Software Licenses: Open Source vs Proprietary

Introduction

Many times, we find ourselves wondering which type of software license would best fit our needs. Without a proper understanding of the various licensing categories, we risk misusing software or even overpaying for tools while similar tools might be available as open source. In today’s post, let’s break down the different types of software licenses and understand how to choose the right one.

What is a software license

A software license is a legal agreement that tells us what we can and cannot do with a piece of software.

It’s like the rulebook the software creator gives us — granting certain rights (like using, installing, or modifying it) and setting restrictions (like not copying it for resale without permission).

In short:

• It protects the creator’s rights under copyright law.
• It defines user rights (use, share, modify, etc.).
• It can be free or paid

Types of software license

There are two primary types of software licenses: Open Source, where the source code is publicly accessible, and Closed Source (Proprietary), where the source code is restricted

While open-source software makes its code or tools publicly accessible, it still comes with certain usage restrictions, which we will discuss further.

1.Open-Source Software License

An Open-Source Software License is a legal agreement that grants users the right to view, use, modify, and share the source code of a software program. Unlike proprietary licenses, open-source licenses encourage transparency, collaboration, and innovation by giving access to the underlying code.

However, open does not mean without rules. Each open-source license comes with its own set of conditions — some are highly permissive, allowing almost unrestricted use, while others require that any modifications or redistributions follow the same licensing terms. This balance enables developers to contribute freely while still protecting their work and upholding community standards. Now open-source software licenses are categorized into two groups; they are permissible license and copy left license. We heard about copy right what is copy left again? Interesting!!!Let’s discuss in detail 😊

Open Source – permissible software license 

These licenses impose minimal restrictions on how the software can be used, modified, or redistributed. They are business-friendly and often allow integration into proprietary products.

Advantages:

• Simple terms, easy to understand.
• Allows both open source and commercial use.
• Encourages wider adoption of the software.
• Compatible with many other license types.

Disadvantages:

• Anyone can take the code, improve it, and release it as closed-source without sharing changes. So, the original authors may not benefit from improvements made by third parties. 

Let’s now explore the different types of permissible software license 

Open Source – permissible software license – MIT License

The MIT License is one of the most permissive open-source licenses available. It imposes minimal restrictions, allowing the software to be used, copied, modified, merged, published, distributed, sublicensed, and sold without limitation.

The only requirement is attribution: the original copyright notice and license text must be included in all copies or substantial portions of the software. This ensures that the original author is credited, even though the license grants broad usage rights.

Due to its simplicity and flexibility, the MIT License is widely used in both open source and commercial projects, and it allows seamless integration into proprietary software.

Open Source – permissible software license – Apache License 2.0

The Apache License 2.0 is a business-friendly open-source license that allows both personal and commercial use while offering strong patent protection. It gives developers flexibility but does not force them to share improvements.

Advantages:

• Allows both open source and commercial use.
• Strong legal protection against patent disputes.
• Flexible — modified versions can have different licenses.
• Encourages adoption by businesses.

Disadvantages:

• Allows proprietary use, so improvements may not be shared back.
• More complex than MIT License, which may require extra legal review.

Open Source – permissible software license – BSD License 

The BSD License allows software to be freely used in both open source and commercial projects. Like the MIT License, it requires attribution to the original author but otherwise gives developers a lot of freedom. The 3-Clause version adds a "no endorsement" clause, meaning the names of the original authors or organizations cannot be used to promote derivative products without permission.

Advantages:

• Very simple and flexible terms.
• Works well for both open source and proprietary projects.
• Widely recognized and accepted in business and academia.

Disadvantages:

• Allows others to make proprietary versions without sharing changes.
• Minimal legal protections compared to Apache License 2.0.

Well, we discussed a lot about different types of open-source permissible software licenses. Let summarize them.

License	Key Features	Advantages	Disadvantages
MIT	Very simple and permissive. requires attribution only.	Easy to understand, compatible with many licenses, allows both open source and proprietary use.1	Allows closed-source use without sharing improvements
Apache 2.0	Similar to MIT but adds patent protection and change documentation requirements.	Business-friendly, strong legal protection, flexible licensing for modified versions.	More complex than MIT, allows proprietary use without sharing improvements.
BSD	Similar to MIT, 3-Clause adds a “no endorsement” rule.	Flexible, widely accepted in academia and industry, minimal restrictions.	Allows proprietary use without sharing changes, less legal protection than Apache 2.0.

Are we good to move to the next category of open-source licenses? let’s discuss 

Open Source – Copy Left software license

When we say copy right it means creators has exclusive rights to control how their work is used, copied, modified, or distributed. Without creator's permission, others cannot legally use it.

Copy left is the opposite of copy right, instead of restricting usage, it ensures that the software (and any modified versions) remain free and open for everyone.

