Until the late 1960s computers—large and expensive mainframe computers, machines in specially air-conditioned computer rooms—were leased to customers rather than sold. Service and all software available were usually supplied by manufacturers without separate charge until 1969. Computer vendors usually provided the source code for installed software to customers. Customers who developed software often made it available to others without charge. Closed source means computer programs whose source code is not published. It is available to be edited only by the organization that developed it.
In 1969, IBM, which had antitrust lawsuits pending against it, led an industry change by starting to charge separately for mainframe software and services, by unbundling hardware and software.
Bill Gates' "Open Letter to Hobbyists" in 1976 decried computer hobbyists' rampant copyright infringement of software, particularly Microsoft's Altair BASIC interpreter, and reminded his audience that their theft from programmers hindered his ability to produce quality software.
According to Brewster Kahle the legal characteristic of software changed also due to the U.S. Copyright Act of 1976.
Starting in February 1983 IBM adopted an "object-code-only" model for a growing list of their software and stopped shipping source code.
In 1983, binary software became copyrightable in the United States as well by the Apple vs. Franklin law decision, before which only source code was copyrightable. Additionally, the growing availability of millions of computers based on the same microprocessor architecture created for the first time an unfragmented and big enough market for binary distributed software.