Software Licensing

You're Buying a License, Not the Software

Another consideration that we have when it comes to our software is the licensing.

The first thing that we should understand is that when we purchase software, we're not actually buying the software. We don't own the software. Instead, we're actually purchasing a license to use that software.

Let me just give you an analogy here. Let's say we purchase advertising space on a billboard. We don't actually own the billboard. All we're doing is purchasing the right to use that billboard for a certain period of time, that we can put our logo or our advertisement on there for people that are driving by to be able to see that advertisement. And it's only for that period of time. It's the same thing with software: we're purchasing the right to use that software, we don't actually own the software itself.

Licensing Follows Copyright Law

Software licensing follows copyright laws. That means there are laws out there that protect anything that I create. So if I put out something like a picture or a video, then I own the copyrights to that, and then people can actually see that or use it who I give permission to for that. And software follows the same laws. That is, somebody creates the software and then they have rights to that software. Somebody can't just steal that software, and we're purchasing that software license to use it.

Types of Software Licenses

There are different types of software licenses. On one side we have open and free software out there that we can just use and we don't need to pay for it, and then there are proprietary software that cost a lot of money, and then there's everything in between. There's a lot of different examples out there, there's a lot of different models out there, so it's just not one size fits all, but there's a lot of examples that we could actually pull from.

When it comes to free access, there's different models of free access out there, and almost all software has at least some level of free access to it, because whoever creates the software usually wants you to be able to try it out and see if you like it, see if it's something that's going to work for you. They want you to install it on their network and then get used to using it, so that you continue to use it. So at the very least they have some sort of free trial where you can try it for free, and then at the end of that free trial, then you would purchase the software if you want to continue using it.

There are also a lot of programs out there that are just free to use. And there are also programs where you can actually use the code, that you can go and download the binaries, the code that is used to create that software, and use it for other projects. Now, there are still laws around it and how you can use it, but there is software out there that you can just freely use, even the code to it. We call that open source. Versus the stuff that's free to use, we call that freeware. And the stuff that has free trials, or where you can use it for a while but then you are required to maybe purchase it, that's called shareware.

Categories of Shareware

Shareware is not a term that we use as much anymore. We can categorize shareware into different categories, and some of these terms we use more often.

• Freemium is a big model out there. It's a very effective model where there's an element that's free to use. A lot of games do this, where it's free to have a game and play the game and get addicted to the game, and then if you want to progress things, then maybe they have some sort of premium version. So that's what freemium means: it's combining the word free and premium. It's a model that's used, a very effective model for selling software and games and that type of thing, different applications.
• Trialware just has a limited amount of time that you can actually try something out, and then if you want to continue using it, then you've got to pay for it.
• There's adware, which is supported by advertisements.
• There's crippleware, which is really not fully functioning until you pay for it. A good example is there's video editing software out there that puts a watermark on there, so if you were to export it, you can export it, but then it's got this little watermark on there. If you want to get rid of that watermark, then you have to actually pay for it.
• There's donationware, where they're just offering it for free but they're asking for a donation if you're able to donate to it.
• Nagware just reminds you, hey, you haven't paid for support, you haven't paid for the premium model, but still allows you to use the full features of it. Proxmox is something that I've been playing around with and recently installed, and that's an example of that.
• And then there's cardware, where the owner of the software just says, hey, send me a postcard.

So there's a lot of different models out there, free software that you can use for a period of time or whatever the case may be, depending on what model it is.

Examples of These Models

Let's look at a few examples of some software licensing models.

What I have here is I've gone to the site. This is software out there that's very similar to something like Photoshop, where you edit photos with it. What we see here is there is a free download. You can actually download this — this is the installer here — so you can download it for your machine and then install it on your machine and start using it for free.

Now, if I scroll down here, what I see down below is: what if I want the source files? These source files are if I want the actual lines of code. What happens with computer programs is we have the code, the lines of code, and then that gets compiled into an executable, and then that is what we actually are running on our machines. And so this right here is just actually the actual code, and we can go and see that. So this is completely free and open source.

The other side of the spectrum is something like Adobe Photoshop. Here we have a free trial, and then after the trial expires, then you pay for it. So what it's showing you is you have a 7-day free trial here; day eight you get charged; and then you have this grace period where you could actually return that, you can get your money back if you decide that it's not the product that you want. So you have a full 21 days to make the decision. So this is the opposite side of the spectrum, where you have this proprietary software that can get very expensive.

Then we have Spotify. Spotify is the freemium model, so they have a free plan, and what is included in the free plan is you can listen to music, but then you don't get all of these extra features that you get with the premium model. So this is a great example of the freemium model.

Then we have something that is based off of donations, so we've got donationware. This is Wikipedia. This is an online application — actually, it's a site — so we've got a site here that asks for donations. So they're providing free services with this, and they primarily work off of these donations. So this is an example of a site that works off of strictly donations.

