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When is Right-To-Copy Course Licensing Right For You?

If you're like most training companies, you don't sell your courseware, you license it. Why? Because you want to place limits and conditions on the use of your intellectual property -- and you need more than the simple copyright and trademark protection you'd receive if you sold it outright.

The most common condition associated with licensing training materials has to do with limiting use to one individual, and this is the way course pricing has traditionally been set. So if a customer has 271 employees who require training, then they are required to pony up $250 (or whatever the per user license fee is) x 271. What could be simpler or more lucrative for you -- especially if your customer has a huge employee population to be trained.

Unfortunately, a funny thing happens when customers have sizeable trainee populations. Rather than pay per user, many larger and more self-sufficient customers seek to negotiate a blanket license fee for their entire organization. What's more, what they're prepared to offer is almost always way less than you would receive based on your published per user price list and standard volume discounts.

Blanket licenses go by a number of names. Old-fashioned customers may ask for a "Right to Print" license. Now that training has gone digital, the request may be for a "Right to Reproduce", "Right to Copy" or "Right to Use" license. Or, borrowing from software industry lingo, the request may be for an "Enterprise" or "Site" or "Server" license.

Whatever you call it, and as disturbing as it may seem to you, how should you respond to a customer's request to decouple from per user pricing? Here are some guidelines to help you decide:

A. Clarify Motives

Not every right-to-reproduce request is a thinly disguised attempt to pay you 10 cents on the dollar. Ask your customer "why is this important to you?"

Perhaps your customer is simply seeking the freedom to put their own stamp on your course. They want the flexibility to include their own logo and key message elements -- maybe even a flattering photo of the CEO!

Or your customer may be seeking to integrate your course or elements of your course in a seamless way with other course content -- or totally customize some or all of your learning content to their specific situation.

Another reason why your customer may be seeking a right-to-copy license is because they feel your materials are too lavish and they don't want to pay for fancy packaging. (Check out "Who's Minding the Store on Course Manufacturing Costs" in the May 9, 1999 issue of Training Business E-Visory located in the back issues section of our Website.)

Yet another possible motive is to avoid the bookkeeping and administration associated with inventorying course materials and keeping track of each and every course participant.

Sometimes customers seek a right-to-copy license because times are good and they want to lock in their next 2-5 years worth of training needs during the current fiscal period. Or they may want to even out payments by paying a fixed amount every quarter.

Once you've clarified your customer's motives, there's a reasonably good chance you may be able to respond to their needs without de-coupling from a per user pricing scheme.

B. Determine Value

Let's face it, you shouldn't care how a customer prefers to pay for your intellectual property so long as you receive adequate compensation for the value received.

However, the first thing to understand is that even if you should decide to de-couple from per user pricing, training is still a people business -- and value is always a function of the number of people trained. So the trick is figuring out what sort of factor to use.

For instance, let's suppose your customer has 2500 employees who could conceivably be trained during the period they are seeking to license your courseware. Together you develop the following scenario:

Number of
Likelihood of
being trained
Weighted #
of trainees

Therefore, should your customer want to purchase a right-to-copy license, your go-in position might be the amount you would charge for 1125 users under your standard per user method -- less your standard volume discount and any savings you would realize from not having to provide physical training materials.

But, life isn't usually this easy.

Suppose your customer wants to substantially customize 50% of your course content, and leave the rest on the cutting room floor. If this is the case, it may make sense to factor the weighted number of trainees by the percentage of your content the customer is actually benefiting from. Let's say you and your customer agree on a content usage factor of 40%. Given this scenario, you'd complete your per user pricing equivalent as follows:

Weighted #
of trainees
Course content
trainee value

If you and your customer can't agree on how many employees will actually wind up benefiting from your courseware and what percent of your course content will actually be utilized, consider accepting your customer's estimate. Remember that constantly evolving business conditions mean that many training intentions never bear fruit. So there's always a chance your customer is paying you for training that will never take place at all!

C. Evaluate Threats

Try and feel out your customer as to what they will do if you aren't able to work out a mutually satisfactory right-to-copy license arrangement. Then come up with your own sense of your customer's options and alternatives in conjunction with your account salesperson.

If you conclude your courseware is uniquely suited to your customer's needs and they would be hard pressed to come up with a substitute, then you are in a pretty good negotiating position.

On the other hand, sometimes customers ask for a right-to-copy license when they have been paying you in a per user way for years and have acquired enough subject matter expertise and instructional design savvy (they think!) to easily develop their own course.

Or your customer may have sourced 15 comparable suppliers who are eager to give away their courseware if it means getting a toehold in the account.

In either of these situations, logically factoring your standard per user pricing in order to arrive at a right-to-copy price is not likely to clinch the deal. So you will need to add additional value to help you justify your price -- or you will need to satisfy yourself that there are excellent strategic reasons for caving in. Otherwise, your wisest move is to pass.

A while back a customer offered to pay one of my clients $250 -- a measly 50 cents per user -- for a perpetual right-to-copy courseware license. "What will you do if we don't go along with your offer?" my client asked. "Then we'll just keep on copying your courses for nothing, like we've been doing all along" responded the customer.

If you're up against a blatant or implied threat to illicitly copy your material, your CEO should have a courteous but frank discussion with your customer's CEO on copyright infringement and its consequences. In my experience, most senior people are honorable folks who will take action on your behalf to nip any potential abuses in the bud.

D. Stay Connected

When customers seek right-to-copy licenses, there's a temptation for training companies to "take the money and run." Nothing could be a bigger mistake.

Let's assume your customer is seeking to license your courseware because they want to substantially customize it and integrate it with other learning content in developing an enterprise wide curriculum. Offer to help! After all, nobody knows your content better than you do, and you may well be able to persuade your customer that paying you to do the work is more cost effective than trying to do it themselves.

Also offer to help your customer repackage your product to put their own stamp on it -- or to help them better manage and administer training delivery.

By the way, don't try to frighten customers into handing over their courseware customization needs to you by making Chicken Little pronouncements like this:

"Unsanctioned efforts to modify our courseware will void any performance guarantees and could lead to general loss of brain function among trainee populations."

Customers will perceive this as an insult and question your commitment to making the modifications they need.

Finally, even if your customer is adamantly self sufficient and doesn't take you up on your offer to help, be sure to check in regularly on how the training effort is going. Why? Because sooner or later your customer is going to be in the market for a new training solution. And you want to be in the picture to provide it.

One way to make this happen is to schedule periodic program reviews as part of the original license agreement.

E. Plan for Contingencies

Don't enter into right-to-copy courseware license agreements that don't offer you the ability to periodically recalibrate or, if necessary, end the relationship. Why? Because circumstances can change.

For instance, you will need to negotiate in advance what happens should you update your courseware during the license term. Is your customer entitled to the new material? Don't be too quick to say yes. Obsoleting your own courseware is an excellent way to remedy a right-to-copy deal that's gone sour -- or strike up a new deal that's more in your favor.

Also try and negotiate some sort of inspection process to help you monitor how widely your customer is using your material and how well they are abiding by any contractual limitations. Try and frame this as a benefit to your customer and, indeed, use this occasion to offer suggestions as to how your customer can get more value out of your intellectual property.

Do be wary about offering right-to-copy licenses of an unrestricted and perpetual nature based on loose language and trust. What happens when your trusted client leaves for another company? Suppose your customer is acquired by a foreign firm that has a casual regard for copyright and trademark conventions? Suppose your customer decides to go into the training business and sell a thinly disguised version of your own course against you!

Finally, only diamonds are forever. So do be sure that your right-to-copy license has a termination date and that any options to renew are at your discretion.

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