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Software licensing must evolve, executives warn

Two major software companies have demanded that software licensing practices must change to accommodate economic and technology trends.

Officials from Macromedia, which is using an electronic licensing-based format for some of its applications, and Macrovision, which introduced the FlexNet e-licensing platform, were speaking at the SoftSummit conference in San Jose.

"Pricing and licensing is not as sexy as [technology], but you know it's a pretty hot topic," said Tom Hale, senior vice president of business strategy at Macromedia.

"Our customers are more and more diverse and having different needs. It’s a very big challenge for us to have to deal with this."

One-size-fits-all solutions are no longer the rule, Hale said. "It's very rare that you see off-the-shelf deals anymore. Everything's customised."

Customers pick and choose what features they want to use and licensing must accommodate that, Hale stressed, adding that suppliers are trying to create predictable revenue streams and battle issues such as software piracy.

Macromedia is using e-licensing, which has customers electronically entering serial numbers for access to software so they get the software they pay for, Hale added.

"We actually need to educate our customers so they understand the benefits of e-licensing," he said.

Macromedia was able to simplify shipping by bundling both Macintosh and Windows versions of software in the same box and have customers license which version they want electronically.

In relaying its message about licensing, Macromedia has stressed the term, "casual copying", as opposed to the term anti-piracy.  Hale said his company has found about 17% of total activation volume is denied in Macromedia's anti-piracy efforts.

Macromedia has activated tens of thousands of clients with its product activation plan. Hale said there had not been a huge groundswell of negative comments, although he admitted there have been "some tough comments".

The enterprise pricing model, including long implementation times and product service arrangements, will one day be replaced by software as a service, Hale said. It is being outmoded by arrangements such as the ASP model, which has seen online CRM company salesforce.com make a dent in that market.

Deployment of software on devices such as PDAs also requires new licensing models. For example, a telecommunications provider may be licensing software on behalf of PDA users.

Hale rejected an industry report which claimed the software industry is mature, saying there is much more innovation possible.

Macrovision, meanwhile, introduced FlexNet, which can be embedded into a software publisher's source code or "wrapped" around it, enabling the publisher to generate, track and enforce licences electronically .

The software supports a utility pricing model for software, according to Dan Stickel, executive vice president and general manager at Macrovision. "You're paying for what you actually use," he said.

Paul Krill writes for InfoWorld


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