Software Licenses Types Explained

This tutorial explains the software licensing model in detail. Learn how many types of software licenses are there and what are the differences between different types of software licenses.

A software license is a legal agreement between the developer and end-user that defines how the end-user can use or redistribute the software. There are mainly two types of software: open source and proprietary. Both types use different types of licensing models. Let's discuss both types and their license models.

Open-source software

In this type of software, the source code of the software is provided with the software to the end-user. The end-user can view, edit and modify the source code. The user can also redistribute the modified version of the software. There are different models of open source licenses offering more or less freedom of redistribution rights.

The most popular open-source licensing models are the following.

Public domain

This is the most flexible license. It grants almost all rights to the end-user. The end-user can modify and redistribute the modified code without any restrictions. The end-user can redistribute the modified code under his license.

Permissive

In the flexibility, this license type stands on the second number. Besides the redistribution right, this license also grants all rights to the end-user. The end-user can view and modify the source code. The end-user can also redistribute the modified code but under the same license type. To redistribute the modified code, the end-user cannot use the different license type.

Copyleft or Restrictive

In the flexibility, this license stands on the third number. It adds an additional restriction on redistribution. This license does not allow the end-user to modify the original license. To redistribute the modified code, the end-user has to use the original license. Besides the redistribution right, this license does not put any other restriction on the source code.

GNU/LGPL

This license allows the end-user to link or use open source libraries in his project or software. If the end-user only links open source libraries, the end-user can release his project under any license type. But if the end-user copies the open-source libraries in his project, the end-user has to release his project under the same GNU license.

Creative Commons Software

This license model allows the publishers or developers of the software to decide what rights they want to reserve and what rights they want to grant the end-users. This license type uses the simplest form of terms and conditions. This license type is mostly used by the publishers who want to release their project or software application under an open-source license but at the same time also want to reserve some rights.

different type of licenses

Proprietary software

In this type of software, ownership of the software remains with the software publisher. The software publisher neither shares nor allows the end-user to view and modify the source code of the software. The publisher only grants the use of one or more copies of software under a license agreement, known as EULA (End User License Agreement). A EULA contains the terms and conditions that define what the user can and cannot do. To use the software, the end-user must accept the EULA of the software.

To create a EULA, the software publisher can use a pre-defined licensing model or can create a custom license for the software. The most popular proprietary licensing models are the following.

Perpetual License

In this model, a version of the software application is sold on a one-time payment basis. A user can use the purchased version of the software application forever. The user gets updates and patches for the purchased version till the last date of the support cycle of the purchased version. However, this license does not include the subsequent versions of the software. If the user wants to use the next version of the software, he has to purchase it separately. For example, you purchased Windows7, you will get all updates and patches of Windows7, but you will not get any access to Windows10. If you want to use Windows10, you have to purchase its license separately.

Floating License

In this model, a license is used to define the number of users who can use the software application simultaneously. This license works on a "first come first served basis". Once all defined licenses are used, no additional user is allowed to access the application. If an additional user wants to use the application, either he has to purchase an additional license or has to request a license holder user to release his license. Let take an example. Suppose a company has 10 users. The company purchased a software application with 5 floating licenses. Now, any 5 users can use the application at a time. The company can rotate users in the pool. For example, it can exclude a user to include another user but it can't include more than five users at a time.

Subscription License

In this model, a license is used to define the time frame in which the user is allowed to use the software application. The time frame could be 7 days (a weekly subscription), 30 days (a monthly subscription), 365 days (a yearly subscription), or a custom duration. Once the subscription period is expired, the user has to renew the subscription. Netflix and Amazon prime are examples of subscription-based services.

Metered License

In this model, a license is used to provide access to certain features of the application. The user can access only the allowed feature of the application. For example, this license can be used to define the number of allowed login sessions, the number of files that can be created or accessed, etc.

Use-time license

In this model, a license is used to provide time-based access to the application. The license expires after a specific time duration. Once the license is expired, the user is not allowed to access the application. To access the application again, the user has to renew the license. Usually, the application notifies the user ahead of time that the license will expire soon. Notifications help the user to renew the license before it expires.

Feature license

The software vendor uses this license to control the features of the software that the end-user can use. This license is also used to limit the number of times a specific feature can use.

Trial license

In this model, a license is used to allow access to all features or certain features of the application software for a specific time duration. During this period, a user can test the application. If the user wants to use the application after the trial, he has to purchase a regular license.

Academic License

Software companies use this type of license to provide their software to students or engineers free of cost or at a minimal cost for educational or learning purposes. The main idea behind this marketing stagey is that if a student becomes familiar with an application during his academic courses, he is more likely to use the same application during his job.

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