What You Need to Know About Software Licensing

Every business uses lots of different software, from operating systems like Microsoft and programs like Adobe to social applications like Facebook and Instagram, and all software comes with licensing agreements. But how many businesses really read the fine print?

It's always important to know what you're actually agreeing to when signing or clicking on agreements - especially since breaching a license agreement could be detrimental to your business.

In this week’s WineDown episode, we discuss the ins and outs of software licensing and what you need to know to protect your business.

Video Transcript:

Nick: Well, hello and welcome to the WineDown. In this episode, we're talking about software licensing. What it means, how it can affect you and what you need to do to make sure you're in compliance. So sit back and enjoy.

Scott: We decided today to talk about a remarkably exciting topic, Software Licensing. The only thing is, there's a few quirks and there's a lot of changes in this area, this part. A lot of changes in the industry around Software licensing as well. We thought it'd be a good thing just to have a bit of a chat about it.

Nick: Yeah, I think it's super important as well. There's so many things hitting you as a business owner, you need to be across, and Software Licensing is one of them. And I've seen too many business owners kind of ignore it, or think it doesn't apply to them or think it's not a problem. And it kind of comes back to when you sign up for something and never reading the agreement.

Scott: Well, yes.

Nick: You go and buy a car, I'd actually say, how many people read the agreement when they buy a car as well?

Scott: Well, or the manual.

Nick: Exactly. But funnily enough, when you buy a car, you're also signing up to a bunch of software licences.

Scott: Actually, you are.

Nick: There's actually now software in the car.

Scott: Same as like when I bought a dishwasher recently and it came with an open source agreement attached to the back of it.

Nick: But that's interesting when you talk about that. So software today, you don't just write a program in kind of a vacuum. Software is built on software, which is built on software, which is built on software. And so what happens is every piece of that software has a different licence. What we talk about when we talk about software licences, not just the bit you buy, it's actually licences all the way underneath it.

Scott: But I've got an expectation, though, that if I buy some software of, say, ABC company, that they're going to manage all those other little bits that they use.

Nick: You certainly hope so. This can catch people who go and build software themselves, so people who build software themselves, or hire an offshore developer to build something and try and project manage it, don't think about the fact that this software developer is going to use potentially hundreds of third party components, all of which have licences and have implications.

Scott: But that's the thing that, these days, if you write a bit of software and you need that to communicate to something on the internet. That network layer that does the communication, you can either write that from scratch... In which case you got to write it, test it, debug it, make sure it works. Do you comply with the standards and all that sort of thing. Or for free, you can take a module that's available to use, no charge, that actually works already.

Nick: Well 'for free' is a gnarly one. One, you've got to be really careful. You might think it's free. You might be able to get a copy of it. You might even be able to read the source code of it for free. But it still might not be free.

Scott: Okay, let's come back to that. That's interesting. So, I guess, what is a licence? What is a software licence?

Nick: Okay, so you never own software. So that's the first step. The first hurdle to get over is you will never, unless you've created it yourself, you never own software. You can attain a licence to software, but you never own it.

Scott: When I was a lot younger and bought my first bits of software, and, in some respects also like movies and things like that, I thought, "I own this now". And technically, no, you don't.

Nick: The first line of any end user Licence Agreement states this software is licensed, not sold. That's the very first line.

Scott: To the average person, what does that really mean?

Nick: It means you don't own your software.

Scott: Yes.

Nick: And there are ways to breach that agreement, which means you won't have access to that software anymore. There are ways to breach that agreement so bad you'll never have access to that software anymore. Which means any data you stored with that software, you also don't have access to anymore.

Scott: Well, that's interesting. So if you store your data using, I'll say, an open source module or a module freely available, and we'll clarify what that means soon, in a certain format that that module uses, and you can't use it anymore going forward, then clearly you've got to go and convert your data into some other format that's understood.

Nick: Which is potentially not possible.

Scott: That's true too. It could be encrypted.

Nick: It could be all sorts of things. For example, a very popular open-source software is called SQLite. Which is used for most file formats now, and SQLite allows the software writer to actually encrypt the data using the key of their choice.

Scott: Okay.

Nick: Now it could be that you're using some software that uses SQLite, where the software vendors decided to encrypt the data. You breach your licence condition; they won't give you the key.

Scott: That's a worry.

Nick: You can't crack that. Well, you can, but it will take up to the heat death of the universe to crack it.

