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Microsoft should demystify their software licensing process

Microsoft could, and should, take the lead in simplifying the licensing process for consumers and for businesses.

Most people have grown up in a society where products are bought and sold. The butcher cuts up meat and sells you a steak. The baker bakes a loaf of bread, and you buy it. The candlestick maker -- well, you get the idea. The common element is that once you pay for that product, it's yours to do with as you please.

In the past, that was even (mostly) true of so-called intellectual property. Someone wrote a book. Someone published it by printing it on paper and sold it to you. You could read it as many times as you wanted, anywhere you wanted. You could keep it on your shelf for the rest of your life, or you could loan or give it or even sell it to someone else, who could then do the same. It was the same thing with a record album or a framed painting.

Software licensing

Then along came computers, software, and digital information. And suddenly all the rules changed. Instead of selling you a product, software vendors -- and then providers of digital content -- sold you a license to use the product. It made sense because a software program isn't a tangible "thing."

That's why, regardless of what the anti-piracy commercials say, under the statutes of many jurisdictions copyright infringement (which is itself a crime) is not the crime of "theft."

The legal definition of theft usually goes something like this:

The unlawful appropriation of property without the effective consent of the owner, with the intent to deprive the owner of the property. (Texas Penal Code, Sec. 31.03).

The problem is that when you "steal" a software program (or digital song or movie or book), you don't deprive the owner of the property. He/she still has full use of it; it's just that you have a copy of it, too. Thus a different model was created for selling the rights to use a creative work.

In the early days of computers, the software was installed by the company that sold the hardware. Then in 1985, a Supreme Court case named Digidyne v. Data General set a precedent by ruling that tying the software to the vendor's hardware was an "illegal tying arrangement." The result was that Data General was forced to license its operating system to other vendors (makes one wonder why Apple doesn't have to license its OS to other hardware makers, doesn't it?).

The EULA

When you buy something, you receive a receipt. You might, or might not, also receive other documents such as a warranty. If you pay for it in installments rather than outright, you usually sign a contract, which lays out the payment terms and the obligations of both parties. You also have a contract, even when paying outright, if you purchase something for which title of ownership must be registered, such as a house or car.

Software licensing traditionally has had some of the characteristics of a sale (a one-time payment rather than ongoing payments, although this changes with the Software as a Service model) and some characteristics of a rental (explicit limits on how you can use it). However, the license terms make it clear that:

"The software is licensed, not sold. This agreement only gives you some rights to use the features included in the software edition you licensed. Microsoft reserves all other rights. Unless applicable law gives you more rights despite this limitation, you may use the software only as expressly permitted in this agreement." (Standard language in Windows and Office EULAs)

Software licenses generally fall into three categories:

  • Public domain (no ownership, no copyright; available to everyone)
  • Open source (copyrighted but the source code available freely)
  • Commercial (copyrighted/patented and licensed to others with a fee and usually with many restrictions)

The contract that governs an individual's use of a piece of software is usually known as an End User License Agreement (EULA). A EULA is somewhat unusual in comparison to other contracts because you don't have to actually sign the contract to become bound by its terms. Instead, you may be deemed to have agreed to the terms simply by clicking a button or even merely by opening the box.

Volume licensing

Instead of licensing software "one piece at a time," companies often enter into volume licensing agreements with software vendors. Simply put, this type of license allows you to install multiple copies of a software product on different machines, using the same volume license key (VLK). As with individual licenses, there are usually restrictions, such as the number of installations allowed, the scope (that is, the key can be used only for machines within the purchasing organization), and so forth.

The licensing labyrinth

Microsoft has long been criticized for its confusing licensing structure, with Ed Bott once calling the licensing scheme for Windows "practically Byzantine" and even Microsoft's own TechNet site notes that you'll probably find yourself completely confused as you "plow through licensing" in preparation for deployment of Windows 7.

