Software sales pick up on Net

The market for software sold on the Internet has been slow to really take off. That finally may be about to change.

3 min read
Software has long been one of the most popular commodities sold on the Internet, but the market has yet to really take off. That finally may be about to change.

New products and services indicate the infrastructure to support the nascent electronic software distribution (ESD) market is finally maturing.

In a deal announced today, for example, EarthWeb will use software from BroadVision to sell products from EarthWeb's Developer Direct Web site.

Until now, most companies focused on "wrapper" technology (secure containers) for sending software over the Internet. But wrappers are only one piece of ESD; now, these companies are creating server products too that help replicate on the Net how software is sold in the physical world.

The evidence: ESD competitors Portland Software and Preview Software are about to release new client and server versions of their products. Traditional software players too are demonstrating their interest in selling over the Net. Since March, for example, pioneer CyberSource, which opened the first Internet software store called software.net, has signed up more than 100 software retailers, publishers, and resellers.

On August 11, Preview Software will release version 3.0 of its TimeLock product, which allows software vendors to distribute both full and trial versions of software from a Web site or on a CD-ROM.

TimeLock consists of a "client builder" utility that encrypts and packages a piece of software, and a transaction server that gives buyers a key to unlock software when it's been paid for. The transaction server also links to e-commerce systems for credit card processing and other services.

TimeLock allows "try before you buy" sales, an important technology for lesser-known software publishers, says Preview founder Karl Hirsch.

"It overcomes consumer resistance and substitutes for brand recognition for smaller publishers," Hirsch added, noting that trying software first gives would-be buyers confidence when they don't know a publisher's brand name.

For publishers, Client Builder costs $795 per software title for one merchant, then $495 for each additional merchant. Merchants pay $495 per title. On the transaction side, publishers can choose to pay $2 per transaction to use Preview's services or $4,995 to license Transaction Server for one title. Additional titles cost $995 each.

ZipLock 3.0 from Portland Software, due in late September, also will offer a "ZipLock builder" that lets merchants, resellers or publishers secure packages around their software. Portland also will run a ZipLock outsourcing service, designed to let software sellers to jump into online sales quickly by letting Portland do the work.

By year's end, Portland also expects to offer special-purpose digital certificates, called "Zerts," that will contain licensing and marketing information.

Portland site licenses will cost $5,000 to $50,000, with a per-transaction fee of 20 to 60 cents.

CyberSource offers a turnkey solution for complete outsourcing as well as an unbundled set of services that a software seller can choose from to do the middleman's job themselves. CyberSource services include a screen for fraudulent credit cards, export control, credit card processing, sales tax calculations, distribution of goods, a license clearinghouse, and shipping notifications for physical goods.

Companies such as Portland and CyberSource are hoping that products like theirs will boost all kinds of electronic product distribution. Both companies say they specialize in "digital products"--a hint they see new markets beyond distributing software. They add that their products also can be used to distribute music, movies, reports, and sensitive medical or legal information.

"Companies are emerging that are providing some elements of the infrastructure required to distribute music electronically," said Bill McKiernan, CyberSource's chief executive. "We think some of the things we offer will help that model."