they love. No illusions about going full-time. It's maybe the most-honest relationship between a maker and their craft. They make music because making something matters, regardless of whether it pays—and it usually doesn't. Software is heading for the same stratification.
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After a couple of too many years working in product development, I know that the most valuable thing about software isn't always in the code itself.
Network effects work when value lives in who uses the product. WhatsApp isn't valuable because it's incredibly hard to build. It's valuable because everyone you want to message is already on it. A technically equivalent replacement doesn't matter. But genuinely networked products are rare as hen's teeth.
Distribution keeps attention scarce even when code is free. Getting software in front of users still requires marketing, trust, and often real money. But I wonder does control of distribution sustain value now, or does it just delay the erosion? This moat may be shallower than it appears. A well-funded competitor with a vibe-coded version can appear overnight and undercut immediately. The foundational AI companies are now expanding their product portfolios and sherlocking is a thing.
Deep domain expertise is the strongest argument. Knowing what to build for a genuinely complex problem—e.g. medical, legal, or industrial use cases—still requires knowledge language models can't (yet) replicate cheaply. The code is "easy". The insight about what the code needs to do isn't. But again, this protects only a narrow-but-lucrative slice of the overall software products market. Expect industries to try solve their problems internally now rather than pay external experts.
But broadly, are network effects, distribution and domain knowledge enough for most products? Are they enough for the flood of vibe-coded apps that are coming?
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What I think actually happens is that value concentrates at the top. A small number of products with genuine moats capture most of the market. Everything else slides toward marginal costs. The middle market is where it may get really uncomfortable.
Those products existed because software was hard to build. The difficulty was the value. Remove the difficulty, and the rationale for their existence—and certainly their price—weakens considerably.
What follows is a Cambrian explosion of software products: vast in number, lacking in real differentiation, with near-zero individual value. Many useful things get built. Most generate no revenue. The long tail of content creation, now applied to software.
And here's the part that workers in the industry should sit with for a moment: Cui Bono? Who wins in this scenario? The Anthropics, the Lovables, the Vercels: the infrastructure layer. The shovel sellers that profit regardless of whether the builders succeed or not.
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A diverse software ecosystem—lots of builders, lots of products, lots of different solutions to lots of different problems—has been a net benefit to everyone for many years.
But if the music industry example holds true, the picture that emerges isn't "zero software value". Its a power law that says a handful of big winners, a hollowed middle sustained by direct relationships and goodwill, and a long tail of useful things with a handful of users built by people who love building (without expectation of financial return).
That's not nothing. The long tail may produce real value for real users. But it's a very different world from the one the software industry has operated in for the last 30+ years. It's one where many in the industry may need to start looking for other forms of income.