according to Joseph Noonan, president and CEO of V.i. Labs in Boston
How long has V.i. Labs been in the software intelligence business?
We launched V.i. Labs in 2006, so we have been tackling software piracy for a decade. Our initial focus was on prevention through a product that stopped software from being hacked and the licensing removed, which is the most common way of pirating software. From there we began to focus on identifying the overuse and misuse of software, which turned out to be a massive challenge for software vendors. Through software intelligence there is a huge opportunity to turn unlicensed users into paying customers.
How big of a problem is unlicensed use in monetary terms?
The Business Software Alliance conducted a survey in conjunction with Interactive Data Corporation that estimated the annual value of unlicensed software used globally to be $64 billion. They also estimated that that two out of every five software applications globally are unlicensed, so two fifths of all software use is illegal. That’s a huge untapped market, so we made it the aim of V.i. Labs to identify that unlicensed use and turn it into actionable intelligence for our clients. They can then work to convert those users into paying customers. In fact, software intelligence has supported our customers’ compliance programs that have generated more than $1.4 billion in new license revenue since 2010.
What systems and services does V.i. Labs employ to retrieve this intelligence?
CodeArmor is our primary platform, which tracks and reports on unlicensed use. The platform collects information about the environment the unlicensed software is running in and then, with the help of a host of look-up services, confirms the identity and so on. CodeArmor then filters, cleanses and presents that data to our clients in a web-based dashboard.
A key element of the CodeArmor solution is our proprietary technology and team of data analysts under the banner of the V.i. Labs Data Service (VDS), that matches raw data with our federated database of infringing organisations that have a history of unlicensed software use. The team looks for characteristics that they have identified in these organisations and then builds a profile for our customers. They can then pursue conversions and new revenue streams.
Why is V.i. Labs working with FAST on an educational campaign?
The relationship with the Federation Against Software Theft (FAST) is all about education. There is a myth that there is ultimately nothing that can be done about piracy, but that just isn’t true. VDS and other sources have shown that the top 50 engineering schools and top 100 colleges and universities in the US have piracy adoption rates of 100 and 95 percent respectively. There is a 51 percent rate at Fortune 100 companies, while the top software companies have a 78 percent rate.
These statistics reveal the error in the myth that piracy is unstoppable, because, more often than not, it’s the same organisations infringing, usually accidentally. They should probably know better but they still do it. The software company statistic is particularly telling in this regard.
This is what the partnership with FAST is about. We are participating in a webinar that FAST is hosting on 14 June, that will demonstrate the size and nature of the unintentional infringement market, if you will, with a view, initially, to informing the UK legal market how vulnerable it is. Most infringement is accidental, such as buying from an unofficial reseller or vendor. FAST is recognising this and has asked us to help.
What can software companies do in terms of their licensing models?
Software companies across the world have lots of different ways of licensing. We work with one that doesn’t use licensing at all, but uses our CodeArmor platform to track and report on all use of its applications and then matches that data to the users’ entitlements. But there are two big licensing organisations, Flexera and SafeNet, which are the most widely used for licensing. Their licensing modules generally keep honest customers honest, but they can be easily overridden due their popularity. That’s an incentive for piracy groups to target software that uses them and distribute it unlicensed. As a result, software companies are aware that licensing has its limitations.
Some companies are considering a software-as-a-service model. Piracy in that environment is really just password sharing, but that is unlikely to ever become the standard because there is $180 billion of distributed software out there. The likelihood of pulling that all in and hosting it is probably a pipedream.
Subscription models are preferred. They are cost-effective for the user because the company is essentially leasing the product on an annual basis. A good example of this Adobe’s Creative Cloud. Technically, it’s just the licensing that’s in the cloud—substantial files still have to be downloaded and installed to the desktop. But the model has helped with Adobe’s piracy problem and made the software more affordable. It makes little sense for someone just starting out to pay thousands of dollars for a few applications when they can get the whole suite for $50 per month. It ties the user to the platform.