I think that trying to define whether code is art is impossible. Duchamp proved that anything can be art, dependent only on the intention of an artist. So of course code can be art, but it isn't necesarily.
Code as a material..? In the broad sense of material, I think it is, at least for me. I see code as a means to an end, though of course in reaching that end the code often becomes something that could be perceived as art if presented in a certain context. I usualy call 'code' 'language', as in programming language. This more accurately represents what it is to me; a method of translating human thought an attention to computers, whose main strength and purpose is to process huge amounts of data very rapidly. The ultimate goal of programming languages, for me, is to bridge the gap between human and computer modes of communication. I would hope that eventually computers will do the work of understanding human beings, rather human beings having to learn computer languages--I'm in favor of computers doing the hard work. This way computer and information related art becomes accesible to everyone, rather than being the elitest and arcane field it is now.
I think PD is an important step in bridging the gap between computer and human methods of communication. PD is one step above an actual programming language, lowering the learning curve considerably. PD also facilitates building interfaces with computers that allow laypeople to create art, say, with the wave of their hand (ultrasound or variable resistors or something), or by saying something into a microphone. For me, the art that is created with a PD media installation isn't the installation itself, but what the audience does with it. Thus the code isn't the material, PD isn't the material, what I create with PD and code is the material that the audience uses to create art. But I will admit that I do perceive what I create at each step is also a kind of art, as is PD, as is the syntax of the programming language itself (isn't what the Romans did in recreating Latin a kind of art, or what was done with Esperanto, or SolReSol for that matter?) So then the material being used is rather the human mind that created all of these things.
As for commercial art...
Proprietary software is not artistic: it's like a recording that you "play" over and over, ad nauseam. (We forgot a lot of rock bands because they were boring "one shot deals"). A proprietary software can be used to express and recreate artistic ideas, but it cannot be a work of art in itself, unless you're kinky enough to appreciate assembler code that can't be modified without being accused of felony...
Commercial art is still art, it just works on a different aesthetic. Denying the art used to write ProTools, 3DStudio, Photoshop and other genius commercial programs, is denying Andy Warhol and his ideas of pop art. I won't argue that computer art has entirely depended on things like Photoshop, but I definitely believe that computer art would be in a very different place today if Photoshop had never existed. Just because it is commercial doesn't mean that it is not art. Just because The Adventures of Monkey Island or Doom, were sold for money, doesn't mean they weren't great pieces of computer art, and very influential on the world of computer art. Even without us being able to tear them apart and look at their code, they are still valid works of pop art. Sometimes an artist, for whatever reason, wants to keep his/her methods secret ( http://www.4dart.com ). Would you argue that, because you cannot know exactly how Van Gogh used his brushes, his works are not art? So Micro$oft can be art too, even though we base consumers are not privelidged enough to view its haloed code (<- a bit of sarcasm, but it's still true).
Just a thought or two.
-Ian