Jeff, I'm not sure that this will answer your question but offer it as a slightly different perspective. During the time I worked at Oracle in the 1980's, our software licenses evolved from a "tiered" pricing model tied to the relative horsepower of a customer's designated CPU, to various "count-the-users" models, in which customers paid some licensing increment for each additional discrete or concurrent user. As you might expect, this transition marked the changeover from host-and-terminal to client/server architectures. More recently, the industry standard has been to license Servers rather than Users, since the client-side functionality is disappearing behind "thin" browser connections.
Back in 1988, Larry Ellison told me that he believed the ideal software licensing model for a database vendor of the future would be one that captured a "millage rate" for each row accessed from a database table during a business process. It might represent some minor fraction of a cent per row, but would provide a continuous revenue stream immune to the usual quarterly and business-cycle hiccups. I recall that he referred to the notion as "data utility pricing". He was convinced that -- given adequate metering technology -- this pricing scheme would most directly compensate vendors according to their product's "usefulness". As a software salesman accustomed to those big one-time license transactions, I was, quite naturally, aghast at this suggestion.
But as an investor, it doesn't seem so far-fetched.
Bob Sutton |
