INDUSTRY REPORT
Executive Summary
Software suppliers want users to value and engage with their products. They also want users to be consumers who pay for and are compliant with software licenses.
Today, as the push to capture recurring revenue grows, so does the need to take stock of where revenue leakage is taking place when organizations are out of compliance with software licenses. This happens through multiple forms of unlicensed use:
- Piracy: when software has been configured or tampered with to remove or bypass license enforcement
- Overuse: the use of software exceeding the limits of the license
- Misuse: the intentional configuration of the software to enable use beyond the limits of the license
To reduce compliance risk and optimize revenue goals, suppliers must have the software usage data to be aware of where revenue leakage is taking place, measure how significant the loss is, and take steps to minimize losses. But as found in the fifth annual Revenera Monetization Monitor survey, revenue leakage related to unlicensed usage is significant and growing; piracy is a major problem for 40% of respondents, overuse is a major problem for 26%, and misuse is a major problem for 30% in 2023. 37% also cite the more recognized challenge of customer churn as a major problem, highlighting the missed revenue opportunities for suppliers who ignore piracy.
At a time when more than a third of respondents (37%) are planning to change monetization models to tighten enforcement/compliance in order to help eliminate revenue leakage, effective approaches are necessary. This report considers the state of compliance and unlicensed use issues, offering insights as to how software suppliers can strengthen their initiatives.
Piracy is a major problem for 40% of respondents, overuse is a major problem for 26%, and misuse is a major problem for 30% in 2023. 37% also cite the more recognized challenge of customer churn as a major problem, highlighting the missed revenue opportunities for suppliers who ignore piracy.
Many suppliers are unaware of the prevalence of revenue leakage: An average of 15% don’t know how much revenue is lost to piracy, overuse, or misuse.
More than a third of respondents (37%) are planning to change monetization models to tighten enforcement/compliance in order to help eliminate revenue leakage, yet more than one in five respondents (21%) are not aware of how they are losing revenue to software piracy, overuse, or misuse.
Significant new license revenue opportunity for software suppliers. Aggregate data from Revenera’s Compliance Intelligence customers used to create the Top 20 list of piracy and license compliance hotspots reveals a $16.2 billion revenue opportunity in countries with strong IP laws and a track record of successful license compliance programs.
Table of Contents
The Revenera Monetization Monitor:
Software Piracy and Compliance 2023 illuminates:
The Revenera Monetization Monitor 2023 Series
This report is part of an annual series, first published in 2019, focusing on software monetization. The first report of the Revenera Monetization Monitor 2023 series focused on software monetization models and strategies; the second focused on software usage analytics. This third and final report addresses software compliance and piracy; it also incorporates aggregated data collected from Revenera’s Compliance Intelligence customers. All reports are based on 454 responses to a survey conducted by Revenera from March through July 2023.
Software License Compliance Issues
Issues Contributing to Revenue Leakage
Revenue leakage takes place for multiple reasons: ineffective licensing strategies, customer churn, inefficient monetization models, and entitlement management errors that provide customers with updates they shouldn’t receive. Unlicensed use of software—in the forms of piracy, overuse, and/or misuse—also directly contributes to revenue loss.
Revenue leakage related to unlicensed usage is significant and growing, with 40% of respondents citing piracy as a major problem, 26% citing overuse as a major problem, and 30% calling misuse a major problem in 2023. Software usage analytics can help identify where license compliance issues are taking place.
Issues Reported to Cause Revenue Leakage
Definitions
Software usage analytics
is the process of tracking and analyzing how users engage with software. It provides:
- Tracking, which usually happens via a call-home system that collects raw data about user actions and computing environments,
- Analysis, through visualization dashboards that show data, identify trends, user behavior, differentiators across user segments, etc., and
- Actionable insights, facilitating context-relevant engagement with the software.
Unlicensed Use
- Piracy: the use of software that has been configured or tampered with to remove or bypass license enforcement.
- Overuse: the use of software exceeding the limits of the license.
- Misuse: the intentional configuration of the software to enable use beyond the limits of the license (e.g., cloning).
Software piracy is reported to be a “major problem” by 40% of respondents in 2023, up from 17% in 2022. In that same time, the number reporting misuse as a “major problem” has grown to 30% from 20%.
That these two forms of intentional unlicensed use have grown so much in the past year may indicate the economic strain that consumers face and their resulting efforts to work around license compliance. Software suppliers must be aware of the scope of revenue lost to these issues and implement steps to minimize the problems.