Scott: Unless you get a nice little computer like the one you bought, in which case it'll take longer.

Nick: It'll take longer. Yeah, I've been building retro computers this week.

Scott: Getting back into the more common elements of this. Software today: you would either buy it outright as what we call a perpetual licence. As in, a licence you don't have to renew every year or every month and you would probably pay maintenance on that to keep it up to date. Or there is some sort of a subscription or rental agreement in place.

Nick: Yes, most software vendors are moving towards the subscription agreement, and there's a real commercial reason for it. They're not just trying to take money. Well, actually, there's two. If you look at something like Office 365, there's a whole bunch of hosting done by Microsoft to make that software work. But even something else they use, they use a product called Camtasia by TechSmith. That's something I saw on my own machine. They don't do any hosting for me, but they do an upgrade every year. And their upgrade has some new features, it has some security fixes, it uses the latest processes, so they're doing a whole bunch of work during the year, and if I subscribe to maintenance, I get that upgrade cheaper.

Scott: I think this is what Microsoft kicked off a while ago, where they were losing ground to Google, which was only available on subscription. And because it was available on subscription, it was always the latest version that was available in the Cloud.

Nick: Evergreen things are a real important thing, and the number of organisations I've worked with, walked into, historically, which have incredibly dated technology. You're seeing that less and less and less now, because people are running Office 365, they're running the latest version of Windows. There isn't this kind of huge, "Oh my god! It's really hard to upgrade!". It's just a thing that happens.

Scott: But if you look at the subscription model, you're getting paid a smaller amount every year, though.

So over, say, 10 or 20 years, you would make a lot more. We're aware of someone we know who actually uses a copy of Excel 2002 because it does what they need, and they've had no need to upgrade it for their particular requirement. But having said that, it's now a 20 year old bit of software which they've bought once 20 years ago. They're properly licenced for it, but it was bought 20 years ago. And you think, gee, if they're doing that, they're getting good value for money. Perhaps not the latest features, functions, and support and all those other things, but...

Nick: It's quite funny. People used to say people only use 10% of Word or Excel. That's probably still true, but everybody uses a different 10%. They get a bit stuck when somebody sells them a new dashboard spreadsheet using the database. And if something doesn't work. Or they send them an open XML spreadsheet which doesn't work on Excel 2002.

Scott: That's true too.

Nick: You say, "I only want to do this task with it." They're multipurpose tools. You're not just doing one task.

Scott: You don't know what's happening later on. Excel 2002, for example, you only have about 64,000 rows of data and you think, "Why do I ever need more than that?" Well, you don't until you do.

Nick: Exactly.

Scott: Anyway, it's interesting. So the idea with the subscription model, though, also helps the valuation of a company.

Nick: Yeah, that's important. But I'm not sure that's as important for customers as it is for...

Scott: No, it's important for the vendor because, if I'm a vendor and I sell my product once and hope that in 3 years time you're going to buy the new version when I bring it out, I know I've got a bunch of cash now. I hope that sustains me for 3 years and I hope you're going to buy the new version.

Nick: I think Microsoft always said our biggest competition to a new piece of software was the previous version.

Scott: That's right, because you may not need all these features and functions that are coming out, but at least if you're subscribing it's just, every month, you just keep it there. It's only a tiny amount you're paying every month, and all your data is stored, and all your other applications and things are stored.

Nick: And it's secure. The technology landscape is evolving all the time - so are the threats. All the time. The vendors are playing catch up with those threats and patching things and running things better and finding ways to do things faster. But we're also finding ways to do things differently. I'll give you an example. There was, years ago, a piece of software compression called Diffie-Hellman software compression. Pieces of software compression and then the Zip format came out, and then Peak Haywire had all sorts of things going on with Zip. There's now a new form of compression called Brotli. Brotli is a compression algorithm which came out less than 10 years ago. It compresses losslessly so much better than Zip ever did.

Scott: Wow.

Nick: It's amazing. We actually use that now in modern web servers, and that reduces the size on the wire of applications significantly. But if you're still using old stuff, you don't get access to that type of technology.

Scott: I actually like the Fractal compressions myself, but they're just too heavy for the average machine to handle. Anyway, so Microsoft has had its licensing agreements around for a while and I think, everybody well knows, used to be on the old box product, that's the little bit of paper in the really tiny 2 point font that was stuck on the envelope on the outside.

Nick: When I worked at Microsoft, I had the absolute pleasure of working with the Microsoft Licencing team on defining one of those.

