Top Ten Licensing Types – Where is the market going?

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Top Ten Licensing Types – Where is the market going?

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No matter what, all software and applications have a license attached to them. Even free software has some form of license. There are far too many different licensing models currently on the market, each with different terms and conditions that the licensee needs to adhere to. We all know what happens if you break those terms and conditions, auditors can end up fining the organisation large sums of money.

There is a number of different software licensing models currently offered by software vendors, including a number of emergent models that were not around in the licensing world ten years ago.

Current top ten licensing types on offer from vendors (no particular order)

1. Device – Also known as ‘machine based’. License is locked to an individual machine.
2. User – License is assigned to a named user who must be identified to ensure the license agreement is validated and the license terms are adhered to.
3. Networked (WAN & LAN) – A license that covers machines that is on the same network infrastructure. This is either in Wide Area Network or a Local Area Network format. Also known as ‘concurrent license’.
4. Subscription (user or device) – License only available during time of subscription. No rights to use it pre or post agreement dates (unless agreement renewed).
5. ‘Cloud based credits’ subscription – Cloud credits are the unit of measurement required to perform certain tasks or rights to run certain applications provided by the vendor. Hosted in the cloud and are usually a subscription model.
6. General Public License (GPL) – License and software available for free. Allows users to use, share, copy and modify the software. Separate legal metrics to ‘freeware’.
7. Client Access License (CAL, includes both device and user metrics) – Allows users to connect to server software to use the software’s features/functions.
8. Capacity Based License – License is based on the capacity of the CPU/Hard Drive or other hardware configuration elements.
9. Font licenses – Font specific license. Related to the fonts used online or internally by an organisation.
10. Freeware – License requires no purchase but the copyrights are still held by the developer. Developer can sell the software in the future and does not distribute the source code.

 

Top Ten vendors and their licensing

Based on the top ten vendors by revenue for the previous financial year, here are the licensing models available for their applications. This will give us a good indication as to what the most popular license metrics are, and also help us predict trends in the licensing market:

* Oracle ‘Developer License’
** Oracle’s ‘Update subscription service’. Still counts as a license!
+ Whilst the vendors may not provide subscription licensing, they do provide subscriptions to maintenance and other services.

What are the current trends in software licensing?

Software licensing trends have shifted recently, away from the popular device and user based model to a subscription-based model. In the 1990’s and the 2000’s the predominate method of software licensing was user and device based licensing for desktops, and less complex licenses for servers. A number of vendors still provide user or device based licensing, but they have evolved their license metrics to make them more complicated and to generate bigger revenues.

License Type	% In use by top 10 vendors
Device	70%
User	90%
Core/Processor	90%
Networked	70%
Subscription	90%
Cloud Credits	30%
GPL	10%
CAL	10%
Font	20%
Freeware	30%

Subscription user and device based licensing are the most common ways to license desktop applications. Vendors have leaned more towards the user subscription model in an effort to combat software piracy, to generate more income and also to ensure that users are using the latest version of their products. Unsurprisingly, within the datacentre environment the most popular licensing metrics are by Core or Processor.

What software license models will be the most popular in the future?

With recent trends in software licensing it appears that cloud based subscription licensing will be the most popular method of licensing software in the future. A number of Tier 1 vendors have already moved to either a subscription license model, or a cloud based subscription model. Whilst this license metric is fantastic for home use and the general public, for organisations it will be more expensive and harder to manage.

Another license metric that is coming to the forefront is the idea of ‘cloud credits’. This is when an organisation purchases a number of credits. These credits are then used like a concurrent license, with a set number of ‘credits’ checked out when someone uses a certain application. These credits are reset every 24 hours for some vendors, but returned to the pool immediately for others. This is obviously a new license model, so it needs to gain maturity. This will happen over time if the vendors think it is successful.

Conclusion

Software vendors will continue to introduce new licensing metrics to the software world; as they try to generate as much revenue as possible and to ensure the lack of software piracy. Whilst it is completely understandable for software vendors to crackdown on piracy, introducing complicated software-licensing metrics without providing adequate support or education to the users is not. Any changes to the software license metrics, terms of use and pricing need to be communicated in a clear and helpful manner so that the end-user knows exactly what their rights are, and how much they should be expecting to pay.

Unfortunately, a number of software vendors do not provide such a service and they end up leaving their customers confused and out of pocket. This also results in a breakdown in the relationship between the end user and the software vendor, thus damaging the likelihood of any future business or relationship.

There is an obvious need to provide a better education around software licensing metrics, and for vendors to make their licensing easier to understand. That’s why bodies such as the Campaign for Clear Licensing is so important in helping make licensing less complicated.

This is an ‘active’ blog, so have your say! Disagree with our list of top licensing models? Have your say and get in touch!

 

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