To be fair, Microsoft is by no means the only software company with a licensing mess. Licensing structures are a bit like government legislation: Even if they start out simple, over the years they become more and more complex as they must cover more and more situations and, in both cases, as attorneys get more and more involved.

In the case of the law, this "it just grew that way" state of affairs is difficult to rectify due to the complexity of the mandated process for making changes. In the case of software licensing, there's no such excuse. Companies can (and sometimes do) change and simplify their licensing schemes any time they want. And there are good reasons they should.

Administrative overhead

The administrative overhead involved with keeping up with licensing issues has, in some organizations, grown into almost a full-time job. If you have a volume license, you usually need to deploy a Key Management Server (KMS) to activate your licenses. To qualify, you must have a minimum number of computers to activate (at least five Windows Server 2008/2008R2 systems, at least twenty-five Windows Vista or Windows 7 computers, at least five Office 2010, Project 2010, or Visio 2010 computers). If you don't have enough, you have to get a Multiple Activation Key (MAK) instead of using the KMS.

It's telling that there is an entire TechNet web site dealing with licensing and volume activation, with almost fifty links to various activation planning guides, activation management tools, and pages such as Choosing the Right Volume License Key, Determine Reporting Needs, and Determining Product Key Needs for KMS.

Some customers have reported that even Microsoft's own licensing experts don't seem to understand how the licensing structure works, or at least different persons within Microsoft interpret it differently in response to customers' questions. And I won't even get into the licensing maze surrounding all the different server products: per-seat licensing, per-server licensing, per-processor licensing: It's enough to make you wish you'd pursued a career in neurosurgery, instead, since it couldn't possibly be any more complicated than this.

Consumer dissatisfaction

Although the biggest licensing headaches are reserved for IT pros in a corporate environment, consumers don't entirely escape the frustrations of dealing with licensing issues. Many don't understand the difference between a Windows OEM license (what you have if you bought the OS preinstalled on your computer) and a retail license (what you have if you bought the OS software and installed it yourself), or between an upgrade license (which requires that you already have a license for a previous version of Windows) and a full license (which doesn't). And now there's the Anytime Upgrade license thrown into the mix.

The type of license you have determines whether you can transfer the operating system to a different computer or not, whether you can transfer it to someone else by selling or giving your computer to another person, whether support is provided by Microsoft or by a hardware vendor, and a number of other "whethers." Back in 2009, Ed Bott did a good job of explaining these issues in his article titled "What Microsoft Won't Tell You about Windows 7 Licensing."

Nonetheless, many consumers are still confused. Many don't realize that they need a separate license to install Windows or Office in a virtual machine on a system that's already running Windows and Office. It may also never occur to users that they're in violation of the EULA if they make two backup copies of the installation disc instead of just one. (All these provisions are from the Windows 7 EULA).

How many end users are unaware that they're allowed, under the terms of a retail license for Office 2010, to install it on two computers -- as long as the second one is a "portable" device? The first, primary computer (which could be a desktop or portable machine) is designated as the "licensed device" and the second (which must be "portable" -- although it's not clear whether this would apply to an ultra-compact desktop system such as the PCs that emulate the Mac Mini form factor) as the "portable device."

On the other hand, if you have the "Home and Student" edition of Office 2010, you can install a copy on up to three licensed devices in your household for use by people for whom that is their primary residence. You have to wonder how many folks, trying to be "legal," may have purchased copies of Office they didn't need to buy because they didn't know about that provision.

Bottom line: KISS

The one-word mantra in the technology world today, and especially in the consumer space, is "Simplicity." Apple started that trend in relation to the user interface, and Microsoft has followed that path with Metro. We live busy lives in a busy world, and we don't have the time to wade through pages of legalese, only to still be unsure about whether our use of the software we paid for is in compliance.

Overly complex and inconsistent licensing terms cost companies money and cause consumers frustration. Microsoft isn't the only -- or necessarily even the worst -- offender, but because its products are so widely used, its licensing complexities are the most high profile -- something that almost everybody has to deal with at one point or another.

