SafeNet, working with SIIA, has released the results of a survey in which software producers openly admit that they are currently losing nearly 50% of their potential revenues. To what you ask? History may tempt you to say piracy – and the latest stories of organized attacks to steal IP of several US companies only further fuels that belief. But is that the real reason? Not according to the 620 software publishers who responded to the State of Software Monetization survey.
Software IP theft is not new – software companies have been dealing with this for decades. Whether it is the competitive theft of ideas or reverse engineering, or just straight-forward piracy (using software without a license), software companies are used to employing techniques to combat these challenges. However; as the software producers deal with the maturation of the market, a redefined customer expectation around their experience, and open source threats, the loss of potential revenues is the real Achilles heel for many. As such, I would argue that the number one issue isn’t piracy – it is the inertia associated with how software producers package and license their products. And the irony is – software producers know it. Nearly 82% of respondents believe that better software packaging techniques specifically could yield higher revenue.
Think about that…. You can spend years fighting over piracy – via legal and technical means – or, you can focus on what you actually control, and boost your revenues the right way: by enabling your customers to license your software the way the want. A customer once told me how upset their CEO was when he found out that their software was being liberally pirated in an Eastern European country. However, once he calmed down, he realized that the revenue they were losing was not necessarily revenue they would have ever had… their software was popular with university students and at their current licensing prices, there was no way for those students to actually afford the software anyway. Instead, they had to think about free trialware for them first – thus converting “pirates” to legit users– and then allow them to continue using software at modest prices once they graduated. Take that same logic and apply it to smaller start-up organizations – they have a need, but they certainly don’t have a lot of disposable budget – would you rather ‘land and expand’ that account, or miss the opportunity altogether?
I am certainly not questioning the need for proper software protection – security is paramount – and survey results show clear understanding of that problem by many software producers. However, it is time software producers admit what is the real root of the problem. Create an effective software monetization strategy that is built into your business strategy and grounded in the following: software packaging at the right price points for targeted markets/segments. And then make sure they are measuring the efficacy of their strategy, collecting proper feedback, and then making changes as necessary. Forget the lofty goal of recovering the full 50% of lost revenues, if better packaging can result in even a 10% increase it is well worth the effort.
For more information on The State of Software Monetization survey conducted by SafeNet and the SIIA please visit www.safenet-inc.com/SoftwareMonetizationMatters.