The small software firm

The type of business I'm interested in is the small software firm, probably just one or two developers. It's the type of business that developed my two most influential applications, VisiCalc and Dan Bricklin's Demo Program. I believe that such firms are an important source of innovation for the world, and should be encouraged. I also know that there are many people who like working in such an arrangement, without being part of a larger organization, and it would be a shame for that not to be available to them as a reasonable form of livelihood.
Back in the 1980s and 1990s, when I last ran Software Garden, a common business model was to write some software, protect it through copyright (so that only the author could distribute it) and as a tradesecret (distributing only executables so as to protect the source code), and sell it through the mail or stores as a "shrink-wrapped" product. Any competition probably did the same thing.
For some simple software, there was the "shareware" model, where the software could be copied freely, but if you liked it you were supposed to send in some money to "register" your copy. This has proven to be a viable business model. Enough people did send in money to fund a variety of companies. There were variations on this theme, but in general it also only involved executable programs. You couldn't modify them nor learn from them by reading the source, etc.