Microsoft could, and should, take the lead in simplifying the licensing process for consumers and for businesses.

Also read:

About

Debra Littlejohn Shinder, MCSE, MVP is a technology consultant, trainer, and writer who has authored a number of books on computer operating systems, networking, and security. Deb is a tech editor, developmental editor, and contributor to over 20 add...

31 comments
gechurch
gechurch

Simplifying licensing is a great goal. The major problem though is "how". There are a few big problems here: * Software is not like your butcher/baker examples. With those examples there it costs the supplier to obtain more meat/buns/whatever. With software nearly 100% of the cost is in writing the software in the first place. The cost to sell one more license is normally very close to $0. That means you want to segregate your customers. You want to get as much money as you can for the product from each person. Some people will find immense value in Windows and will use every feature. Maybe they're a business customer and will make money by using the product. These users will be happily pay more than your average home user that just wants to use Facebook and check emails. That why there's home, pro and ultimate versions of Windows. * Much of the complexity exists to help end users. To use an example the author mentioned - upgrade licenses. Sure, it would be simpler to only have full versions but that would mean users that want to buy the next version have to pay the full price every time. Upgrade licenses add to the complexity, but it would cost users more without them. Much of the complexity came about for this same reason... per device licensing, per processor etc. * Microsoft is a big company with millions of users. Unfortunately they need lots of precise legal terminology because people can and do look for any loophole they can. * It's not related to the complexity, but I think it's worth pointing out for every customer that bought extra licenses to play it safe, there are probably 50 users that do the wrong thing. I know loads of business customers that have gone to their local retail store to buy a copy of Office. They inevitably buy home and student versions. They usually install that one license on all their machines. These aren't dishonest people - it's just human nature. You look for the cheapest product that fills your needs - "Oh look, this one's only $150 and includes Word and Outlook. That's all I need". These people are often shocked when I tell them they need to buy another license for each additional PC. And then there's the people that happily pirate Microsoft products - there are plenty of them. Overall I don't think Microsoft comes out ahead because of their licensing complexity. I actually don't think things are as complex as the author makes out. I consult in the SMB segment and dealing with licensing is generally very easy. The hardware we buy always comes with an OEM license of Windows. Some clients are big enough to warrant volume licenses, in which case we get a single key, plug it in to our image and forget about it. Not hard. On the Office side it's much the same. We generally buy either retail licenses or open a volume agreement. The former is a slight pain with images since we have to change key and activate in each one. It adds a couple of minutes to the set up time of each PC. Bigger clients open a volume license. As above , you get a single key and add it to your image. Done. I think if we're going to advocate simplifying licensing we need to give examples, and I haven't seen any examples yet. I can think of a few: * Office licensing on terminal servers. You can only user per-device licenses for Office. That's silly and expensive to stick with (Use RDP from your iPhone once - buy another license. Use RDP from a hotel Internet kiosk - another copy of Office per machine please). MS should allow per-user, and I think should go back to also allowing retail copies on a terminal server (like they used to with Office 2003). * This isn't an EULA issue but an implementation one - I've noticed if you use a volume key on Office 2010 on a PC image you need to reactive/repair Office on each machine (unless you use a local activation server). This is a pain they should do away with. Actually, they're the only two I can think of off the top of my head. Has anyone got any more concrete examples?

jwesleycooper
jwesleycooper

Especially considering that so much of their profit and industrial leverage springs from their legal department's many jolly court room romps over liscensing issues?

