I would also assume a disadvantage to this method is that the source code if limited in what can be edited, so for a programmer who wants to update or improve a plugin, they are mostly out of luck due to the encryption. From a design point of view, I understand there is still flexibility, but the programming aspect is limited.
So the overall business model for most people who make wordpress plugins is they charge for something added to a free product.
I find this interesting because we have never encrypted any of our works. We charge for the product, but then people can also charge for derivative works without worry that others can distribute them for free, because the initial license does dictate this.
On the other hand, if someone got a hold of the source code or unencrypted a product in the future, I would assume the whole business model could be blown because people could then redistribute with impunity.
Do you find any misstatements or lack of understanding in my description?