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Software Licensing- An Overview


A Software License is a legally binding agreement that specifies the terms of use of an application and defines the rights of the software producer and the end-user.

Fierce competition, cloud and virtualization and software piracy all force the software producers to adopt one or the other form of software licensing to meet their organization’s need in the best possible way. Software Licensing allows software producers to combat piracy and generate revenue by easily enabling new software monetization, licensing, pricing and packaging models.

There are different kinds of software licenses and licensing contracts depending upon the requirements of the vendors.

End User License Agreement (EULA)

EULA defines the end agreement under which the end-user may use the license. Also known as ‘shrinkwraps’ or ‘clickwraps’, such agreements between the organizations often specifies the terms of use for all the users of the organization, superseding any EULAs which may come with the software.

Proprietary License

Most software licenses are Proprietary Licenses. This means that the publisher has the sole ownership rights of the software but allows the users to use one or more copies of that software while the right of ownership of those copies also remains with the publisher itself. The user must accept the license before he is permitted to use the software.

General Public License

These are the agreements used in cases of ‘open source’ softwares. Under General Public License (GNU), the end users are allowed to download or use the software for ‘free’, that is, without a charge and are also allowed to make any changes like to the source code but the refinements of the software must also be made available under the GNU GPL license.

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Concurrent Use License

With a Concurrent Use License one can install the software on many machines at the same time, provided the total number of machines does not exceed the number of licenses one has purchased. Concurrent use licenses are employed along with ‘license manager’ that checks the number of machines being used from exceeding the number of licenses.

Perpetual Licenses

Such licenses are without an expiry date which allows the users to continue using the software without having to pay a recurring fee to continue its usage. Most softwares sold for the use at homes come with this license.

Non-Perpetual Licenses

This license necessitates the end users to pay periodically for the continued usage of the software. It leases the software to the user with them having to pay a continual fee, usually annually or sometimes bi-annually.

Site Licenses

These call for the installation of the software on multiple machines for as long as they are located on that particular site or region. Some vendors refer to their license as site license but may restrict the number of installations per site. To be sure, thus, one needs to read the license specifics carefully.

License with Maintenance

Some licenses allow the user to purchase the ‘maintenance’ or ‘software assurance’ of the software along with the usual fee of the license. This gives the user the right to receive the new versions of the software until the maintenance license expires.