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What Will Happen to Rented Software When Its Publisher Sinks?

Posted by Cliff on from the stuff-to-think-about dept.

MightyE asks: "With the advent of subscription software with renew-required keys, I have a question. What happens when a software company from which you lease goes under? Who will provide you your software keys in the future? Should a law be required that if such a company goes under, they must either sell the rights to rent keys to another company, or provide non-terminating keys to the current subscribers?" With many large software corporations looking to put these systems into effect, I think it's better to discuss this question now, rather than later.

"Currently if you purchase software, and the software company goes under, all you lose is support, you still have a working product. Consider a large corporation making a major rollout of "rented" (rented meaning any software with a time-limited key) software. If the software company closes its doors, the corporation has now invested thousands, hundreds of thousands, or even millions of dollars into rolling something out that may only work for the rest of the quarter.

On the other hand, consider that you are a company that rents software. If you are required to enable non-terminating keys for the event of corporate liquidation, this would only have to be broken once and one single non-terminating key could get out on the net, thus defeating one of the largest concepts behind "rented" software, anti-piracy (not that I don't whole-heartedly believe that any good software with a rented key won't be cracked with a key patch or something).

Certainly it seems a viable solution to require such companies to give or sell their key distribution duties to another company."

19 of 272 comments (clear)

  1. Laws are the *last* resort by gunner800 · · Score: 4
    How about this for a solution...

    If you (or your company) are comfortable with the risks of renting software, then rent software. If you're not, don't.

    Nobody is going to force you to rent software. If you want to pay the (arguably) extra money, then go buy some non-terminating software. Even if every piece of software in existence is rental-based, nobody will force you to use it.

    Just don't accept a license you don't want to agree to.


    My mom is not a Karma whore!

    1. Re:Laws are the *last* resort by Masem · · Score: 3
      "Hi, we're Microsoft. Office 2005 will be sold only as rentable software. Since it has feature X which every one of your competitors is using, you'll have to use it too."

      Software renting puts too much power in the hands of a monopoly (which aren't illegal in and of themselves!), and as proven by the MS trial, if such a company did do this, say in 2004, and were charged under anti-trust act, they could continue to do that deed for several more years, up to at least 2009, collecting rent from their customers.

      I believe that if renting software comes to pass, there must be a law to allow rent-to-own or outright purchasing provisions to prevent a monopoly from maintain their position.

      --
      "Pinky, you've left the lens cap of your mind on again." - P&TB
      "I can see my house from here!" - ST:
    2. Re:Laws are the *last* resort by rgmoore · · Score: 5

      The biggest problem is that you don't always have a real choice in the matter. There are real world cases in which there's a single vendor for a critical piece of software that you desperately need. Even worse, that's likely to become the case more often as software patents become more prevalent, as they give the companies legal monopolies in specific areas. If the company that holds a monopoly on your critical piece of software decides to offer their software only on a rental basis, you have only unappetizing options. You can break the law by writing your own software that violates their patent, rent their software with the odious terms that implies, or do without something that may be critical to your business success. This is the kind of messy decision that happens in the real world of effective monopolies that "free market" appologists choose to ignore when claiming that consumers aren't really stuck.

      What do you do when all of your choices are bad? Since the government is fundamentally responsible for this kind of mess by giving away monopolies in the form of software patents shouldn't they be involved in protecting people who wind up being screwed by them?

      --

      There's no point in questioning authority if you aren't going to listen to the answers.

  2. on a related note... by popular · · Score: 3
    Can those PPV Divx movies be used anymore, or are people stuck with stacks of useless DVD's after that company shut down?

