tsu doh nimh writes "Security experts have long opined that one way to make software more secure is to hold software makers liable for vulnerabilities in their products. This idea is often dismissed as unrealistic and one that would stifle innovation in an industry that has been a major driver of commercial growth and productivity over the years. But a new study released this week presents perhaps the clearest economic case yet for compelling companies to pay for information about security vulnerabilities in their products. Stefan Frei, director of research at NSS Labs, suggests compelling companies to purchase all available vulnerabilities at above black-market prices, arguing that even if vendors were required to pay $150,000 per bug, it would still come to less than two-tenths of one percent of these companies' annual revenue (PDF). To ensure that submitted bugs get addressed and not hijacked by regional interests, Frei also proposes building multi-tiered, multi-region vulnerability submission centers that would validate bugs and work with the vendor and researchers. The questions is, would this result in a reduction in cybercrime overall, or would it simply hamper innovation? As one person quoted in the article points out, a majority of data breaches that cost companies tens of millions of dollars have far more to do with other factors unrelated to software flaws, such as social engineering, weak and stolen credentials, and sloppy server configurations."