Donationware is a licensing model that supplies fully operational unrestricted software to the user and requests an optional donation be paid to the programmer or a third-party beneficiary (usually a non-profit). The amount of the donation may also be stipulated by the author, or it may be left to the discretion of the user, based on individual perceptions of the software's value. Since donationware comes fully operational (i.e. not crippleware) when payment is optional, it is a type of freeware.
Red Ryder was the name of a well known communications and terminal emulation software program created for the Apple Macintosh in the 1980s. It was one of the first donationware programs to be distributed on the internet. It was written by Scott Watson, who founded The FreeSoft Company of Beaver Falls, Pennsylvania. By spending no money on advertising, but simply offering Red Ryder on Bulletin Board Systems (BBSs), allowed Watson to market and distribute what became the number-one communications program for the Mac. He did not sell it in any store. All he asked of those who downloaded the program into their computer was that they might send him $40.
He later said, "I took advantage of a problem: piracy. Many program-users copied them free. I assumed that, if I offered something free and asked people who liked it to pay, that some people would; that maybe I'd get a bigger percentage than people who sell software." This new kind of "on approval" selling worked well and there was no necessity for follow-up. The cost was a fraction of available competitive software. Often people who found the software useful sent in checks. Each BBS sent the program online free to anyone. Anyone who liked Red Ryder could copy it for friends and passed the word to others, who then got Red Ryder from their bulletin board systems. Macintosh magazines rated Red Ryder highly. Scott rejected orders from both computer stores and distributors and concentrated on development. Many new bulletin boards ran his offer.
See also 
- Careware, where the software developer requests a donation to charity
- Gift economy
- Participatory organization
- Jesse Reichler (2006) Donationware experience – An article describing experiments with Donationware: Ethical Software, Work Equalization, Temporary Licenses, Collective Bargaining, and Microdonations at Donationcoder.
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