Key Takeaway: Software licensing is crucial for protecting intellectual property and enhancing software revenue.
For software developers and vendors, robust licensing is vital to safeguard valuable business assets. A modern software licensing solution is essential for business growth and protecting software.
Understanding Software Licensing
Software licensing allows end-users to access software while maintaining the software publisher’s ownership rights. Most software is copyrighted, and end-users must accept a software licensing agreement (EULA) to use it. This agreement outlines usage terms, installation limits, and any restrictions on modification or redistribution.
How It Works
Software licensing resembles renting a car; you need permission and a key. Software requires a key or permissions to run, usually obtained by paying a fee. There are various licensing models like perpetual, subscription, and floating licenses.
Perpetual License: Offers indefinite access to a named user.
Subscription License: Provides access for a recurring fee.
Floating License: Shared among users on a first-come, first-served basis.
Advanced models include consumption-based licenses, limited by time or measurable factors.
Click here for a full guide on all license models.
Benefits of a Software Licensing Solution
Proper licensing monetizes software, restricting access to paid license holders. Modern solutions automate the process, reducing manual administration and friction in business processes. However, legacy methods like license dongles and servers are being replaced by cloud-based solutions, which are more efficient.
Click here to learn why cloud-based software licensing is the superior method.
Examples:
- Floating Licensing: Netflix’s standard plan allows content playback on two devices simultaneously. The licensing engine ‘floats’ licenses between users while controlling intellectual property.
- Metered Licensing: Otter, a speech-to-text app, offers free monthly transcription minutes. Usage is metered, with a countdown timer, showcasing controlled metered licensing.
Licensing Your Software:
Develop In-house: Building an in-house licensing engine offers ownership but can be complex and costly, especially with growth. It may not scale well and can require significant maintenance.
Click here to learn more about the drawbacks of developing your own licensing system.
Use a Specialist
Outsourcing to a specialist suits businesses scaling up. However, beware of traditional key-based systems that might introduce inefficiencies.
10Duke Enterprise Solution
The 10Duke licensing engine is used by some of the fastest-growing software businesses in the world. Click here to learn more about 10Duke or watch the video below to get you up to speed with the basics.
In summary, effective software licensing is vital for protecting intellectual property and maximizing revenue. Whether developing in-house or using a specialist like 10Duke, the right software licensing strategy can significantly impact a software business’s success.
This article is a shortened version of our original article: Software Licensing — Definition and Guide 2024, to read the full version click on the link or visit our website.
