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Why You Should Consider a Named User License Model

By Peter Scott, TMCnet Contributor

On the one hand, the marginal cost of issuing a software license is nearly zero in many cases; the cost of developing software and running the business is hardly affected by allowing an additional user to use code that’s already been developed. At the same time, failing to fully monetize software can keep developers from recouping their costs and making a living from their labor.

So while unlicensed software does not cost a developer directly, indirectly it is incumbent that code be properly monetized.

One way to help ensure that software licensing revenue is not left on the table is by moving from a user-based licensing model to a named user license model.

The difference between the two is that named user licensing keeps consumers honest far better than a user-based licensing model.

With a user-based licensing model, a license is considered used when an application is verified as being installed. Developer discovery and inventory tools recognize that a software license is consumed by a user, but many licensing schemes fail to adequately protect against the software’s use on multiple devices.

This option to have the software on multiple devices might still serve just the licensed user in question—but it also might open the door for others users who take advantage of the software, and without paying more. This is the model most of us have grown up around.

But there’s a better model out there, as noted in the recent Flexera blog post, Software license consumption—when does it happen? There’s the named user license model, which is much better at ensuring that software is not shared above and beyond the license.

With a named user license, the software license follows the user and cares less about the device where the software is installed.

A good example of a named user license is Adobe’s (News - Alert) Creative Cloud subscriptions. Install the Adobe software wherever you want, but it only can be run when a licensed user is logged in—and not in multiple locations at the same time.

This not only is better for proper software monetization because it captures actual use, it also thankfully is becoming accepted by consumers who are getting used to cloud applications and this named user licensing model.

There still are times when a user-based licensing model makes sense, but these scenarios are few and far between.

As a software user I hate to tip off developers that they can better monetize through a named user license. But the truth of the matter is they can, and I have little choice because named user licensing is becoming the standard. My days of sharing software with friends have all but come to a close thanks to the prevalence of named user licensing schemes. Bad for me, but great if you’re a developer.