    --

  3. I would imagine... by michaelb · · Score: 3

    if the company from which you are renting your software goes under, you would become the owner of the software. Obviously, this would have to be covered in the lease agreement, but any good legal team should be demanding such clauses. In my company, for example, we have a clause in all contracts with various vendors that if they fail to meet their contractual obligations we obtain full rights to the source code. Which it then becomes my job to support and implement upgrades to. ;-)

    1. Re:I would imagine... by markmoss · · Score: 3

      I would recommend more than that: have the contract provide that a reliable third party hold copies of the source code (if you don't normally get it) and the technology to renew the keys. Then if the leasor goes under, you not only own the software, you have someplace you can go to get it. I'd say that any company that rents mission-critical software without clauses like this in the lease is living dangerously.

      I have only one question. Why just rental software? I know of some DOS and Win 3.1 programs that are still useful but don't run on Win 98 or NT, and presumably won't run on anything MS will be supporting in a few years. You should be able to get the source code on software you bought when the vendor ceases to support it.

      I don't believe it would be a good thing to pile on yet another law to deal with these situations. The best solution would be for the corporate bosses to extract their craniums from their rectums and realize that they need to insist on something like this in the contract before they buy or rent _any_ software, and tell M$ that they'll just have to use open source until they can get such contracts. But meanwhile, several changes to the copyright laws are in order: (1)A much shorter term for books, movies, and music, and a very much shorter term for software. (2)If you stop publishing it, you lose the copyright. (If you are worried about rights to derivative works, you can keep it in publication forever by just posting it on the web.) (3) To copyright software, you must put the complete source code on CD and file it at the Library of Congress. Once it becomes public domain, the source is available to the public.

  4. What happens to drivers, etc... by caffeineboy · · Score: 3

    Presumably the subscription will continue to be source of assets that somone will be interested in. As long as support costs a company less than they make in renewal fees somone will have an interest in collecting money... After there are too few people renewing to justify the cost of customer service, I would think that benevolent companies would make a "eternal key" public domain, but that's not to say that they would.

    This reminds me of the drivers for my hayes modem. They disappeared for a while and now have come back since the rights were finally purchased by a company that cares... Of course, there is no advantage to the company offering the drivers now. It's kind of like legacy hardware support except that the money will keep coming in. It wouldn't surprise me if companies could be started merely to sell renewals for extinct companies.

    --
    +++ ATH0 +++
  5. Let's just put an end to this. by fmaxwell · · Score: 4
    The software "licensing" system is broken. Companies sell licenses and rent software because they are desparately trying to keep software from being considered a "product" that has been purchased. If it was a product (in the eyes of the law), then they could not get away with providing buggy crap that fails to perform and crashes constantly. It would be no different than a toaster that failed to work one out of 20 times -- it would be considered defective and the manufacturer would be required to fix it.

    The black-helicopters-are-spying-on-me/lower-my-taxes/ there's-a-Waco-coverup/they-want-to-take-my-guns-a way crowd will disagree, but we need government legislation that makes software a product just like anything else that we buy in a store. Then Microsoft would quit trying to find ways to embed javascript into e-mail and, instead, make Outlook reliable and secure.

    1. Re:Let's just put an end to this. by gilroy · · Score: 3
      Blockquoth the poster:
      The problem is, if you can make a perfect copy of something, with little or no difficulty or expense, you can rip off the producer of the item. There has to be some means of protecting the property rights of the producer.
      Property rights should be protected. Intellectual output is not property, except through a linguistic perversion... precisely for the reason mentioned: You can make perfect copies at zero cost; therefore, the true economic worth is zero. The "value" of intellectual "property" is created solely by the state-sanctioned monopoly given to the creator.

      Is that necessarily a bad thing? Maybe not. (Maybe -- it's not clear why, other than some vague moral sense, you have a "right" to profit from your intellectual exertions. It seems, to me, to make about as much sense to demand a "right" to profit from, say, breathing.) But since the value is created entirely by the people (by surrendering of their rights), one can imagine the government, perhaps, having a say in what mechanisms are used to maximize that value. To wit, copyrights and patents should exist to serve social ends.