Scott: Oh, wow.

Nick: That was an experience.

Scott: Yeah, there's a year of your life gone.

Nick: Certainly, probably 120-130 hours. Well. And I wasn't drafting it, I was just answering questions.

Scott: Yeah, it's a model. And of course, now, when you sign up to new software online, 'Click here to accept the licence agreement'. And you think, "Well, where's the licence agreement?" And there's a little window, it's like four lines high, and then you're trying to scroll through what could be like a 1000-line document in there.

Nick: There's actually a legal term for that clicking. It's called a Clickwrap. And by that, a vendor can prove in court, and it's been tested, that you agreed to that licence agreement or not.

Scott: Well, that's interesting.

Nick: In fact, they did one in the UK, just talking about licence agreements, where they got trickier to use this software. And in the licence agreement, it says that by signing this licence agreement, you agree to give 40 hours of community service. They just sold it in a certain area in the UK and they called these people on it and said, "You need to come and do your 40 hours of community service." And some of them took the company to court and lost and they had to do their community service.

Scott: Wow, that's amazing.

Nick: That's why you read licence agreements.

Scott: That's very interesting. We've come a long way from the old days of the markets in Hong Kong, where for $2, you can get whatever you wanted.

Nick: Exactly. There's more money to be made doing it the right way.

Scott: That's right.

Nick: I'm just putting it out there. You know, one of the things that scares me as a parent is I have kids who agree to licence agreements all the time. On TikTok or Instagram or whatever, those all have licence agreements. You may find your child becomes, for example, a famous photographer, and all the photographs they took as kids become part of their portfolio. Except, they don't.

Scott: No,

Nick: Because they shared them on Instagram and are now the property of Instagram.

Scott: Yes. If you read those, and most people are sort of half aware of this, but would be quite offended, I think, to some degree, if they really thought about it. The Facebooks, the Instagrams, the TikToks, and whatever says whatever you post, it's theirs.

Nick: Exactly.

Scott: And it's theirs forever.

Nick: I think you'll find consumer protection is not going to help you a lot there either. We've got quite strong consumer protection laws for certain things where you're not paying anything for something if it's not directly harming you and you've agreed to something.

Scott: Yeah. Well, you're not necessarily not paying something, though, but you are obtaining a benefit.

Nick: Yes.

Scott: From using the software, regardless of how big or small that benefit is.

Nick: So, that's reading and we're not lawyers, right? So you should take what we say with a pinch of salt. Go talk to your lawyer. That'll help. As lawyer's would say, "Read the agreement, for goodness sake!"

Scott: I did take an agreement to a lawyer once, and they said, "Okay, which clause are you wishing to talk about?" I said, "Well, no, I was hoping you would read it and tell me what it meant."

Nick: That's going to be incredibly expensive. Okay, so let's talk about Microsoft. Microsoft used to be you get the end user licence agreement.

Scott: Yes.

Nick: If you are an enterprise, you bought software assurance, which is kind of the maintenance.

Scott: Yes.

Nick: If you are a small business or a home user, you'd buy a small business server with 5 licences or something, and that would do you until the point you needed to upgrade.

Scott: More or less, yeah. That's all changing. There's a thing called NCE or the New Commerce Experience.

Nick: This sounds scary. Just to let you know about Microsoft Licensing, there is a qualification called the Masters of Microsoft Licensing. Microsoft Licensing is incredibly complex. I've met people at Microsoft who don't understand Microsoft Licensing. There's lots of them. So, it's important to be across it, especially if it's something your business relies on.

Scott: It is. I do remember having conversations with Microsoft people. You asked 5 different people about something and you'd get 5 different answers. They'd all be right, which is scary.

Nick: But you've got to also now be careful about breaching your terms with Microsoft, especially if you're using Cloud services, because they can be in their rights to turn you off.

Scott: Yeah, I guess.

Nick: They would.

Scott: No, I guess you've got to be realistic. Clearly, if you're in there doing something dodgy and nefarious, that sort of makes sense. But if you just really, 'that meant that' and 10 people in a room would agree with you, then they probably wouldn't.

Nick: One example if you're allowing people in Iran to use your Office 365 subscription...

Scott: That's an interesting thing we saw recently.

Nick: That could take you off.

Scott: Yes.

Nick: And North Korea and...

