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Source Code Escrow
Makarand writes "According to this article in The Economic Times (India) Software companies in India
are embracing the trend where source code for the software being bought or sold
is
kept safe with an escrow agent
with carefully drafted agreements. This allows
the buyer to get hold of the source code in cases where software was licensed from a
start-up which has now folded or a breach of contract regarding the maintenance services
that were agreed upon can be proven. The source code is automatically released
upon the occurrence of any of the events mentioned in the escrow agreement and the
buyer will be able to study the source code and continue to provide support services
for the software bought without relying on the employees of the software supplier."
If the developer goes out of business, getting the source code by itself is almost always useless: almost no single customer will have the resources to maintain and extend it. Source code is only cost effective if there is a community of users and developers, and that requires releasing the code under an open source license ahead of time.
(For the same reason, Microsoft source code isn't their crown jewels, as they always claim: even if people got access to it, they couldn't develop and maintain it anyway. The main reason Microsoft doesn't want their sources released is probably marketing--the "Coca Cola Secret Formula" gimmick--and the probably embarrassing state of it.)
Another problem with source code escrow agreements is that people don't know whether the code deposited with the agent will even compile or be complete. And the agents themselves disappear or misplace code.
Some of the early source code escrow companies themselves went bust. You need a software escrow agent that's likely to be around for decades. There are still companies offering software escrow services, but it's a minor business.
Iron Mountain has a software escrow business, and they offer some stories of software released from escrow. The most common situation is bankruptcy of a supplier.
I had the lead for my former company's purchase of a customized Learning Management System. My employer was a privately held retail chain which could barely keep the configuration straight on our POS, and had already replayed the whole custom software development death march several times. But the lawers insisted that we obtain a "Source Code Escrow" for our $250k LMS purchase. I asked them under what conceivable circumstances they thought we would actually put together a team to take the code back into development, or even to create the build environment for debugging (and recursion testing, rinse, wash, repeat). I escalated to VPs, who basically said "Gotta have Source Code Escrow" while having no clue what would really be involved. So we paid for and got it. The LMS company indeed went belly up during the dotcom bust and we abandoned their product for an off the shelf system from a more stable vendor. But they still have the right to dig that old code out of escrow should they desire!
----- Indecision is the key to flexibility.
Another problem with source code escrow agreements is that people don't know whether the code deposited with the agent will even compile or be complete
Escrow is just like software, its goodness or badness varies with the people involved. Nearly two decades ago I worked at a medium sized company that sold equipment to the phone company. Everything went into version control. Source code, documentation, compilers, libraries, tools, config files, etc. Developers produced a release candidate, passed along CRCs of all files to QA. QA wiped a PC's hard drive, grabbed the candidate from version control, built it for themselves, and verified the CRCs matched. QA only tested what they built for themselves. When a candidate was approved and released to the phone company that release was also sent to the escrow company designated by the phone company. And of course checklists documented the process above.