To combat these trends software and system vendors now see the need to change the way they market their products, to increase the value they offer their customers and to gain competitive advantage by better differentiating their offerings from the competition.

Licensing is amongst the most promising approaches to achieving more competitive, value-based offerings. Today, software and system vendors are seeking ways of moving away from the traditional model based on perpetual licenses and printed End User License agreements toward more flexible licensing models that yield attractive offerings and products that appeal to end users, not only in terms of features but also in pricing.

IP protection and secure licensing go hand-in-hand
Software license compliance was originally driven by software vendors who had motivation for preventing piracy. Now, this focus has broadened both in audience and in reason. Software and computer integrated systems providers realize that secure and flexible licensing can enforce compliance and increase sales. The providers’ end users are demanding licensing options, since they want to pay for what they need and use and increase their return on investment.

End users want to clearly state their preferences and expect their providers to offer appropriate licenses and charge according to value. Addressing these increasing demands can only be achieved with Software DRM solutions that offer secure and flexible software licensing capabilities.

Through licensing, leading Software DRM solutions provide software publishers and system vendors a means for assigning usage terms to software. Regardless of public perception, it is not the software that is purchased—rather it is the right to use the IP contained within the software. Licensing is also inseparable from pricing, as licensing is a tool that enables the implementation of innovative pricing and business models, including: try-before-you-buy, rental, subscription, pay-by-use, pay-per-feature, floating users and other metered and on-demand models.

At first glance, it may appear limiting to distribute software with licensing terms that seem restrictive. In reality, while earnings per copy sold may be less, in essence, the likelihood that users will be willing to purchase the rights to a license increases, since a particular license may be more compatible with their needs. This, in turn, provides the software provider with the flexibility to reach more potential customers who will be willing to make the investment.

Furthermore, utilizing sophisticated licensing models creates a means of differentiating a software or system vendor company’s product from the competition. Organizations are able to provide their customers with more attractive software offerings. Subsequently, more software is sold, and sales increase.