Scott: So the countries on the sanctions list. Yes. Okay. But this New Commerce Experience, the structure of the subscriptions is changing. It used to be you just subscribe and, month-to-month you pay, and that would be it.

Nick: Let me caveat that a little bit because I have read the licensing terms. You actually subscribe for a year. Whenever you subscribe to Microsoft 365 you subscribe for a minimum of a year period...

Scott: Yes, that is true. That's true.

Nick: But Microsoft didn't enforce it. They never enforced it.

Scott: That's correct. Yes, I do remember this. So if you wanted to, you could subscribe for a few months and then turn it off and they wouldn't come and say, "Hey, where's the other 9 months?" So that's happening now.

Nick: Now, that's led to a bunch of very seasonal organisations, and certainly some I've worked with, where they bought their licences to Microsoft at the lowest point, so they have the fewest licences, but because of big licensing agreements, they can scale up to as many as they want and scale back down. As long as on their true update, they have this many, they're absolutely fine. This is one of the things this licence agreement is trying to get around.

Scott: Yeah, this is a problem. One of them that, well, you can still address it. So you get an option now, you can stay month-to-month, but it's 20% more than it used to be. You can commit to a year, whether you pay once for the whole year or whether you pay monthly over that year, and you'll be 20% less than the month-to-month price.

Nick: I think, in a way, that's kind of fair.

Scott: Look, I don't actually mind it, but you are riding that there are certain organisations, like if you're running a big ski fields business and all of a sudden during ski season, you may have 500 staff and outside of ski season you've got 20. How do you licence the 480 extras for a short period of time?

Nick: Take the 20% uplift to be licensed correctly.

Scott: Yes.

Nick: But you're only paying that for half the time. So you should have, in the old licensing model, you should have actually licensed everyone.

Scott: True, and this is when we also had other organisations who are global, who are saying, "Well, we're only using the licence during 9 to 5 in Australia." So, as the clock spins around to say, New York, we'll take those licences and reallocate them in there. So that the licence is not actually actively being used in two places at once.

Nick: Not a good idea.

Scott: No, I think they got around... As in, that was caught on pretty quickly and it was 'Follow the Sun' licensing. It didn't really...

Nick: Yeah, that's dodgy as. If you're going to spend that much effort circumventing the licence, if you're any size of organisation, it's going to cost you more than that.

Scott: I don't think circumvents correct, I think it's, as per like taxes, you are legally entitled to pay the least amount that you have to. Providing you structure your resources accordingly. And this is organisations looking at, well, concurrent users as different to every user. Concurrently, we may only ever have a third actually using it at any time.

Nick: Right. I've got my Microsoft licences. Okay. I don't want them anymore. Can I cancel the licence agreement?

Scott: I don't know.

Nick: I know with Microsoft one you can. You have the right to return to Microsoft any materials you have and cancel your license.

Scott: Oh, actually, I know you can upfront if you don't agree to the licence.

Nick: You can post as well. Right. So you can actually use it, pay your money, etc. You can cancel your licence agreement. No money would change hands.

Scott: Because I remember there was a court case about this where a person bought a laptop and they wanted to put Linux on it, but the laptop was only available with Windows. They said, "Well, I don't want Windows," and they said, "Well, it comes with it." "You can't not take it, it's part of the cost of the machine." So when they turn the machine on, it says, "You must agree to this licence agreement, otherwise return the box for a refund." And they returned it for a refund. They said, "I don't agree," and they got $110 back at the time.

Nick: That's probably how much it was for Windows.

Scott: Yeah, it was about that. US dollars and this is a while ago. But that caused an inordinate amount of problems and really it shouldn't have happened that way.

Nick: Lots of vendors will now allow you to get OS a less hard way.

Scott: And that's the proper way to do it, rather than try to spend like $10,000 of labour working around this one issue.

Nick: But you just uncovered, one of the ways Microsoft got as big as they did, was they tied up all of the vendors to bundle their software in their devices.

Scott: Clearly, if you're buying a PC for enterprise use...

Nick: If you buy your PC for anything, it's got to have something on it. Unless it's an MCi 8080 and you've got to handcraft in your bootloader. But anyway, that's a whole other...

Scott: When I bought my first Apple II, in Hong Kong actually, it was many years ago.

Nick: That had no operating system on it.

Scott: So I found out afterwards because I turned it on and I watched the little lights flash, I watched the drive spin and nothing happened. And I sat there for half an hour watching it and nothing happened.

Nick: Did you press 'Enter' to get the prompter?

