Guide To Different Types Of Software Licensing

different types of software licensing

Let's say one day you buy new task-managing software for your company. It was super cheap, it runs well...then a team of lawyers rappel down your building, smash in through the windows, and hit you with a veritable barrage of lawsuits. 

Ok, so you won't have to deal with a SWAT team of lawyers. 

But anytime you get new software, you should make sure you know what the license is. Otherwise, you do risk incurring some serious problems if you unknowingly violate the license. But what are the different types of software licensing, and how do they work? 

Well, wonder no longer! We're here to break down everything you'd ever need to know about the types of software licenses! So without further ado, let's get into it! 

First Things First 

Before we break down the different types of software licensing, it's important to know the basics of how software licenses work. Think of a software license like a deal you make with the company that produced the software. You get to use the software in exchange for following the terms and conditions they present. 

More often than not, this licensing goes into place to protect the copyright a company has with the software. This is because anything violating the terms of the license stands as a breach of copyright. This also tends to mean that the user cannot access the source code of the software and either copying or altering it in any way. 

That said, different companies have different levels of protection on their software, and that's where the different types of licenses come in. 

What Are The Different Types Of Software Licensing? 

The first type of software license we're going to talk about is public domains. This is the most hassle-free entry of the list, as this means the software is free for anyone to use in any way they choose (including for commercial use) since it is not owned by anyone. Famous examples include SQLite and CERN. 

Next on the list is open source (i.e., LINUX). Open-source software carries many of the same freedoms of public domain software, like the ability to modify the code and use the software however you choose. The difference lies in the fact that open-source code still carries copyright with it (albeit a very loose one) while public domain software has no copyright at all. 

Several sub-types of copyright licenses exist among open-source software. One of these types is MIT, which requires you to put a specific copyright statement about the software you used in any work you produce with the software or reproductions of the software you give to others. 

And Then Things Get Complicated 

Copy-left takes this a step further by stating that anything you produce with the open-source software becomes subject to the same regulations as the software you used to build it. So, if you made a video game on open source software with a copy-left license, your game would become an open-source piece of software as well whether you wanted it to or not. 

The next "tier" of software license is anything that falls under the "freeware" banner. Freeware means that you can use the software free of charge, but it's still a copyrighted entity with a unique list of restrictions on how you use it. 

Shareware, on the other hand, gives you a limited "free trial" of copyrighted software. It used to work on the honor system (when your trial finishes, you either paid up for full use if you wanted to use it more or deleted it) but has since evolved to lock you out until you pay. 

The Big Kids On The Block 

Finally, we get to the proprietary license. This license happens with commercial software developed by a company that will sell it to you for a very specific use. No mucking around the code here, since this software is the product the company makes money off of, and you'll get stripped of your right to use it (if not worse) if you try anything funny. 

There are two main forms a proprietary license will appear in, and those are perpetual and subscription. Perpetual is a one-time purchase that grants you infinite use of the software for as long as you want. Subscription, on the other hand, requires you to pay a monthly fee of some kind to keep your access to the software while also offering incentives the longer you stay on the subscription program. 

The Island of Misfit Licenses 

In addition to all the licenses we mentioned, there are a few more licenses that serve as specialized restrictions for certain kinds of software. For example, Original Equipment Manufacturer licenses grant you the ability to use any software bundled with a piece of technology that you buy (like a laptop). Applications like iMovie and the Safari web browser tend to fall under that umbrella. 

Not For Resale licenses get used when software sellers want to give the software to a company in a straight transaction. This prohibits the buyer from giving it to the public or other companies. Concurrent Use licenses mean you have to buy an "individual unit" of the software for every single person that's going to use it (as opposed to selling it to one person to distribute to others). 

Volume Licenses operate on a similar principle, requiring that you get a certain amount of units to buy the software at all. Educational software licenses distribute software to schools or teachers at reduced costs, and server licenses grant you an individual license for every server you run software on. 

This all seems super complicated, right? Well, if your business wants to keep a handle on all the software licenses they juggle, they can get SAP license management to make sure they're up to code while avoiding any unneeded payments.

Master Of The License 

And there you have it! You now know all the different types of software licensing! And if you want to know even more about enhancing your business through computer software, check out the other posts on our blog! 

Now, we need to check why lawyers are rappelling down the side of our building...

New Frugal Finance Blog Posts & Articles