Pardon the dust!
This page includes some jargon that hasn't been added to the site's glossary yet. I'll be around to fix this later, but sorry for the inconvenience in the meantime.

All about software licenses

An overview

If you've ever installed something on your computer, then the odds are that you've seen an example of what's known as a EULA, or End User License Agreement. Whether or not you just scrolled down and blindly hit "accept", you probably saw a specific line at the top of the wall of text that reads "This software is licensed, not sold".

The reasoning for this is pretty simple. A digital product can be copied an infinite number of times, and thus the files that make it up are practically worthless. But, just having a copy of the files does not grant one permission to use them. When you purchase software, what you are actually buying is the right to use that software (ie, a license for it). This is particularly evident when you purchase software online, as it's usually distributed via download these days (ie, you do not receive a physical copy of the product).

Since this can be a little complicated, I've created this page to provide some information about typical types of software licenses, as well as the pros and cons of this system.

Common types of licenses

Everybody wants something different, so it's not surprising that people have created a variety of ways to market their software. This has led to the adoption of many different licenses. While each license comes with its own terms and conditions, they tend to fall into one of three categories.

Here's an overview of what you can expect from software licenses.

Something for Nothing
Software that can be used freely is generally known as freeware, though free online games are generally known as free to play games. The distiction seems to come from the fact that you cannot keep a copy of the online game. You may also hear about freemium games, which are free to play games that also have a premium service available for purchase (hence "freemium" -- free with a premium option).

Another form of free software is open source software, sometimes called free open source software, or FOSS for short. Open source software is unique in that the developers have made their program's source code available to the public, allowing anybody with programming know-how to modify these programs however they want. Granted, most people just use the programs as-is, but the option to make your own custom version is there.
Payment required
While there's a lot of freeware available today, the majority of programs out there are sold like any other commodity. It's just that you're buying a license to use your copy rather than the copy itself. Aside from the standard license, there are two additional types of paid licenses worth mentioning.

The first of these is the popular shareware license, which breaks a program up into a free and a paid version. This allows people to try a product before they buy it. A similar idea is found with donationware, which is when you're asked to pay for the software, but you're not required to do so. This turns any payments into a tip or donation, hence the license's nickname.
Subscription model
Very few programs warrant a subscription fee, but they are out there. Usually, this model is used when there is something that needs regular maintenance, such as a server. When video games require a subscription, they are said to pay to play, a pun on the free to play model. Pick your pay to play games carefully, as this is the most expensive way to play video games and may not be worth the price.

On a side note, the slang term pay to win isn't a synonym for games like this -- instead, it's an insulting way to refer to games that abuse in-game purchases.

Some Pros and Cons of using licenses

Using licenses to affirm someone's right to use software has several advantages for both the user and the companies producing it. Some of these might not be obvious, so let's review some of the benefits, and potential problems, of using the licensing model in today's digital age.

The Greatest Benefits
By using this model, developers are able to maintain a single copy of their product. Thus, when the software is updated, it can be distributed to the users using this "master copy". This allows developers to impliment changes quickly. It also greatly reduces the expenses that come with selling software, as there's no need for a physical product to be shipped out. No physical product means no packaging, no shipping, and no useless package inserts to throw away.
The Greatest Drawbacks
Probably the biggest drawback to this model is that you don't really own the digital media that you purchase. There are a few different ways that licenses can be revoked or otherwise terminated, and if this happens, you lose the ability to use whatever you purchased. In some cases, the software or media may even be erased from your devices without warning.

Part of the problem is that you'll rarely, if ever, purchase your licenses from the property owners directly. Instead, you'll buy them through a distributor or marketplace. If that distributor closes its doors, then the licenses you have through them disappear too.

A particularly infamous example of licensing going arwy happened in 2009. A third party used the Amazon marketplace to sell licenses to a book without getting the copyright owner's permission. When this mistake came to light, Amazon "recalled" the product, removing the ebook from people's Kindles. The fact that Amazon could just erase content on your device was scary enough, but what really made this incident famous was that the book in question just happened to be 1984 by George Orwell.