Scott: No, not a sausage. They didn't supply anything.

Nick: But Apple's got a built in - it’s got 2 operating systems built in. There is a bios. There's basic and there's the Apple to monitor, which allows you to actually... Anyway, moving on, moving on, moving on.

Scott: Okay, so Microsoft Licensing is changing at the moment. So just talk to your licence suppliers about what this means and how it affects you. If you want to commit to 1 year terms and 1 year renewals, you can pretty much stay the same price as you were. Otherwise, staying monthly, you're going up 20%. The alternative, of course, is to just buy something outright.

Nick: And less and less of that's being available, right?

Scott: Yeah, it's harder to find now.

Nick: It's harder to find.

Scott: People want revenue streams. They want to know, sitting on the beach and the sand with the waves rolling in, that, that hour, someone has just paid them $50 to do something.

Nick: I think that's disingenuous.

Scott: It's a pretty good thought, I don't know.

Nick: I think people don't want the liability of you using somebody's software which puts your business at risk.

Scott: Right.

Nick: So let's say, for example, you bought an ERP system. You're running your manufacturing plant and you never change it, you never upgrade it, you never patch it, you never do any of those things, and then you go offline because you've been hacked. And there's a patch version that you haven't applied.

And we've been to customers where they haven't patched things for ages and ages in that perpetual licence. Who's liable? I would imagine you'd have a dig at the software vendor as well. You might not get anywhere. You can give it a crack.

Scott: You can, but I would suggest that your warranty is expired. And if you read the licence agreement, there is absolutely no liability for anything.

Nick: So that's another piece that's in most liabilities, most licences, which is this product is licenced without any warranty, express or implied, as for performance, fitness for purpose, blah, blah, blah.

Scott: They don't do anything. And especially: "Do not use this if you're in the medical industry." "If you've got life sustaining equipment."

Nick: And software has killed people. So, I was watching an NDC, it's a Worldwide developers conference, I was watching the Copenhagen one, and the very last presentation is a developer talking about all of the time software has caused impacts. From the Mariner 1, right, where the software, instead of looking at a smooth value - something made a mistake - and so this number, which was meant to be between 0 and -2 and +2 the whole time on someone's console, and Mission Control suddenly jumped to 8 and he hit the big red button and blew the spaceship up. Right? Because someone had made a software error. To the hedge fund that lost a $15 billion position because somebody did a bad software upgrade. And these things just go on and on and, obviously, its life threatening as well. So, you have to read the licence agreement.

Scott: So legals, then?

Nick: Yes.

Scott: In any legal agreement, software or whatever, there's one thing I look for upfront: how to get out of it.

Nick: Yes, and you can.

Scott: In most cases you can. I've seen some agreements recently though, where you actually cannot cancel the agreement.

Nick: Wow, that's interesting.

Scott: The vendor can. But you can't. There's no provision for the end user to cancel the agreement, which means, in theory, you are committing to make payments every year or every whatever, in loan for terms until the end of the world.

Nick: Well, that's kind of cool. We should have agreements like that.

Scott: I don't think any of them would want to try to enforce that. But the concept is that's a poorly written agreement.

Nick: Yes, but again, people signing it because they're not reading it.

Scott: They are. I'll say, in the old days, but that's not really fair, there's an organisation with the big stick called the Business Software Alliance, the BSA, and it's funded by a lot of the larger vendors.

Nick: Originally funded by Lotus, Microsoft and Intel, I think.

Scott: And Adobe.

Nick: Adobe, yes.

Scott: Yeah, and they existed to go and find all these organisations that were not correctly licensing or had not paid for their software. And this is a lot easier, like 20 years ago or 10 years ago, where there's no licence keys or it's just, yeah, you just copy the software. And they don't understand that it's not...

Nick: We built a system back in 2005 when I worked for Dimension Data to do software licence management for large enterprises. We used to do enormous software management for those.

Scott: It is a complex area.

Nick: It is.

Scott: But there's a difference between 'we thought we'd done the right thing' and 'we've got a software licence system in place and it's tracking all these numbers and it seems to not have counted this one properly'. Sort of an honest error versus, 'I've gone off and copied this software and put on 20 machines and only pay for one'.

Nick: I get it. BSA is still around, though, but I think they're going to hit you if you're a larger enterprise. They're not going to come talk to the littlies like they used to.

