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Writer's pictureDavid Briffa

Chapter 43 Software Licensing

Updated: Jun 12

Software is built with the intention of being used by many people. End users tend to use the software as is. Engineers use software and alter it according to their clients' needs. Engineers build original software and sell it. Legal instruments are required to have a common understanding. Software Licensing is a legal tool that describes how software can be used and distributed amongst people.

What Is a Software License?


A software license is a contract between the party/entity that is making software available and its end user. The license is a text document which describes what is being made available and how it can be used.


Two Basic Categories


Most software falls under one of two categories.

  1. Proprietary Software Proprietary Software, sometimes referred to as closed source, is software that is made available (sometimes with payment) without any authority to modify or reuse. The source code of the application is not shared meaning that end users will only be provided with an installer and license key. Rebuilding the application by reverse engineering the operational code is generally prohibited. Examples of Proprietary Software include: Photoshop CS5, Microsoft Office and Balsamiq.

  2. Free and Open Source Software Free and Open Source Software (FOSS) is software, including the source code, that is available for free. End users are encouraged to make improvements or reuse the code. There is a very large community of coders and engineers that produce FOSS software. Many development frameworks are FOSS these days. In fact, when I build applications I heavily rely on FOSS software and I try to give back as much as I can 😇. However, examples of applications that are FOSS include: GIMP, LibreOffice and Pencil Project.

Software Licensing Models


  • Public Domain Software Freely available for use and not copyright protected.

  • Private Unlicensed Software/Tailor Made Software Such systems are closed and entirely intended for internal business use. Tailor made software is privately comissioned software that is specifically designed and built for an organisation. Such software is still protected under copyright laws.

  • Freeware This generally refers to Proprietary Software that is made available to the user free of charge but cannot be modified or redistributed. Giving away software for free may be a good idea to advertise products or get engagement from customers.

  • Open Source Software is made available with source code that anyone can inspect, enhance and reuse.

  • Perpetual Single-User A person simply pays for a particular version of the proprietry software once and that person only is able to access it indefinitely.

  • Site-License A software product is paid for by an organisation, e.g., a company or a school, to be used by various people who are part of the organisation.

  • Shareware This is normally proprietary software that is free to download/install but extended usage normally requires some form of payment through the purchase of add-ons or perhaps technical support. This model is popular with game developers, as it enables them to build a lot of hype quickly, which is critical, but at the same time monetisation to support them is very possible. Antivirus software also tend to be shareware.

  • Subscription License via SaaS A software licensing model whereby users pay for a subscription in order to gain access to a service that is centrally hosted. Instead of installing an instance of an application on the computer, the user accesses it via the internet. This has a few advantages for the user, for example the burden of hardware/software management is on the company providing the service. The user will not have to worry about whether their digital device is compatible with the software, or whether the application needs to be updated to get the latest features or bug fixes. SaaS is also known as on-demand software. A lot of common applications nowadays are delivered this way:

    1. Streaming applications e.g., Netflix and Disney+

    2. Cloud storage solutions e.g., Google Drive and Dropbox



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