Software Monetization

Here is a term that has made it into our vocabulary a bit too much lately – “wobbly”. Suddenly everything is wobbly – our economy, stock market, jobs market.  The obvious connotation is “uncertainty” but wobbly has also become a cop-out term for not knowing where something is headed. It is a sign of times we are in – or so it feels. Uncertainty in economy leads to uncertainty everywhere else.

My advice – something I try to follow rigorously at work and and personally  – when you are surrounded by uncertainty, do the opposite – be decisive. This is especially true for high tech companies.

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In my last blog entry (Show Me The Money, Part 1) we looked at a number of factors that play into software revenue recognition when a vendor (ISV) introduces electronic license enforcement into their product lines.  Part 1 focused on the principles and mechanics behind giving customers access to the software upon order execution so that the ISV may recognize revenue.   Part 1 concluded by bringing another key element into the revenue recognition equation: time.  Time can affect revenue recognition in a number of ways:

• We have the time required by the customer to actually get their license keys after the ISVs claims to have given them “access” to the software.
• We have the software’s ability to run by default without a license key for a temporary amount of time.  Does that count as “access”?
• We have some ISVs selling perpetual entitlements but wanting or needing to deliver license keys that expire annually.  Does the customer really have access to what they bought?

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Great companies consider and plan for the whole user experience – the product, its price, how its purchased, updates through its life and the service and support provided.

In the days when products were purchased up front – and the monetary relationship came to a close – all the burden was on the buyer to research, plan and hope that, after parting with their money (monetization ends), the product will have met and continued to meet or exceed their expectations.  Because the customer experience often falls below this mark – and yes, sometimes with enterprise software – the dynamics of the buyer/vendor relationship are changing.

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Part 1 of 3 from the series “Take on Licensing: What High-Tech Manufacturers Need to Know”

If you’re an equipment manufacturer in the high-tech sector, you are probably already deeply involved in the evolution from a pure hardware manufacturer to a software vendor.   Whether you are in the business of selling software-driven equipment for the automotive industry, medical imaging and diagnostics, digital printing, sophisticated surveillance systems, coin-operated gaming and casino gambling, the change to software licensing is impacting your business.

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A common argument against DRM is that it punishes paying customers without successfully preventing piracy. Legitimate users are restricted from freely using the content or software that they rightfully own, while illegitimate users can still download the very same content, and use it without restrictions – and without paying the publisher. Read More