Robert Lefkowitz looked at the old question of whether software is a product or a service by turning to an even older field: horse studs. In days of yore, if you had a mare that you wanted bred with a high-quality horse, you paid for the "service" of the stallion's owner bringing it over and performing the deed.
Nowadays, it's all about artificial insemination. So instead you browse through, ahem, a seed catalog, and purchase however many milliliters of semen from whichever stallion strikes your fancy. Now of course, if you had sufficiently small tweezers (and modern technology does), you could make millions of horse babies from even a tiny sample of semen.
But, according to the law and to the terms that you purchase the semen under, you are buying not a product (the semen itself) but... a service. You own the physical material, but you do not own the rights to it. You license the genetic material of the stallion. You perform your own artificial insemination with the material you purchased, but (this is true) you are allowed to make only two copies.
Lefkowitz's point was that the subtle product-service distinction is not unique to software, but I found myself wondering if, somewhere, there is a Jack Valenti of the horse-stud cartel, lamenting backup foals.
Current Music: Trance to the Sun -- Phosphorella ♬