apotheon
apotheon

QUOTE: The contract that governs an individual???s use of a piece of software is usually known as an End User License Agreement (EULA). A EULA is somewhat unusual in comparison to other contracts because you don???t have to actually sign the contract to become bound by its terms. Instead, you may be deemed to have agreed to the terms simply by clicking a button or even merely by opening the box. That's not a contract. A license is a grant of permission; a contract is an agreement. A license document, often abbreviated to just "license" (thus the confusion), is also not a contract but looks a lot like one. Contracts are explicitly agreed; license documents (or "license agreements") are statements of terms where it is implicitly assumed that the recipient has agreed to those terms. Such a "license agreement" where there is no evidence per se of meaningful agreement with the terms on the part of the recipient is not properly enforceable -- which is not the same as not being enforceable; it just means that even when enforced effectively, that flies in the face of any kind of reasonable sense of justice. The way it works in theory is that one is bound by strict copyright restrictions unless agreeing to the license. The defense of "I didn't agree to the terms of the license" just means you were not aware of the conditions of the grant of a license elaborated upon in the license document, and thus were not properly aware of a license grant (per se) at all. That's not much of a defense, considering that the point of a license grant is that now you get to do something you would not previously have been allowed to do (i.e. install and run the software, except to the extent the doctrine of fair use comes into play to allow that), but only subject to specific restrictions in consideration of the agreement. By rejecting those considerations on the grounds that you did not agree to the terms, you also reject that license grant, reverting to a state of probably having just violated minimal copyright restrictions. All of this is theory, of course. No set of laws and interpretations thereof makes one whit of difference if you end up in court and the judgment goes the other way. I'm not a lawyer; this is not legal advice; proceed at your own risk. I'm just pointing out (in a very long-winded way) that a license is not a contract.

n2add
n2add

We should have fixed this mess back in the 1980's when computers began to become mainstream devices. We also should have insisted on the right to return software that did not work on our systems. It's probably too late now.

blarman
blarman

In order to use this software product, you, the consumer, agree to the following: 1: to only use the license on one personal computer, 2: not to redistribute the software or license key to anyone else 3: to pay the standard cost for the software Wow. That was worth a million dollars at least. I should be a lawyer.

AU-man
AU-man

I deal with Microsoft Licensing in our manufacturing and development departments. What a nightmare! SLP was OK and not too much fuss. OA2 licensing is more of a pain but manageable. The next Win 8 version of licensing, called OA3, is going to be the worst yet. Systems must be attached to the internet in order to activate at the client's site. We need to implement servers to track license usage and report it to Microsoft. What??? OA3 is the reason we will likely skip Win 8 and wait for Win 9 and a smoother licensing process (hopefully). Or go all Linux...................

davidjbell
davidjbell

Before I retired I managed VL for a company and when I had queries with MS UK I found I seemed to know more than them having read the bizantine licensing booklet. I remember hitting the bizarre world of software when dealing with Digital Research UK over CP/M licensing in the 80s so the problem goes back before MS. I'm not anti-American but I think the problem centres around West Coast legal culture; it's the legal guys who assume every one is bad by default that drive the licensing rules. Here in Europe the legal culture is different with more of an assumption that users are 'reasonable' people so local software companies tend to have simpler EULAs. Change will only happen when the legal guys in software corporates have less power then they have today and the Customer Service teams drive more of the end-result. It requires and enlightened CEO to make this happen. MS could make a start by simplifying the server user seats rules.

lehnerus2000
lehnerus2000

If MS can't correctly explain how to acquire a legal license for a product (when a consumer directly asks them) that should be grounds to rule Microsoft's license(s) invalid. The only reason they are this complex is so that they can "trip you up" and demand more money from you.

