25 years of licensing

 By Mary Branscombe

Software has changed a lot in 25 years and so has the way we pay for it but some things remain the same, as Mary Branscombe discovers.

HardCopy Issue: 39 | Found In: Licensing | Published: 01/02/2008 | Last Revision: 06/07/2010

When did you last open a box of software? Today you might download an application, use an online service, acquire a Client Access Licence or get applications pushed to your system from the server. You might be using the same software on multiple PCs and even a smartphone, and you might pay for it per user, per CPU or even per month. However if you bought a copy of WordStar or Microsoft BASIC back in 1983 then it came in its own box with its own floppy disks, and that was one licence and one box of software per user. As Grey Matter’s licensing expert John Lockwood told us, this was an improvement over the mainframe world: “IBM and ICL rented the software and even the operating system to you on a monthly basis, although this did cover updates. At least at the desktop end you were buying a perpetual licence with no ongoing cost obligation.” Multi-user deals gave you multiple licences with a single set of media, again for a single payment. Businesses didn’t need to find shelf space for so many boxes of software, but there was no guarantee that the software would only be installed as many times as it had been paid for so copy protection became common. It wasn’t popular with users and many people believed the significant copy protection introduced with WordStar 2000 led users to switch to WordPerfect (although an incompatible file format, different keyboard shortcuts and less customer support than the competition might also have been to blame).

Share and share alike

Other software developers took advantage of the way software was passed around at user groups and on bulletin boards, saving them the cost of printing manuals and copying disks. Andrew Fluegleman, Jim Knopf and Bob Wallace developed PC-Talk, PC-File and PC-Write and included a request in the documentation for users to send money in exchange for support and new features. Businesses sprang up to sell floppy disks of shareware, as it was called. Magazines gave away the disks on their covers and CompuServe introduced an option for paying shareware fees. Successful shareware titles like Procomm turned into traditionally distributed commercial software, but as mainstream publishers started to produce commercial programs at shareware prices, the market shrank. Some shareware developers turned to open source, many introduced trial versions (although some of the most successful shareware titles like WinZip still have nothing but a reminder) and Internet distribution made the difference between shareware and other commercial software irrelevant.

The dongle

Many applications used installation codes that had to be typed in, but copying a licence code wasn’t any harder than copying a floppy disk so if you wanted to control the number of machines on which an application could be installed you needed extra hardware. Usually that was a pass-through connector that fitted into the parallel port of a PC – you could plug a printer cable in as normal but the software would only run if the hardware was present. Brand names like Sentinel invoked security but the connectors were always known as dongles.

Some applications were individually encrypted and could only be decrypted on a machine with the correct dongle. Every copy of the software was a custom copy, individually locked. This took time and effort for the developer but was justified for high price applications such as CAD software – if an extra licence cost thousands of pounds per seat then the effort of protecting it was worthwhile. A demo version that you could only use for a limited time could also be tied to a specific dongle: the dongle stored the date or the number of times the application had been run so you couldn’t keep using it just by resetting the date on the system or deleting a log file. When software began to be distributed on CD, the sheer size of data files meant that unless you had an unusually large hard drive you had to have the original CD to run the program, even after you had installed it. As hard drive sizes increased, many games and some multimedia applications (including the full version of the Oxford English Dictionary) used the CD itself for copy protection, leaving specific blank areas on the disk or using other unusual formatting that not all disk-burning software could reproduce at the time. Controlling licences centrally proved more successful. As soon as computers were networked, software like Quark XPress and Adobe Photoshop began to check if an installation code had already been used on another machine on the same network. Client-server applications could limit the number of clients that could connect to the server at the same time or prevent installation on extra machines. You could install the same copy of NetWare 3.11 on two separate networks, for example, but you couldn’t connect the networks together. Now it’s common for the installer to check online to see if a licence key has already been used, and the Internet makes it easy for software publishers to issue unique licence keys and tie extra benefits like patches and updates to having a legitimate, licensed copy of the software.

Select your agreement

Today businesses have a choice of how they pay for software, says Lockwood. “They can pay all up front or split the expenditure with known costs.” They can also choose a range of benefits along with the licences. Microsoft offers Enterprise agreements, Select agreements and now Open Value agreements: “Some of them offer licences only, some of them offer licences with additional benefits like new releases, some technical support, electronic training benefits and work at home rights all built in.” Microsoft’s Software Licensing and Protection Services allow ISVs to turn individual features on and off for dynamic licensing as business needs change, but access to new releases is often more important for developers: “Taking account of new hardware, new features, new methodologies, new ways of presenting information and the continual wave of new features and new technologies being drawn in, people who want to keep at the edge of the technology will want to keep getting updates.” There’s also the issue of who can use an application or service and on what device: “With volume licensing, secondary user rights mean you can install on a desktop and a portable device, or on a server and your desktop using Terminal Services. BizTalk and ISA Server are per processor and not how many users, but most products still use a server CAL and you pay for each user and device connecting to the server. “There are user CALs and device CALs, so you either cover the device and it doesn’t matter who’s using it at any one time, or the user can access the server from any device he likes.” Virtualisation adds another level of complexity: “Usually each instance will require a licence for it to be used but Windows Server Enterprise allows the main copy and up to four virtual installations on the same machine.”

Still complicated

For all the developments, John Lockwood doesn’t believe software licences have changed much in the 22 years he’s been with Grey Matter: “In essence the fundamentals have not changed, though all sorts of other things have been added because of changing legal requirements. The essentials are still there: we don’t warrant that this will do anything other than what we say it will do; we don’t warrant anything apart from faulty media; we still retain the right to the software itself and we permit you to use it in these certain ways. That hasn’t changed, there’s just this complexity of other schemes around the licensing.” There’s a wide range of licence mechanisms and software publishers take a piecemeal approach to protection that can be confusing, no matter how good your intentions. “Some things are controlled very strongly. With MSDN you have a limited number of times you can re-install something for testing and then you have to get more licences. But SQL Server Development Edition has all the facilities of SQL Server – it’s purely a licence restriction that says you mustn’t use it as a production server.” Unfortunately, he thinks the future holds more complexity rather than less: “For end users to understand licensing schemes when they only need to deal with the problem every two years is hard; they find the complexity mind boggling and frustrating. If the publishers communicated better what they’re doing in the changes it would help but it’s not getting any better, it’s probably getting marginally worse where you’ve got a multiplicity of schemes. Narrowing down which is the one that’s really relevant to you and then clearly comparing the options of one with another is difficult: you can’t compare a two year scheme with a three year scheme, for example; you have to do it over a six year period.” The days of FAST raiding companies to check on their software licences have gone: now publishers like Microsoft are more likely to send a letter “reminding and encouraging people to review their status.” Between the complexity of licensing, regulatory issues and the sheer cost of software, Lockwood says, “Auditing services like SAMwise have mushroomed over the last few years. This makes sure a business has bought all the licences it needs and it isn’t paying for licences it doesn’t need.” So while he expects to see more online distribution in the future, with both applications and licences coming directly from the publishers, it’s going to be worth consulting a licensing expert for many years to come.

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