Friday, February 17, 2006

question: on the topic of perpetual licenses

This morning as I pored through pages of SKUs and pricing schemes that threatened to make my eyes bleed, I happened to shuffle a copy of the InstallShield EULA to the top of my paper stack.

The InstallShield EULA is a click-wrapped, perpetual license. Whatever you might happen to think about click-wrapped EULAs, it's the perpetual element that captured my interest.

If you're writing software for sale, there are financial reasons why you'd want to sell perpetual licenses. Namely, you can recognize all the revenue up-front, as opposed to distributing it over the term of the agreement. Customers like it (ostensibly) because they then "own" the license, and can use the product for as long as they like. Often they buy maintenance agreements in addition to the perpetual license, and that gives them access to "fixes" and "new releases", generally speaking.

But I keep coming back to the word "perpetual", because I see the life expectancy of software as a discrete (not perpetual) thing. Whether it is obsoleted by changes to the underlying operating system, changes in how the task it addresses is completed, the vicissitudes of the marketplace that drive products in and out of fashion, software in an installed and operated state is anything but a perpetual entity. It's curious, actually - that we should associate permanency with something so ephemeral as software.

But we wish to "own" software the same way we "own" a pair of shoes, or our house, or our car. It's "my copy" of BlahSoftPro. I paid good money for it, I use it, it's mine, right? Same way these shoes are mine, right?

Except that software (and all digital content) aren't shoes - they are "soft" goods. Curiously, though, unlike music and video, software has more in common with shoes in that they both wear out. But I digress.

From an "ownership" perspective, soft goods are sticky wickets. The possession of a pair of shoes doesn't immediately enable you to duplicate and redistribute them, so we've not had to concern ourselves with the same issues in the shoe world as we do with software, or any digital content for that matter.

That's not to say that Nike doesn't get really, really angry when someone mass-produces knockoffs. But everyone who buys a pair of shoes isn't immediately able (with some minimal effort) to duplicate the shoes ad infinitum.

(On a side note, when we buy a pair of shoes, are we accepting the manufacturer's EULA when we put the shoes on for the first time? Is this analogous to the explicit EULA acceptance that is given when we break the seal on the envelope containing a stack of CDs for some software?)

If it can be copied, it can't be owned, the argument goes, and therefore we have to wrap the "good" (software, movie, song, text, whatever) in the protective arms of a license. A license which we pretend is forever, and which can be challenging to enforce under some circumstances.

Which brings me back to the question of perpetual licenses for things that we expect to wear out.

I think we sell perpetual licenses because many of us deliver software as discrete, stand-alone assets that don't have an embedded life-cycle. We deliver software that does foo, and will continue to do foo. Perpetually. But if we give that software a life-cycle, and embue it with a capability to be continuously updated, extended, configured and integrated into other applications, is it still a discrete, stand-alone asset?

Once a piece of discrete, stand-alone software gains an embedded life-cycle, does it make sense to license it under a perpetual model anymore? Should we grant the right to use a piece of software forever if that software will change and adapt over time? More importantly, when a customer buys software, are they buying it with the intent that it will only ever do foo, or would they prefer to buy it with the expectation that it will do foo+?

Once a software gains this life-cycle, doesn't it become a service - even if you're installing it? Should we limit the use of perpetual licenses for (hard and soft) perishables, but use other forms of licensing (pay-per-use) for mutables?

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