      I am continually astounded by the free-market libertarians who carp about people interfering in the "natural" market by "ripping off" the creators of intellectual output. Of course, if you really believe in the dead hand of Adam Smith, you recognize that the value of something is the price that someone is willing to pay; that is, the opportunity foregone by a purchaser. In the Digital Age, since copying is a cost-less process, the actual value of intellectual output has fallen to essentially zero.

      This might lead to the End of the World as We Know It, but it's the way that free captialism will tend.

      --
      The Mongrel Dogs Who Teach
  6. This kind of thing happened to me by BluedemonX · · Score: 4

    I bought a piece of software called Bodycraft, which is supposed to generate a workout and eating plan appropriate to your wants/needs (e.g. gain muscle, lose weight, stay same weight)

    I bought it, and installed it on a computer, and called for the code to unlock the stupid software dongle, and everything went relatively well: although the program was buggy, I could hack it to work.

    Moved to a different computer some time later - whoops! Need to re-register. The phone was disconnected when I tried to call back for a re-registration (some stupid software dongle).

    Contacted the big name fitness guru who's name is all over the box - who said "I can't help you, that's the company, they screwed me too, yadda yadda yadda - but you know what, with this new company I'm working with, you can buy the same program AGAIN for $30 more!"

    --

    --- Jump!! Fire!! Bullet time!! - Lego version of the Matrix
  7. This has already happened, hasn't it? by ewhac · · Score: 4

    In the consumer space, this has already happened with DIVX (the DVD "rental" scam). DIVX's answer to its customers was, essentially, "Fsck you."

    However, there are also several high-end software packages out there -- the old Diab C compiler and Perforce source repository system come to mind -- where you have to install a "license" server and periodically update the key that allows it to continue to operate. Doubtless others exist. How many of these have had their parent companies fold? What did their customers do? Was the eventuality covered in the contract?

    Schwab

    --
    Editor, A1-AAA AmeriCaptions
  8. Re:Free Market by sphealey · · Score: 4

    Actually, "source code escrow" agreements used to be quite common, and are still to be found in contracts for business-critical applications such as EPR systems. The vendor agrees to put a copy of the source code in escrow with a law firm or CPA firm that handles such situations, to be release to the customer if the vendor ceases to be a going concern (or in some cases if they terminate the product line), at which point the terms automatically change from license to ownership. I imagine most of the really big guys will put similar protection in the contracts with M$.

    Now, has anyone ever made actual USE of such an agreement? That I can't tell you.

    sPh

  9. This issue hits close to home to many universities by Lostman · · Score: 4

    My university's mathematics department relies heavily on the use of Mathematica (a "god" in the mathematical notation and symbolic problem solving front). I loved it and I bought it -- and found out that there will be a problem if the publisher (Wolfram Research) ever goes out of business...

    When you run it for the first time, it notes all your hardware and creates a unique "id" that has to have a matching unique "password" to unlock the software.. sound familiar?

    The gist is, when the university decides that their 180 mhz computers just "dont cut it no 'mo" and upgrade, if wolfram isn't there to give out their unique passwords then the university has lost out on QUITE a lot of funding (The student version (full w/o manual) goes for 150 but the retail version (full w/ manual) goes for about 1150).

    Now, in these cases would it be "correct" or "right" to reverse engineer the software's security or at least use a keygenerator as found on the little warez kids sites... and what kind of trouble could a university find itself in if they did this?

  10. Or abandons the software! by Sly+Mongoose · · Score: 3

    "What happens when a software company from which you lease goes under?

    Suppose the company, without going out of business, decides they do not want to support the software any more? Perhaps they have a new version with more features (and a higher price/rental) that they are interested in pushing? Perhaps they merge with a competitor and now have two similar products competing with each other and decide to kill off one of them? Suppose they want everybody to switch to the (buggy?) version 6.0 so they can close down their v5 support department?

    There are any number of ways you could have the rented-software rug pulled out from under you. I guess you had better address that issue before signing on for a particular product and structuring your company's survival around it's continued availablilty!