Scott: I also think the issue is a lot less than it was, because things like, for example, Microsoft 365 software is licensed to a user now, or an account, and if the account is on...

Nick: And if you don't pay, they turn it off.

Scott: It just not licensed anymore. It just doesn't work anymore.

Nick: So that's that part. So that's cool, that's the BSA. Now, we've spent a whole bunch of time talking about what we in the industry called cops, commercial, off-the-shelf software, Microsoft, stuff from Adobe, blah, blah, blah. There's a whole other, great unwashed marketplace of software, and that's the Open Source.

Scott: And Commercial Office.

Nick: Not necessarily, there's lots of commercial open source products.

Scott: That's fair too.

Nick: But open source is a little bit different in that you can, at least, depending on the licence agreement, read all the source code and you can, depending on the licence agreement, copy it and you can, depending on the licence agreement, use it for free.

Scott: Now, there's a number of these licence agreements. The MIT one, I think I like the most.

Nick: It's my favourite.

Scott: It's because it's like two sentences? One sentence? It's one sentence.

Nick: One sentence. And it basically says, 'you're free to do whatever you want'. There's no warranty.

Scott: Yeah, as in, "Here it is." "Use it, don't use it, we don't care." If it breaks, don't come back to us.

Nick: But be careful, though, because even under the MIT licence, the software is still copyright. Oh, yes. To someone else. Now, you have the right to create derivative work. That's fine. But you can't take that software and go, "it's mine." You have to change it.

Scott: That's right. What you can do, though, is say, I've included that software in my product and I now have a page at the back of my documentation that says, "Hey, I've used this bit of software. I'm free to use it.” But I'm referencing the author.

Nick: You'll find that on your phone. If you go into Settings, all these software licences appear. Of all the bits they've used.

Scott: Yes. In a 2 point font.

Nick: It's a bit bigger than that, but that's important to think about. If you get software which doesn't include that, then I suggest that's got to be a red flag because everything relies on other stuff. Nobody builds software in a vacuum.

Scott: And this is the clause that says, "You can download all the details here." "If you can't do that, send $10 to this address." It will mail you a physical copy of whatever licences and things that are in use.

Nick: So, that's the MIT licence. It is one of my favourites, but there's lots, there's hundreds of open-source licenses. There's one which is a bit gnarly, though.

Scott: Yeah, tell us about that one.

Nick: AGPL licence.

Scott: Okay, what's that?

Nick: AGPL licence is kind of what's known as a 'copyleft' licence rather than a copyright licence. Open source is free, not as in 'free beer'. It's free. You can look at it and you can use it. If you use AGPL software in yours and you're a user under an AGPL licence, you have to immediately make all of your source open source as well, under the same licence.

Scott: So, if I find someone's code and it does exactly what I want to do, it's going to save me, like, thousands of hours of effort. And I see that, I'm just going to plug that into my application.

Nick: If it's AGPL, you immediately have to open source yourself.

Scott: I'm going to take all the code I wrote and make it available as open source as well.

Nick: Because you'll normally find people who licence their open-source software under the AGPL, also have a commercial version. So what you do in that case is you go and pay for the commercial version because it saves you thousands of hours. So it's a business case to do it and you pay for it. It's way more expensive if you do that after the fact than at the beginning with a lot of these guys.

Scott: What happened with Elasticsearch in Amazon?

Nick: That's interesting. So Elasticsearch came out from kind of nowhere. It's what they call a NoSQL database. And it suddenly became really useful in a systems management capacity. Managing logs, basically, of lots of systems all over the place. And so Amazon decided to use it in their product set. And they liked it so much they did, what they call, they 'forked it'. They credit it, copy it, it's open source, and they changed it. They created a derivative work and they called it Amazon Elasticsearch.

Scott: And they charged for it.

Nick: And they charged for it. They were hosting it, so they were allowed to charge for it.

Scott: They're allowed to charge for it.

Nick: They're also supporting it, so they're allowed to charge it.

Scott: Yes. But it does seem a little off, doesn't it? Here's a whole bunch of developers around the world that have contributed all their stuff to keep this free and open source. Some big companies come along and says, 'Oh, that looks nice, I'm going to take that and charge for it."

Nick: But there's nothing stopping me taking that and building a product and charging for the product. The issue really comes because it was Amazon and because they're really big. And now Elasticsearch themselves have no route into all those Amazon customers because they're going to use the Amazon one instead. That's really where they got cranky.

Scott: Okay, that's fair.

