Electronic Licensing: What Every Software Vendor Should Know

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Electronic Licensing What Every Software Vendor
Should Know

• Richard Mirabella
• VP Corporate Strategy
• Macrovision
• rmirabella_at_macrovision.Com

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Globetrotter Software
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Macrovision - The Parent Company

• Financially strong and profitable every quarter
  for over 10 years.
• NASDAQ (MVSN).
• Revenues over 80 M in 2000, over 200 million in
  cash.
• Leading rights management for software video.
• By far the largest rights management vendor for
  software. Its technologies are de facto
  standards.
• Used by 7 of the top 10 software vendors.
• Video rights management is a de facto standard.
• 100 of DVD players, 90 of set-top and
  satellite,100 of digital video recorders, 75
  of DVD disks,60 of theatrical VHS tapes.

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What is Electronic Licensing?

• Developer integrates into product
• Electronic license certificates distributed to
  users
• Verifies if software use complies with license
  terms
• Logs usage information for Software Asset
  Management and Post-Use-Payment
• Implements business practices for marketing,
  sales and operations

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Issues Addressed by FLEXlm

• Slash unlicensed use and piracy
• Price more efficiently
• Control try-before-you-buy
• Penetrate accounts, encourage customer loyalty
• Implement post-use-payment models
• Fits Internet, CD, direct indirect
  distribution, ASP, updates over Internet with one
  binary set

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Why the Industry Is Adopting Electronic Licensing

• Vendors want to increase revenues customer
  loyalty
• Increases revenue (typically 10-20)
• Better licensing for deep account penetration.
• New ways of doing business (e.g., ASPs,
  Internet).
• Customers want to manage software assets
• Licenses offered by vendors better suited to wide
  adoption.
• Higher ROI and better management accountability.

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Network Economics

• Metcalfes law - value of a network increases
  with the square of the nodes.
• Also applies to using the same apps
  tocollaborate and share data.
• Impact.
• Increases the number of users needing an app.
• Encourages unlicensed use.
• Encourages standardization on vendors.

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Electronic LicensingBusiness Practices in
Software
Supports Notebooks LANs WANs Internet ASPs
License Server
Managed App

• License Certificates

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Policy in the License

• Simple API Instruments a product.
• Typically implemented lt 1 day.
• License terms described in a text filesecured by
  a digital signature.
• No need to make new S/W versionswhen license
  terms are changed.
• Supports the entire license lifecycle.
• Licenses designed to be sent direct to the
  application via HTTP, Web, email, phone, FAX, or
  paper.

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Network Licensing Encourages Wide Use
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Supports the License Lifecycle

• Licensing is not a one time event
• Match commercial events to electronic licenses
• Policies needed
• Demo/evaluation
• Initial purchase
• Incremental purchase of licenses (through
  multiple channels)
• Version Number Upgrades
• Version Date Upgrades
• Standard Packages
• Custom Packages
• Ability to mix

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Controlled Distribution of Updates

• Electronic licenses include upgrade rights
• No additional license transactions,
• Unless new upgrades are purchased
• By version numbers
• By anniversary date of software version
• Distribute binaries by CD, Web, or customer
  network
• Minimize operations cost
• Enhance customer satisfaction
• The Internet is making updates continuous

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Alternatives to Traditional Licensing

• Pay-per-use
• technology is built-in
• retains customer confidentiality
• Bill for s/w used above license rights
• limits to customer liability
• mix of licenses and 1 month 1 week licenses
• Application Service Providers
• need means for ASP to bill the ASPs customers
  and ISV billing the ASP

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Customer Acceptance of Network Licensing

• Everyone can run. Everyone is licensed.
• Infrequent, frequent immediate use.
• Affordable software access to all users.
• Vendor or customer can limit access.
• Better control over software assets.
• License tracking compliance is automatic.
• Many customers encourage vendors to use networked
  licensing.
• Intel, Motorola, Nortel, GM, Ford, Loral, NASA,
  Shell, Exxon, Chevron many others.