  11. This is not a new problem. by gorilla · · Score: 4
    This is not a new problem. It used to be that leasing of hardware & software was the way that IBM did business. You didn't even rent foocalc 1.2, you rented production payroll for 1200 employees, complying with all federal & state statues'. If you found you could only produce 1000, or there was a statue you weren't complying with, then IBM would fix it for you.

    This is one of the reasons why IBM was investigated & the prosecution started for anti-trust.

    Businesses never liked this model, they wanted control over their destiny. I see no reason to suspect that business has changed much in the intervening 40 years.

  12. Renting is for throwaway systems only! by dcavanaugh · · Score: 4
    Why rent anything to satisfy a need that doesn't go away? Installing any non-trivial software system is an expensive proposition. My thought is that we buy something with the intention of keeping it long enough to justify a perpetual license. If we honestly plan on walking away from the product in less than 5 years, I have to ask the questions: (1) "Why are we doing this?" (2) "Can we find something that is not a throwaway system?" Of course, we pay for annual support, so there is always a "pay-as-you-go" element to all of this anyway. Why should we tolerate a periodic licensing hassle? In the pure throwaway scenario, you look for an ASP -- simply buy the app, server, and service concurrently.

    Having the perpetual license is an important damage control mechanism. Software companies go bankrupt or they merge and put the customers on a "death march migration plan". We need to have the option of indefinite self-support, so as to keep the existing systems on "life support" long enough to consider our long-term options.

    I predict we will see more and more companies (led by M$), trying to make this a "pay-per-click" world. I also predict the free market will continuously reject such initiatives. I don't want to rent an app any more than I want to rent a phone, house, car, clothing, eyeglasses, appliances, furniture, computer, or DVD (remember DIVX???) The final nail in the Rentware coffin is that software rental is an operating expense, whereas software purchase can be capitalized.

    The only positive thing I can imagine is that Rentware makes it easier to walk away from a bad decision. If you buy the wrong software, you can eventually stop paying for it and buy something more appropriate next time. I have seen a few systems that were poorly chosen and eventually discarded. Renting those would have been nice. Not as nice as buying the right thing in the first place, but better than a total writeoff.

  13. Rentware - what's next? IPIX-style licensing? by kobotronic · · Score: 3
    Rentware : DIVX. Didn't anybody learn from this sordid mistake? Apparently not. Here we go again. This time it is Microsoft pushing for the same godawful, boneheaded concept.

    • Question: Can you still use your data when your application dies, because your subscription expired, because the company died?

    • Consider: So what if you go flat broke? You bought, ahem RENTED an application while you had the clams to pay for it, and now you don't have your clams no more. So now you can't use Word to type up a new resume. Doh!

    • Concern: So how many generations of NT/XP/whatever before you can't even start your computer without the OS validating its license key with Microsoft over the internet? You're really up the creek if you take your laptop on the road then, aren't you!

    • Extrapolate: It seems only the logical next step for Microsoft to start pushing for an IPIX-style per-document, per-file licensing scheme. As soon as that becomes the industry standard, you'll not only be paying your Microsoft taxes, you'll also see ads like ...

      • On SALE! 10 Adobe Photoshop .PSD file save keys,
        only $20 with $10 mail-in rebate!
        ( Also lets you save 20 *free* .JPGs )
        Click to pay with your Passport registered credit card...

  14. Roll-your-own by jmorse · · Score: 3

    Actually, I believe (and please correct me if I'm wrong) writing your own software would be OK under US patent law, provided you don't sell it. But then, doing so might be more expensive than paying the crappy subscription fee.

    Of course, the only ones who won't be affected by a move to subscription models are the big customers who get special deals (i.e. non-rented copies)...

    I guess that's what America gets for entrusting its prosperity to corporations...

