If I were an author, I'd go for option 2.
That'd give me enough money to no longer worry about selling books. I'd be happy to then work for free and give away future books.
If I made that kind of money selling software, I think I'd take the same approach. I'd still make it since I love the work, but I'd give away the product and source. I contribute to open source now and then but just can't bring myself to give away everything yet, eating is important
