Any software is a product of intellectual activity, so only the developer or copyright holder can copy it and allow its use. To grant such a right, you need to draw up a special document - a license agreement.

A license is a document that grants the right to use intellectual property. The license contains a legal agreement between the copyright holder of the product and the user. The terms of the license agreement govern how the Software may be distributed and used. Also, the document often prescribes what rights the end user has, what guarantees the author of the software gives and what obligations he will fulfill. The second party to the agreement is the end user (an EULA agreement is concluded with him).

For the consumer, such an agreement is the basis for the lawful use of the software, and for the developer, it is a tool for protecting the ownership of the product and income from its distribution.

Classification of types of software licenses depending on legal status
From the point of view of legal status, licenses are classified into the following main categories:

Free licenses. Everyone has the right to copy, study, modify, use it as they see fit, without additional approval or obtaining permission from the author / copyright holder. Typically, the focus here is on the key benefits of the peer-to-peer development model. As a rule, there is no mandatory fee for use and a set of functions. Its key difference is its open source code. The copyright holder has the right to restrict certain types of use or distribution:

The MIT License is one of the most loyal varieties. It is allowed to use the product in almost any way (including in proprietary software), as long as the copyright notice is preserved.
Apache License - Make sure to retain the copyright notice and disclaimer of warranties. Otherwise, you can freely modify the product and distribute it.
MPL (Mozilla Public License) is allowed to be distributed, copied and used. However, if any changes have been made to the source code, then they should also be available when distributing the software.
The GNU General Public License (GPL) allows modifications to the software, but "derivative works" must be distributed under the same GNU license.
The Lesser GNU Public License (LGPL) is a more flexible analogue of GNU. The library can be linked to proprietary software, and there is no need to distribute all the source code.
The BSD License is similar to MIT in many ways. The BSD additionally includes a clause prohibiting the use of the authors' name to promote derivative works without permission

Proprietary licenses. Under this category, you cannot use the product until the user accepts the agreement. This type includes any software that does not meet the characteristics of free software.
The subspecies of this category include:

Freemium — the copyright holder provides access to the basic version of the software for free, while you will have to pay for the extended version with additional features.
Shareware — the software can be used for free, but either the time of use or functionality is limited. The full version will be paid.
EULA (End-User License Agreement) is the most common version of the license agreement. Defines the distribution and use of the Software. As a rule, it prohibits the distribution and modification of the software product.
 

For the right to use free software, the developer usually does not require payment, but it is quite possible to provide implementation and technical support services on a commercial basis. In addition, only access to the source code should be completely free. If the user needs a binary assembly, then the copyright holder may well sell it as a separate product. These nuances are directly spelled out in the text of the free software license.

Both free software and software distributed under a proprietary license can be shareware.

Free Software
Also known as Free and Open Source Software (FOSS). The main features that the licensee receives include:

full availability of the source code;
product study and the ability to change the software;
product launch, regardless of the goals;
Distribution of copies (including modified copies).
 

Free software products are conventionally divided into 3 subcategories
Copyleft

The consumer freely modifies the product, distributes the software without strict restrictions, but with the obligatory condition that identical rights are retained in any products that were created on the basis of this software. For example, if the developer has indicated in the code that it is intended exclusively for personal use, then the product created on its basis is also unacceptable to implement for commercial purposes.

Permit License

The main advantage is that the copyright holder imposes a minimum of restrictions. The main disadvantage is that the developer does not provide a guarantee for his product.

Public domain

Any consumer has the right to freely implement the code in their applications, projects, use it as many times as they want, and make changes without restrictions. Business treats this format of licenses with extreme caution and usually uses them reluctantly. The developers of such software do not guarantee their compliance with current coding methods, the product may not meet security requirements.

In addition, software is copyrighted by default, and in order for it to legally fall into the "public domain," its developer must explicitly and actively relinquish copyright. This point should be carefully checked before using such software.

Proprietary software
In the case of proprietary software, the developer grants the right to use copies of its product (one, several or unlimited quantities) in accordance with the terms of the license agreement. In this case, the ownership of all copies provided to the user remains with the copyright holder.

According to the type of restrictions imposed by the developer, the following subcategories of proprietary software are distinguished.

Shareware (non-commercial)

The copyright holder distributes his product for free, but provides for some restrictions. As a rule, with this type of license agreement, the software has a limited period of use, some functions are not available, or it is provided only for specific purposes (for example, for personal use or for educational purposes).

Depending on the conditions and restrictions, conditionally free software can be divided into several more subtypes:

Demoware - demo versions. Software with a lot of limitations, often without databases or key libraries. The main task of the demo is to demonstrate the functions of the software to the user and motivate him to buy a full-fledged license.
Crippleware – many features are available in the free version, but key features become available only after payment (for example, by purchasing a license key).
Adware — the copyright holder does not limit the functionality of the software, but earns money due to the fact that during work, the user is shown a lot of windows with ads.
 