HAL 9000
HAL 9000

Microsoft Licensing is a nightmare to deal with and that is just VL Product with Software Assurance which was not mentioned above. The one thing I have figured out over the years I have dealt with VL Product is that I have built up a very strong friendship with the Head of M$ Legal here as I ask her every time I have a query about M$ Licensing. I used to make the mistake of ringing the Licensing Hotline and asking whatever questions I had but then I found out that if I rang twice within 15 minutes of each other and got a different operator I got a different answer. It just got worse if more time passed and far more confusing. Now I just ring M$ Legal and do what I am told is the right thing and get it in writing. That way if I'm given the wrong directions I'm not about to get sued for following the head of M$ Legal Advice. All Software Licensing is a joke at best and a Nightmare normally which is sent to drive you crazy and send you broke, because you make a simple mistake of listening to what you are told by the representative at the Licensing divisions of different companies. I still remember ringing the M$ Partner Technical Support line telling the operator that I had VL software installed on 5 different systems and that one of them wasn't working right and the next thing I knew was I was talking to someone from M$ Legal because I had told them that I was Pirating the Software. Seems that even when you ring the Partners Line they don't listen to what you are asking and treat everyone as a criminal who have to prove that they are doing no wrong. Then I can remember the advice from a Corporate QC that the EULA said that the software could be used on 2 different CPUs so that meant that it could be installed on 2 different computers. They wouldn't have it any other way so I just suggested that they do as they please and they could deal with what happened latter. Though the reality is that nothing was ever going to happen to them as they had the Legal Background to defend any action and where not ideal for M$ in that case to bother with.. Of course if it was me who followed that advice I would be chassed all over by M$ and hung out to dry not to mention going broke in the process and being listed on the M$ Enforcement Alerts as a Pirate. Where as the person giving the advice would be left alone and if they followed their own advice would not be bothered with. The Legal Departments of those companies only go after the [b]Easy[/b] options and never fight a case where they may not have the outcome that they want. After all they dont want to set a Precedent that may not be in their best interests. :^0 Col

lastchip
lastchip

I've never read a EULA in my life and Microsoft's licensing and damn activation keys, are two of the major reasons I moved over to Linux and have never looked back. Deb is dead right. Microsoft needs to massively prune their whole licensing structure and particularly, make it understandable for any normal human being. In fact, in the future, it is likely they will have to reconsider their whole business model, as I don't see paying for software (in the conventional sense) as a model that will survive. It's clear they are already feeling the heat, and although Windows computers are not suddenly going to disappear over night, their strangle hold is not what it once was. Failure to move with the times, will take it's toll. You only have to look at Nokia or RIM to see that. If I buy a refrigerator and I move house, I don't have to worry about using it. I just plug it in and off it goes. Software should be no different.

Mark W. Kaelin
Mark W. Kaelin

Do you read all of the EULAs that accompany Microsoft software or any software for that matter? Would you like to see Microsoft take the lead and simplify all of their licenses?

mudpuppy1
mudpuppy1

If you were a lawyer, what you just wrote would morph into a 200 page document not even God could understand. :) I like your non-lawyer version much better and suggest that all companies adopt it. I would add one thing: Include a "family license" where a person could install the software on up to, say, 10 computers as long as they were all his or members of his immediate family living in the same house (or words to that effect). I've always thought it ridiculous that I should have to buy the software (or a license) for each system I want it on. I still remember the one time I actually read a EULA, it was for some small freeware program I downloaded. It could have been written by John Cleese. It was hilarious. Essentially, the author didn't care what you did with it. Wish I could remember the program.

dogknees
dogknees

Is ultimately about "tripping the customer up". It's about convincing the client that something you paid $100 for is actually worth $200 to them. What's the problem with bringing it out into the open and not hiding the reality from the punters? It's a bit like "cyber-squatting". What's the problem with out-smarting a company and making money by doing it? It's what we do anyway so why hide it?

JohnMcGrew
JohnMcGrew

...when you can compare it to dealing with the IRS, and you look just as bad: The rules are indecipherable, even those in charge cannot tell you what they are or how to apply them, no two people have the same answer, and in the end you are forced to proceed just hoping you're doing the right thing and that your decisions will not come back later and bite you in the butt. But this phenomenon isn't new; I remember feeling the same way trying to figure out Novell's upgrades & licensing back in the '90s. I think the problem is that nobody is certain or completely confident in the business model, and they all know it's going to change eventually anyway so they're just making it up as they go along hoping that it will all work out. In the meantime, we have to waste time figuring it all out just trying to get our jobs done.

