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Opinion: Software vendors should offer subscription- and utility-based licenses only when those pricing models make sense for the buyer.

Great news! It looks like that bad old practice of perpetual software licensing is going to go the way of the dodo. No longer will you have to deal with the inconvenience and hassle of paying once for software and getting to use it whenever you want to and for as long as you want to.

According to a study released at the recent SoftSummit conference, everybody just loves subscription- and utility-based licenses for software, except for some dinosaur companies that will eventually come around to realizing how stupid it is to pay once for software and use it as much as they need to.

/zimages/6/28571.gifClick here to read what a software-industry panel had to say about subscription and utility licensing.

And whats not to like! With a subscription model, you only have to pay a simple monthly fee to use an application in your company. Sure, the monthly fee is high: It will probably be years before subscription fees come down to a level thats actually competitive with what people pay for a perpetual license. But whats important is that the software vendor gets regular income.

And dont even get me started on how great utility licenses are. I know I love paying my constantly changing electric and phone bills at home. I cant wait to have to pay a charge every time I fire up a program. Maybe we can get to that nirvanalike state where the software vendor not only charges you for how often you use a program but also for how much value you get out of it.

I can see it now: "Jim, we saw that your Oct. 4 column was really good, so were going to charge you an additional fee for the extra value you derived from our software."

OK, Im exaggerating—a little. But when software vendors start touting the benefits of subscription and utility pricing, a little skepticism is always in order. Every time I see software company CEOs talk excitedly about utility licensing, I half expect them to contentedly light up cigarettes afterward.

Thats because most of these vendors really, really want these types of licenses to take off. They want to be freed from the constant revision cycle and the fears that customers wont upgrade to the latest versions. They want the constant, reliable revenue streams that subscriptions and utility licenses can provide.

Next Page: Wishful Thinking by Vendors