Software manufacturers and users are at loggerheads over licensing, according to a new study.
While software publishers move to subscription-based pricing, companies prefer the traditional one-off fee, said the study, sponsored by Macrovision, the Software & Information Industry Association, and the Centralised Electronic Licensing User Group - all of whom want companies to move to subscription models.
The survey spoke to 396 software industry executives and 100 enterprise users, and found that one in three software companies have subscription-based models as their primary pricing model. Half are expected to do so by 2006, the survey claimed.
However, businesses prefer by a two-to-one margin to stick with the perpetual licensing model (one-off fee). This means there could be an "expectation gap" between vendors and customers in the future, the study reports with stunning prescience.
"I think what's happening is the difference between the laggards and the innovators," said Daniel Greenberg, VPof marketing at Macrovision, which, incredibly, sells software licensing technology. While the software publishing and technology industry is quick to adopt new trends, enterprises such as automotive industries and utilities are more resistant to change, he said.
"We do think there will be some friction as the software publishers try to roll out the subscription pricing," he said.
While perpetual pricing has enabled users to acquire software user rights permanently for a single fee, Greenberg pointed out that enterprises still pay ongoing maintenance fees. Subscription-based pricing will spread the payments out more evenly, he promised.
Although users with a perpetual license can use the same release as long as they want, history has shown they want to upgrade anyway, Greenberg goes on. "I think history has proven that software quickly becomes obsolete - computers get faster, demands get greater, and software quickly gets obsoleted in the process."
The study also found that the most prevalent pricing models are per-user and per-seat-based, but that metrics-driven models are growing in popularity. Under a metrics model, software is licensed based on factors such as number of users, transactions, or time used.
Nevertheless, more than 70 percent of business execs say they prefer the traditional pricing and Greenberg admits that software companies will ultimately users decide on licensing models. "I don't think any software company can impose a paradigm shift on their customers," he said.