How’s this for an age-old discussion? This topic was very hot back in the 80s and 90s when I was first getting started in the software business. It was a topic that was hotly contested for quite a while, and then largely went away (at least as a topic of discussion!) for quite a while.
WHY SOFTWARE PROTECTION WENT AWAY THE FIRST TIME
The reason copy protection largely went away is that previous generations of license/copy protection schemes were so bad, that the marketplace demanded their removal–at least in mass market and mainstream business applications. The worst of these technologies, of course, were the hardware dongles. They consistently created unhappy, irate users. I know of companies which almost went out of business because of them. Although hardware dongles never completely went away, they ceased being an important factor in the business long ago.
That doesn’t mean that everyone stopped copy-protecting their software–a number of hardcore holdouts continued on. This has always been an emotional issue. Software developers work long and hard, at great expense and not without risk, to produce a product that will be accepted commercially, and provide a meaningful financial return for their effort. As a result, some developers never stopped copy-protecting, regardless of the problems that these technologies presented for their end users. These approaches caused all sorts of problems, from creating license control issues, to locking up machines or causing the software to not function properly. Again, this is an emotional issue for many developers, the thought of someone stealing their work. And of course, this is quite understandable. No one likes to work hard, only to see someone else commandeer their work for free, against their wishes.
But copy protection for some time now has been largely limited to niche categories with little competition, as well as a few stubborn companies in more mainstream market. This happened for two major reasons:
- Competition–with most copy protection going away, keeping your copy protection in your product became a competitive disadvantage in most markets.
- There’s another adage that developed in the software business after copy protection largely went away: “It’s not about how much they steal, its how much you sell.”
People in the industry decided that a certain amount of theft was inevitable in the software business. So the thinking went, you should focus on selling to those who will actually pay for it, rather than worrying about those that will steal it. The belief became that anyone of consequence who was using your software, they weren’t going to steal it anyway. Especially in business markets, with the need for support, given the productivity lost if someone was actually using the software seriously–making theft an activity only for stupid people. Not to mention the fact that if you worked for someone else, there is really no upside to not paying for software. Now, of course in consumer markets things are a bit different, because the money comes out of the user’s wallet, and usage may be more casual, making support not as critical. But in the end, the same rule applied. It’s more important to focus your efforts on selling, rather than preventing theft.
So what has changed over the last couple of years, prompting me to write this article? As it happens to occur frequently in our business, technology has improved. The new technology is known by a number of different names: License Management, Licensing Servers, Registration Servers, to name a few–I’m sure there are more. Along with that improvement in technology, a number of larger software companies have embraced some form of this technology in at least some of their products. Microsoft and Macromedia (now Adobe) happen to be a couple of companies that come to mind, that I’ve encountered some form of license management in their products. When these companies embrace something, it causes you to at least step back and take another look.
These license servers have taken advantage of the pervasive connectivity of the Internet in today’s world. Essentially, they require you to “check in” with the server online, before you can use the software. In this way, they can keep a master record of who’s purchased what software, and check it against your registration. If for example, too many people are attempting to use the same registration number, it can prevent unauthorized users from enabling the software. In addition, most of these products have flexibility built in, so that you can trade off usability vs. enforcing the license strictly. For example, you could choose to allow two registrations per purchaser, enabling people to use one copy on their desktop computer and one on their laptop, as some license agreements allow. This type of flexibility, if used properly, may allow you to increase your revenue while limiting irate tech support calls from your legitimate, paying customers.
SHOULD YOU DIP YOUR TOE IN THE WATER?
So where do I stand on this issue, given all the reasons stated above including the all important “it’s how much you sell, not how much they steal.” Well, I still believe in that old adage, but I will admit the new licensing products do have me intrigued. It’s still most important to focus on selling, not preventing theft, if you want to grow your software business. But the complete ease of installing software without having to pay for it has always been a problem for developers. It’s so easy to steal that it has become a bit of a habit for some, and accepted behavior from a societal perspective. It became almost a “don’t ask, don’t tell” kind of cultural phenomena to use pirated software.
Of course, theft rates have been decreasing for a long time, even in emerging markets where the problem is the worst. But theft rates are still really high compared to just about any other business that you can think of. If even of few of those freeloaders can be convinced to pay what they should, it may make a meaningful impact on a software companies top and bottom lines. So if it can be done without significantly inconveniencing legitimate buyers, it would certainly be helpful to have a way to remind otherwise honest people that they should stay honest, when it comes to software. As a result, this is an area where I’m advising my client to slowly dip their toe in the water–conduct a controlled test with License Technology, and evaluate the results.
This is a topic which I’d really like to hear your feedback on. Do you use, or have you at least evaluated using a License Management product, or some other form of protection? What are your conclusions? This could be a very valuable discussion for many in the software industry. Post a comment on the Morettini on Management Blog, or send me an email.