Commercial

The most common subtype of licenses for proprietary software. The User is only entitled to use the Software, while only the Publisher has the right to modify or distribute the Product. The right to use is provided on a paid basis, and the "subscription" can be fixed-term, and the cost may depend on the set of available features.

Special attention should be paid to proprietary software related to trade secrets. Such software includes developments that have economic value. The owner patents the source code and keeps it a secret.

In general, the software is used and distributed exclusively within the company and is not available to users outside the company. In most cases, this subcategory of proprietary software is not directly related to licensing. However, if necessary, the fact of classifying proprietary software or its elements as a trade secret must be reflected in the text of the license agreement.

Licensing Types by Selling Method
Depending on the method of granting rights, the duration of the product, and the frequency of payment, the following types are distinguished.

Subscription
The right to use the Software is granted subject to regular payments (once a month / quarter / year). The user has access to all paid features until the end of the subscription period. The product can be used on any suitable device after authorization.

This type is suitable for those who want to get acquainted with all the features of the software in as much detail as possible and decide whether there is a need for its full-scale implementation, or for short-term use.

Volume Licensing ("Corporate")
It is suitable for organizations with a large staff when you need to provide software for many workplaces at once. A license of this format is purchased once, the agreement is formalized with a list of software provided, as well as information about the customer. Along with the agreement, the company receives the keys to install the product on its devices. The product can be used on all devices of the customer company. As a rule, when buying a corporate license, the copyright holder provides prompt technical support, helps with solving non-standard situations and offers serious discounts.

This option is considered the most profitable and convenient if you need to purchase new software or an update for the entire company at once. It is preferred by large companies.

Full Package Product ("Box")
The product is paid for once — at the time of purchase. By purchasing a "boxed solution", the consumer gets the right to use the software on one device, while the number of users of this device does not matter. "Boxes" usually provide for the right to change the device, but the number of such changes is limited.

This option is often used by small companies where several employees use the same PC. Also, this type of license will be convenient for those who have already purchased equipment, but it does not have the necessary software products for work.

OEM (Original Equipment Manufacturer)
Assumes that the user purchased the equipment immediately with pre-installed software. You can use a product purchased under this license only on the device where it was pre-installed.

This option is suitable if you plan to purchase new equipment. This is more convenient and faster than buying equipment and software separately.

License type by number of licensees
If the software was created for a specific customer (as a rule, these are companies of different forms of ownership) for his individual needs in accordance with his technical specifications, then the rights are received by the sole licensee. Then an exclusive license (private/custom software) is issued. Obtaining an exclusive license in such a situation is not the only option. The parties have the right to conclude an alienation agreement. Thus, the customer company receives full rights to the developed product.

The developer can provide the right to use the software to any number of clients, without restrictions. End users may also be included in the number of licensees. Then a non-exclusive license is issued. As a rule, popular software — for example, applications used by office employees, gaming applications — are distributed under licenses of this type.

Term of the agreement
By purchasing a license, the licensee acquires the right to use the product for the period specified in the license agreement. The term should not exceed the period of validity of the exclusive rights to the development as a product of intellectual activity.

If the license agreement does not specify the validity period of the right, then it is considered to be set for 5 years by default.

Software as a Cloud Service
Today, the field of software as a service (SaaS) is actively developing. This type of interaction assumes that the software product is provided as a service, and it is stored on a cloud server. In this case, the product is not tied to the user's devices.

For the end user, this approach has a number of advantages, which include the following:

there is no binding of the software product to a specific device;
you can organize teamwork according to unified standards, even if there are remote employees;
all computing operations are carried out in the cloud, which helps to save physical memory on the PC;
If necessary, you can easily switch to the tariff plan that provides the necessary "package" of functions and is acceptable in terms of cost.
 

For the developer, this option allows you to more effectively protect the product from unauthorized copying. With this format of interaction, it is much more difficult for consumers to violate the provisions of the license agreement and it is almost impossible to act to the detriment of the interests of the developer.

In addition, it gets the ability to track product usage statistics, change the subscription price, and adjust the licensing policy as needed.

Another advantage of "cloud software" for the copyright holder is the provision of a more or less constant, predictable and stable income, which has a positive effect on business development.

The software product is installed on the developer's server, and users get access to the infrastructure — system or computing. A "classic" license agreement for SaaS services is not quite suitable. If the software is provided as a cloud service service, then a "mixed" type agreement must be concluded between the copyright holder and the licensee, combining a license agreement and a contract for the provision of paid services.