Nick: But it is what it is. But yes, that was an interesting one. And it's caused Elasticsearch to strongly consider using the AGPL licence themselves.

Scott: Because they weren't using that before were they?

Nick: No, they weren't. They're MIT.

Scott: Yes. So we talked a little bit about licence management tools before and this sort of links into auditing tools. If you don't know what licences you have, there are tools you can put on your network that will go around and check what's actually installed and what's in use.

Nick: First of all, you should know what you have.

Scott: Yeah, you should.

Nick: But what I'm saying is, if you don't, you need to get a tool. If you've got a register that's up to date...

Scott: I would think you would need a tool to do this anyway. There's lots of easy ways to do it. And you can think like, I've bought 10 copies of Office, I've bought this and this and this. I've got 12 licences of that, whatever, I don't know. But you don't know that someone's taken a laptop home, installed some software from somewhere, click, click, click, oh look at installed, yes, blah blah blah. And all of a sudden you're now running some software on your network that may or may not be good.

Nick: You also got things like someone in the marketing department, for example, will go and subscribe to Trello or Monday.com or one of these online things.

Scott: The Shadow IT discussion.

Nick: It suddenly appears in the business. Shadow IT, I think is cool. Except when it comes to licensing, because then that person paying on their credit card leaves the organisation. Payments stop, the service gets cut off. The day it stops working, everybody goes, "Where's this?" Because all the alerts have been going to Irish, it doesn't exist anymore. And suddenly you're in a world of panic.

Scott: If you ever wondered if you found a bit of software on the internet, like, here's a nice little SaaS application. You go on there, and you say, "We have lots of users," and you see all these big corporate logos scrolling across the bottom. Look at all these companies that are using this software. And what is that? That means one person in that organisation has gone online with their credit card, even a trial, has gone online and said, "I'm going to try this out." And then when you look into the licence agreement they agreed to, it says, "By signing up to our platform, we can use your corporate logo." You agree to allow your corporate logo to be used and you can be a reference site for us.

Nick: So it's important to know what software you're using to know what reference sites you're on.

Scott: Yeah, and all of a sudden, your own corporate logo appears on someone else's website. "Well, we're not using that." Well, actually, one person did once for an hour and that's enough. A year ago. Yeah.

Nick: All right. So I've been sitting out on business. I know I've been listening to all this stuff about licensing. I get there's probably lots I don't know and there's lots we haven't covered. What should you do? Where do you go from here?

Scott: The reality is you need to know what software is in use in your business. So, if you're working with a managed service provider, they would likely have some sort of a management agent or a bit of software on every machine. It can do, in most cases, licence auditing. It can go and find all these applications

and report back to the central server, the central management server. And your MSP can produce a report for you that says, "Here are all the software applications you haven't used."

Nick: So kind of you guys do that for all of your clients all the time, right?

Scott: Yeah, we produce lists and some of the software is going to be things like, “Oh, it's like Adobe Reader, it's free," for example. Okay.

Nick: Have you read the licence agreement?

Scott: I have not.

Nick: No, you should. Let's move on.

Scott: I don't have that on my bucket list, I must admit. And there will be other software, but you'll find things like, "Oh, what's this?" "What's that?" And, one could be, "That's not appropriate for use in our organisation." "Let's get rid of it." Another thing could be, "How did we licence that how's it being paid for?" "Do we understand where this is all coming from?" And they paid for it, but as you said before, it's important because when it stops working all of a sudden, "Where is this?" "Oh, the billing account?" "Who has the billing account?" "We don't know. They left." "Great. What credit card was it?" "We don't know. We can't get into the billing account."

Nick: So we can't get into the billing account because we're not an admin anymore. And that person's left and we deleted their email account so we can't recover the password. So now we have lost a bunch of corporate information and data.

Scott: In the meantime, the business has stopped from using that app. Very annoying.

Nick: Absolutely. That was really interesting, Scott. There's lots to think about there.

Scott: It is. There's a lot more to this. I mean, in some respects, not always the most exciting topic, but you've got to stay on top of this just to have good operational awareness and good business management every now and then. Cool.

Nick: Excellent. Thank you. That was awesome. If you do like what you've heard or watched, please leave us a like, make sure you subscribe wherever you found this. And certainly, if you'd like us to chat about something, leave a comment and we'll pick up that topic and run it through in the next WineDown. Thank you so much for listening, watching, and being here with us today.

Scott: Thank you. See you.