charleswdavis6670
charleswdavis6670

If you were true to your word, you wouldn't be posting or reading these words.

andrew232006
andrew232006

Does anyone here read every word in EULAs? In my opinion, most of these are unreasonably long. So much so that the software vendors can't reasonably believe that users are reading them. It is ridiculous that a 10 page EULA that can change every month is legally binding. Imagine buying a house, then a week after you've moved in someone shows up and throws a stack of papers at you saying you have to move out or follow these rules.

dogknees
dogknees

Would that be one that paid attention is school and learned all they were taught? Or is it someone who didn't gave a dang, slacked off and now wants someone else to do their thinking for them? If it's the latter, they can deal with the consequences of their choices themselves as far as I'm concerned.

apotheon
apotheon

I hope some of that was sarcasm.

chrisbedford
chrisbedford

and B. it's called "ethics". If you don't know what that is you are probably already a lawyer.

lastchip
lastchip

But just because I no longer use Windows personally (or professionally), doesn't mean I've lost interest in what's going on in the world around me. In fact, in what I now do, it would be commercially fatal not to. Additionally, I often find Deb's articles interesting, although not always agreeing with her sentiments. On this occasion however, I believe she's pretty much spot on. One can argue with the terminology (as Apotheon has later in the thread), but the sentiment in my view is correct. In the IT world, one cannot ignore the major player, even though on occasions, we may all wish to. Shrewd observation though!

apotheon
apotheon

I have not only read every word in a few lengthy MS EULAs from time to time -- I have actually re-read until I was sure I understood everything in some, and done the same with every major GNU license version (AGPL, LGPL, and GPL 1.0, 2.0, and 3.0) as well. Then again, I founded a small copyright licensing policy advocacy initiative, and tend to really care about things like what legal conditions apply when I recommend software to someone (or don't recommend software, as the case may be) as a consultant. I'm pretty weird that way, though; the vast majority of people I have met with strong opinions on licensing have never even read the entire Apache License, let alone the GPL or any MS EULA. They've usually read the MIT/X11 License and one of the BSD licenses, though. The people who don't really give a crap about licensing at all, on the other hand, have never even read that. Most, in fact, have not even read a copyright notice on most software, and probably have wildly inaccurate ideas about what "copyright" means even in the most general terms. The WinXP EULAs, and the last Win2K EULA, reached a breaking point for me, where the terms of the license had gotten so nutso that I would no longer allow myself to rely on MS software as the primary platform for my computing life.

lastchip
lastchip

I thought I may be out on limb here, but it seems not.

lastchip
lastchip

Clearly, you need "normal human being" to be defined. A person of normal intellect that doesn't have a legal degree, but can still understand the written word and a Microsoft licence. Hope that helps.

apotheon
apotheon

A minimal level of legalese density will always be necessary, exponentially increasing with the complexity of the license's terms, as long as those lawyerly restrictions are not in place -- so if the license you liked so much was more "plain English" than something like the Open Works License or the Nietzsche Public License, it was probably legally unrigorous enough that you could end up in legal trouble if the licensor changed his mind. Even the NPL might be a bit less legally rigorous than it should be (it definitely is with regard to the warranty disclaimer section; maybe that'll get an update before it reaches v1.0), but with the OWL fallback that might not be a huge problem. I'm not really sure; I'm not a lawyer. . . . and the lawyers probably aren't sure either, anyway.

mudpuppy1
mudpuppy1

at the Nietzshe license (the one I read years ago was funnier, and more readable), but it and the other one are still more legalese-ish than I like. I think the simplicity and readability of blarman's is the way to go. We can couple that with restrictions on the crap lawyers can pull to try to get around it.

dogknees
dogknees

a case of making ourselves feel better about what we do by claiming that others do it. Not that that's any kind of reason for doing anything.

apotheon
apotheon

I appreciate the positive feedback.

lastchip
lastchip

and as always, well presented.