Software Licensing: Commercial and Open Source
Software licensing defines the legal terms under which software can be used, modified, and distributed. Understanding the major licence models — commercial, open source permissive, open source copyleft, and the spectrum between them — is essential for technology leaders making decisions about software acquisition, development, and distribution.
Commercial Software Licensing Models
- Perpetual licence: One-time purchase for indefinite use of a specific version. Traditional enterprise software model. Declining in favour of subscription.
- Subscription/SaaS: Recurring payment for access. Aligns vendor incentive with customer success; creates ongoing cash outflow.
- Seat licensing: Per named user or concurrent user. Predictable for vendor; scales with organisation size for customer.
- Usage-based: Consumption-based pricing — per API call, per GB, per transaction. Aligns cost with usage; unpredictable at scale.
Open Source Licences
- Permissive (MIT, Apache 2.0, BSD): Use freely, including in commercial products. Only requirement: attribution. Most commercially friendly.
- Copyleft/GPL: Derivative works must be released under the same licence. Using GPL code in commercial proprietary software requires releasing your code as GPL or obtaining a commercial licence.
- LGPL: Weaker copyleft — linking to LGPL libraries in proprietary software is permitted without GPL implications
- AGPL: Strongest copyleft — providing AGPL software as a service requires releasing source code