And then one other example that I wanted to show you would be Proxmox. Proxmox is a virtualization software, and I'm just going to log into this and show you what we see when we log into it. So I'm going to log in, and it says you do not have a valid subscription for this server, please visit this for available options. So really, this is like nagware. What it's doing is it's saying, hey, go get a subscription so you can get support. There's really no downfalls of hitting okay and just using it just as it is, so we don't need to do anything extra to be able to use this software. It just is — they want you to support them by going and buying some sort of premium subscription model that offers things like support for it. So there we have an example of a nagware, although it's not really naggy; it doesn't nag you all the time, it's just when you log in, it just says that that one time.

How Long a License Lasts

If you purchase a license to use software, that doesn't mean that you necessarily have that license for the entirety of your life. That is, there are certain licensing models that you need to consider when you're purchasing this. Sometimes it's one time — sometimes you just purchase it and then it's a perpetual license, and you have it for the entirety of your life, essentially. Otherwise, there's also a subscription model, where you pay for a subscription and then once that subscription runs out, then you can't use that software anymore.

There's also a one-time purchase with a maintenance subscription, and that maintenance subscription allows you to do upgrades. Usually when you do a one-time purchase, it's good for — let's say you buy the 2024 version of it — and then what happens is that you're stuck on that version, even though they come up with more. Once 2025 comes out, then you are still stuck on 2024. And so what you do is you pay a maintenance fee for that, and you get free upgrades every time they come out with another upgrade. So that is one of the models that is out there as well. And then as soon as you stop paying for the maintenance, now you're stuck on whatever model it is when you stopped paying for that subscription.

Usage Limitations

There's also a lot of usage limitations with this. For instance, you can find that there's a number of devices that your software can be installed on, or perhaps it's the number of users that can use it. Sometimes those are assigned users, so you assign a user a license and then they have that license for the year, or perhaps just the time that it's assigned to them. Other times it's concurrent users — so how many users are using it at any given time? Do you have 100 users on the system, do you have 110 users on the system? And then it just doesn't allow more people to get onto the system once you've reached that max.

I've also had ones that have site licenses. I used that when we geolocked it to an IP address, so as long as you're coming from that IP address or the IP address range, then you have access to certain software. There's hardware limitations on how many cores or how much RAM that you can have on the system. Or it could be time bound, that you buy it for a certain date, or that you buy it for a certain usage — maybe you purchase something for 60 minutes, or maybe it's 24 hours, or whatever the case may be. So there's time bound, and once you run out of that, then you no longer have access to it.

Models I've Encountered

Just to give you a few examples of this, here's some licensing models that I've encountered in the past. For instance, my Adobe products that I use are limited to one user, but I can install it on multiple devices. I've also had SQL licensing. I paid $60,000 a year for SQL licensing, and it was based off of the number of cores that were used on this database server — so SQL is a database server. And then I also have used PRTG, where you'd pay by the number of sensors. PRTG is a freemium model: you get 100 sensors for free, and then once you extend beyond that, then you've got to pay for more sensors. And each sensor would be used to monitor different devices on your network.

The EULA

So one of the questions is, how do you know what all the licensing is all about? Well, all that's found in the end-user licensing agreement, or the EULA. This is the thing that a lot of people just skip and don't read. They can get kind of boring, and there's not a lot of times we have actionable items out of what we read — although you could be missing out on some opportunities by not reading it. For instance, Adobe allows you to install their product on two different devices, and if you read the EULA you might know that and then be able to utilize that software better.

It becomes more important, though, when you're dealing with businesses, because they can get in trouble if they are not complying with these licenses. Well, you can as an end user as well, but it becomes more critical as a business to make sure you understand the EULA as you're rolling out software on your network. And you better really understand what it is that you're agreeing to before you start purchasing the software and installing the software.

Activation

Some software you can install and start using it right away, where other software needs to be activated. Even some of the free software a lot of times needs to be activated, that you need to download some sort of license and install it on the machine. Maybe there's a token that you use to install it. Maybe there's some sort of credentials — you add your credentials into there and then it activates it, and then you can start using the software.

Perhaps it's some sort of hardware. For instance, my DJ software that I like to use is all mapped to my controller, so as long as I've got my controller, then I can use that software. I also have used certain USB devices that need to be plugged in in order to use certain software, and so that's another example: as long as this was plugged in, then you had a license to use it; otherwise, if you unplugged it, then you no longer could use it.

It also could be based off of location. I gave an example before where I had a site that could use software, a bunch of students at a school that could use software as long as they were accessing it from the school, and it was based off of their IP address.

Registration

Registration is a little different concept. Registration is the idea that you're going to give them your information about you — perhaps it's your name, maybe it's your email address, perhaps it's a phone number, maybe it's a mailing address. They're going to collect that information maybe to activate the software, but usually it's to provide support or the warranty for the software, and then you need to register it before you get the warranty.

And a big motivating factor for that company to get your personal information is to market different products to you. So as soon as they get that information, now they can start marketing to you, or they can sell that information to other companies. I'm not a big fan of companies or software that makes you register the product, but some of the products require you to register before you can use it, while others it's just to get, like I say, that warranty, or they just try to push it on you to register that software.