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As a veteran of the first copy protection wars, let me give you one simple insight that should guide you:

"Thieves don't buy"

Software thieves will not pay for your software, no matter how much you lock it up. If they can't get a cracked copy or code, 99.44% of them won't use it. It doesn't matter if they still live with their parents, or are the CEO of a big company; thieves don't buy.

Thus, you must tailor your strategy towards supporting your non-thief customers, while minimizing the parasitic cost of the thieves.

Consider doing this:

* Require registration for support, not for running the program. If they run an unregistered copy (ie: no serial number), give them full functionality but remind them how to pay on startup, gently. Perhaps do it only when you do the weekly update check, or whatever. Support is your major marginal cost, so you want to try and avoid giving support to the thieves.

* Phone home to check for updates, but continue to run no matter what. If the phone-home does detect a registration conflict, alert the user ("someone may have stolen your registration number") but continue to run.

* Explicitly disclose what your phone home does, and allow the user to disable it, or the registration check, if they so desire.

* Provide a way for your legit users to get logs of the phone-home information. Say their laptop gets stolen; the IP address logged on the phone-home could mean it gets recovered, you're a hero, and have a customer for life. But have strong data privacy rules about the information and how long it gets retained.

* If you have a product with low/no marginal costs, consider letting your users decide how much to pay you (works best with small ticket items). See http://tipping.selfpromotion.com/ for an essay I wrote on this some years back.

* Always remember to add the clause to your software license that makes Bill Gates promise to become your towel-boy.

The easier you make it for your honest users to pay you, and the more helpful you are to them, the more you will be paid.

I've been doing this for years on one of my sites, with great success. Here's an article I wrote back in Y2K on how
it works..

http://tipping.selfpromotion.com/

Their twist for dead-tree pricing, cost+the tip, is a nice refinement. It'll be interesting to see how it works out.

From the article:

If it goes through unmodified, the EUCD would make it a criminal offence to break or attempt to break the copy protection or Digital Rights Management systems on digital content such as music, software or eBooks. As it stands, the EUCD may lead to a rerun of Dmitri Sklyarov's prosecution, prevent teachers copying materials for their students or other legitimate uses of copyright material, opponents believe.

...

Since it is illegal to circumvent copyright protection, developers would be forced to sign licenses with the creators of a format in order to develop playback tools. This means that a creator could control the market, Cox warned, creating antitrust concerns.

It never ceases to amaze me how companies who claim to be technology companies, or corporations who adopt technological representations of their media cry when all of a sudden they have to deal with a new set of rules that comes with the new medium. If you're unprepared to deal with the ramifications of the technology, then don't invent/publish/distribute using it. Period. End of story.

If you're concerned about copy protection, invent something that works. If you don't have the resources to do that, then investigate new paradigms of reimbursement. The fact that corporations are lobbying for regulation this strict is a clear admission of failure on their part to be smart enough to add value to a huge demand already presented by end consumers.

Thank God for the almighty dollar!

In the end, I hope OpenSource technologies and licenses will be continue to be developed, published and used by individuals. If it is prohibitive to use a particular proprietary file format, then we as consumers should demand that it shouldn't be used, and alternatives be made available instead.

There is an article about it here, as well as his own words here.

I have started to use PayPal to send a few bucks to people who's freeware I use or who's causes I like. I keep about $20 in my PayPal account that I have generated from ebay sales of thinks like junk-to-me books or electronic bits, and occasionally send $5 to someone for GPL software or things like that.

I think that this model for content payment is workable, but maybe not at the corporate level.

Maybe I'll send fairtunes a few bucks...

There is an article about it here, as well as his own words here.

I have started to use PayPal to send a few bucks to people who's freeware I use or who's causes I like. I keep about $20 in my PayPal account that I have generated from ebay sales of thinks like junk-to-me books or electronic bits, and occasionally send $5 to someone for GPL software or things like that.

I think that this model for content payment is workable, but maybe not at the corporate level.

Maybe I'll send fairtunes a few bucks...

And things like Delorie Lynx Viewer, Delorie Web Page Purifier, HTML PrettyPrinter, Delories Search Engine Simulator for starters - oh, don't forget last weeks Slashdotted site DejaVu for viewing sites in 'old browsers'.

Richy C.
--

1) traditional merchant account (about $30 a month) + lower discount (% of each charge, usually 1.5%-3%) + per-charge flat fee ($.25 to .35).

All the major players have decent methods for integrating their system into your site, everything from hosting the whole shopping cart to various flavors of "your cgi page calls our cgi page, we do the transaction, we redirect back to some cgi of yours with the results". The hackery involved is trivial.

After having problems with one provider who had an annoying habit of randomly double-charging customers, I settled on Anacom and they've been flawless. They've also been around a while.

Option 2 - charge without a Merchant Account. You pay about 1% more on the discount, but unless you're doing $3000 a month in sales or more, you still come out ahead. ProPay seems to be the leader here, but I have no personal experience with them [some of my SelfPromotion.com users have recommended them, though.

3) Indirect, using a web-bank service like PayPal, which just announced a business service. The rates seem a little better if memory serves, but the downside is that people have to be paypal users to use it. My advice is that you should offer PayPal as an OPTION along with (1) or (2) above.

Best,R