    --

    "You done taken a wrong turn."
    -Bill McKinney, in Deliverance
  15. Unworkable idea. by jms · · Score: 5

    Should a law be required that if such a company goes under, they must either sell the rights to rent keys to another company, or provide non-terminating keys to the current subscribers?"

    Let's call the failed company "FailedCo."

    FailedCo "notified" their employees of the company shutdown by changing the lock on their door. (Common practice!) They immediately laid off their entire staff and cancelled their lease on their building. The entire contents of the office, including the computers containing the source code to the software as well as the license key generator -- were loaded up into a truck and piled in a non-climate controlled warehouse, pending Chapter 11 proceedings.

    As the case drags through bankruptcy court, more and more customers are faced with license key expiration, which means that they are going to be forced to abandon using the software. This makes the "rights to issue new license keys" less and less valuable over time. When the last license key expires, and the last customer has to abandon their software, the "rights to issue new license keys" falls to a value of zero dollars.

    Let's say, for argument's sake, that the judge orders FailedCo to "find a company to continue licensing the software to current customers."

    No company in their right mind would agree to do so!

    Why? Let's say, for the sake of argument, that a company, "ReceiverCo", agrees to do so.

    First off, they are being asked to take on the business operations of a failed software company, and pay good money for the privilege!

    Second, even though they have the rights to sell license keys and continue to maintain and develop the software, ReceiverCo is first faced with a daunting problem.

    The problem is a warehouse filled with computers, huge boxes piled full of cryptically labelled or unlabelled floppy disks, 8mm tapes, and zip disks.

    Before they can issue a single license key, they have to figure out:

    1) Are all the computers intact? Have the hard drives crashed? Do they boot up? Do they have to be networked together in a certain way in order to work? Are some computers NFS servers? Do they have to be manually restarted when they come up? How much time and money is it going to take to figure this out?

    2) Which are the important computers -- the ones with the source code and the license key generator, and which computers are unimportant -- the secretary's computer. The "important" computers are probably protected with unknown passwords. What are the passwords? Are the really important computers protected with encryption? How much money will it cost to hire "hackers" to break into all the machines, and sift through the 80 gig hard drives to find the valuable "assets" -- the source code & license key generator?

    3) Was the source code left in a buildable state? Remember, all of the developers are gone, and with no warning. Their computers are probably filled with test builds, undebugged source code, obsolete source code, and probably even entire non-working, experimental build-trees. Parts of the program are in C++, parts are in undocumented assembly language, and the internal build scripts are written in an in-house written scripting language that no one outside of the company has ever seen before. What if FailedCo itself has been licensing code from another company, and that license has run out?

    4) How do you run the license key generator? Odds are, it isn't a nice, well-written application. Most likely, it's an obscure command-line program, with a non-obvious, non-documented syntax. How do you even know when you've found the license key generator? Is it that binary called "lkg" in the home directory of an account called "lisa" on any one of 35 identical-looking computers? The "lkg" command just spits out "incorrect syntax" no matter what you type, so how do you know if you've even found the license key generator?

    Remember, all of the people who staffed FailedCo are gone. They have new jobs. They've filled their heads with new information for their new job, and barely remember this stuff. And their getting laid off was such a bad experience that they have no interest whatsoever in helping ReceiverCo revive FailedCo's products. Or maybe one of them will do the job -- at an extortionate price.

    It could literally take months to years and hundreds of thousands of dollars in manpower to conduct what would amount to an archeological dig through all those computers, and reconstruct the license-key granting program & procedure.

    All this to secure an asset of unknown value, that is quickly free-falling towards worthlessness.

    No company in their right mind would ever do it.

    What will really happen is that FailedCo will fail to find a receiver, and the judge will order that the company's assets be liquidated. All the files and computer media -- floppys, backup tapes -- will be either sent to a landfill or bulk-erased and sold as used media, and the computers will have their hard drives either removed and destroyed, or reformatted, and the computers will be sold as "used computers, without windows", at auction.

    And the source code and license key generator will cease to exist.