License.Rocks to Tokenise $14.3 Billion Software Licensing Market

A case study on OST Partner Company

Let’s talk about software licensing. Embedded, Cloud-based, on-premise. Business to business, business to consumer. Billing integration, usage tracking… Not exactly a conversation starter, is it? That is until you realise the sheer size of this under-appreciated market:

The global software licensing market is expected to reach $14.3 Billion by 2023, a compound annual growth rate of 8,5% between 2017 and 2023.

Source: Market Research Future

Looking at regional market shares, the Europeans take the cake: Europe is expected to account for the largest market share of $204M by 2020; with Germany making up the bulk of the market with 25% market share.

Visual courtesy of

The North American market is expected to achieve the biggest CAGR of more than 10%, with the Asian-Pacific market likely to follow suit, as major players like China and India are “less mature in enforcing IP rights, and more prone to under-licensing,” according to a report published by MarketResearch in January 2018.

With so many licenses sold, one may wonder what happens to those agreements when a company ceases its operations (M&A, insolvency), or when a project simply gets migrated to cloud-based software. Turns out there’s an entire industry dedicated to giving licensed software a second lease of life, and it may well be the fastest grower in the realm of software licensing.

Imagine all the software licenses for this office alone. Now multiply that by millions of companies… Photo by Alex Kotliarskyi on Unsplash

Europe’s booming second-hand software licensing market

Following a verdict by the Court of Justice of the European Union, companies are allowed to buy and sell software licensing on the secondary market, even when the software publisher’s Terms and Conditions explicitly forbid you to do so. Bear in mind that the verdict has far-reaching, economic implications — as the case brought forth was about a software license worth hundreds of thousands of euros.

While it has taken a while for the industry to mature, there’s been a surge in European companies making a business out of re-selling software licenses. There’s only one caveat: You can’t sell software licenses without proving “initial ownership” and its full license history first.

In other words: you must prove that a legal entity purchased a software license before it decided to sell its license as a second-hand digital asset.

Queue in

OST Partner Company, announced as a Partner in January 2018, is building a platform for decentralised software licensing through tokenisation. envisions to build a framework that defines how digital products like software can be re-licensed and create new business opportunities and sales channels for creators of digital products.

With two of its founders working in the Software Asset Management (SAM) industry, the advance of blockchain technology made realise that tokenisation would be the best method to keep immutable records for all licenses bought and sold, including previous ownership, any upgrades and current adoption. is on a mission to tokenise the global software licensing market. When a software license becomes a digital asset, it can be traded between parties.
Why keep track of licenses in a spreadsheet when you’ve got blockchain? Photo by rawpixel on Unsplash

Zooming in on software licenses doomed to get lost during an M&A or an insolvency, the Berlin-based startup pitched their solution to the German Berufsverband der Insolvenzverwalter (Professional Association of Insolvency Administrators) — which happened to have its offices nearby.

The Association was impressed: You can’t argue against money left on the table by Administrators who can’t possibly keep track of all the software licenses used in a company.

Soon after, landed its first revenue-generating client: The administrative office handling the largest insolvency case in Germany.

We envision a way to enable anyone to generate, track and monetise licenses. We are starting with software but ultimately we intend to extend this to any digital good.
Daud Zulfacar, co-founder

The fact that licenses get stored immutably on the blockchain also means that it will be much easier for startups and enterprises alike to be compliant with local tax and assets regulations, as well as providing investors with a wholesome due diligence report on licenses currently in use.

The OST Ledger and Balance APIs play an important role, as they provide with the tools to integrate transaction histories and token balances into their platform.

The team created this video for their OST KIT Alpha III Proof of Concept, featuring the workings of the OST Ledger and Balance APIs:

Road to decentralised software-as-an-asset management

Based on their experiences in the SAM industry and on their talks with insolvency administrators, the founders see the lack of transparency and a one-fits-all license management solution as some of the biggest challenge they hope to tackle with their tokenised software licensing platform.

Daud explained to me that the very foundation for their platform is a cryptographically verifiable Audit Trail to keep track of the ownership and transfers of software licenses.

To go short: Every software license gets represented by a token, basically a twin of license.rock’s own Branded Token staked against OST. was one of the first partners to successfully mint LRT on Mainnet last month.

As the token represents a license, ownership can change hands by transferring the token from one public key (seller) to the next (buyer).

Learn more about the Audit Trail in Daud’s OST LIVE interview with José Mota below.

The team plans to start a license token economy by the end of March 2019, enabling publishers to generate software licenses on-chain, thus enabling them to keep track of all their licenses and providing users with more transparency in terms of (previous) ownership and actual value.

Ambitions beyond corporate software licensing’ journey starts with the tokenisation of corporate software licenses, but the team hopes to extend their solution to any digital good; enabling creators to generate, track and monetise their licenses.

The service-driven software asset management market will disappear, giving way to micro-payments for on-demand software usage.

In addition to launching a license token economy next year, wants to build a framework to ensure copyright protection (intellectual property) of digital assets by 2020. Think of technology license agreements, trademark licensing, franchising agreements and copyright license agreement.

Storing these agreements on the blockchain virtually guarantees an irrefutable Audit Trail, paving the way for major publishers, IP holders and even small-time developers to launch, sell and track thousands of licenses in the years to come.

For now, system admins and insolvency lawyers can rejoice in the fact that licenses worth €100,000 or more will no longer be a burden thanks to’ decentralised marketplace for software licenses.

Daud Zulfacar sat down with José Mota to talk about his company’s vision for decentralised software licensing, their plans to tokenise the licensing market and the work done on their Alpha III POC.

About OST

OST blockchain infrastructure empowers new economies for mainstream businesses and emerging DApps. OST leads development of the OpenST Protocol, a framework for tokenizing businesses. In September 2018 OST introduced the OpenST Mosaic Protocol for running meta-blockchains to scale Ethereum applications to billions of users. OST KIT is a full-stack suite of developer tools, APIs and SDKs for managing blockchain economies. OST Partners reach more than 200 million end-users. OST has offices in Berlin, New York, Hong Kong, and Pune. OST is backed by leading institutional equity investors including Tencent, Greycroft, Vectr Ventures, 500 Startups.