In other words, copyleft is a licensing approach that says:

"You can use, modify, and distribute this work freely — but if you share it or make a modified version, you must give others the same freedoms."

This means:

• Any derivative work must be licensed under the same terms.
• You cannot take copyleft software, make improvements, and then release it as proprietary or closed-source.
• I hope we have a good and clear understanding about copy left software license. Now let’s talk about different types of copy left software licenses.

Open Source – Copy Left software license – GNU General Public License (GPL)

The GNU General Public License (GPL) is one of the most widely used copyleft licenses in the open-source world. Its main goal is to ensure that software remains free and open for everyone — not just free in cost, but free in the sense of freedom to use, study, modify, and share.

The key feature of the GPL is its strong copyleft rule:

If a derivative work (modified version) is created or GPL-licensed code is combined with other code, the entire combined work must also be released under the GPL.

This means:

• GPL software can be used, modified, and distributed, including for commercial purposes.
• The source code must be made available when distributing the software.
• The same GPL license must be applied to any modified version so that others receive the same freedoms granted by the original license.
• GPL code cannot be taken, improved, and then released as closed-source or under a more restrictive license.

Example:

If a GPL-licensed text editor is enhanced with new features and then distributed, the source code for that enhanced version must also be shared under the GPL so others can use and modify it.

Why it matters:

The GPL protects the open-source ecosystem by preventing proprietary restrictions from being applied to software that was intended to remain free.

Open Source – Copy Left software license – GNU Affero General Public License (AGPL)

The GNU Affero General Public License (AGPL) is similar to the GPL but with an extra rule for software used over a network. If the software is modified and made available for others to use online (such as in a web app or cloud service), the modified source code must also be shared with those users.

This license is designed to prevent companies from keeping changes private when running open-source software as a service. It is especially important for web-based and cloud applications.

Open Source – Copy Left software license – GNU Lesser General Public License (LGPL)

The GNU Lesser General Public License (LGPL) is a weaker version of the GPL, mainly used for software libraries. It allows the library to be used inside proprietary software without forcing the entire software to be open source.

However, if the LGPL-covered library itself is changed and distributed, those changes must be shared under the same LGPL license. This makes it easier for open-source libraries to be used in both open source and commercial projects.

2.Proprietary (Closed-Source) Software License

This type of license means the software belongs to the company that made it. The person using it only gets permission to use, not ownership.

Key Features:

• Hidden code – The code that makes the software work is secret. It cannot changed.
• Rules for use – The license tells exactly how the software can be used.
• No sharing – It cannot be copied or given to others.
• Mostly paid – Usually needs to be bought or paid for monthly/yearly.
• Updates from company – Only the company can fix problems or add features.
• Company owns it – All rights stay with the maker.

Example: Microsoft Windows, Microsoft Office, Adobe Photoshop

Let’s talk about different types of proprietary licenses.

Perpetual License - Proprietary (Closed-Source) Software License

The software is bought once. After buying, it can be used forever (no expiry date). Ownership of the software is not given (the company still owns it), but the right to use it permanently is given. This is a good license to buy once and use fore ever but there are certation limitations to know before using these types of licenses.

No free major upgrade, need to buy the new version again

Software owner may stop providing security patches after certation period of time. So it may become out dated or insecure over the time.

If someone is agreed to pay gain for new released version or ok to continue without security updates then this license may be a good option to consider.

Subscription License - Proprietary (Closed-Source) Software License

The software is used by paying regularly (monthly, yearly, etc.). The software works only while the subscription is active. Once payment stops, the license ends and the software usually stops working (or switches to a limited/free version).

Example: Microsoft 365, Antivirus software

Trial or Demo License - Proprietary (Closed-Source) Software License

A Trial or Demo License is a temporary license that lets a user try the software for free (or with limited features) for a short time.

It is mainly used by companies to let people test the software before buying.

Concurrent User License - Proprietary (Closed-Source) Software License

A Concurrent User License is designed for organizations where many employees need access to a software, but not all at the same time.

Instead of buying one license per person (which is expensive), the company buys a pool of licenses that can be shared.

The key rule: The number of people using the software at the same time cannot be more than the number of licenses purchased.

Example:

The company buys, for example, 10 concurrent licenses. The software is installed on as many computers as needed (say 100). When a person opens the software, the license server checks availability.  If fewer than 10 people are using it then access is granted. If already 10 are active then the next person must wait. When one person logs out or closes the software, the license is freed and can be used by someone else.

Site/Enterprise License - Proprietary (Closed-Source) Software License

A Site License or Enterprise License is a type of software license that allows all users within an organization (or within a physical location) to use the software without buying individual licenses.

Instead of buying one license per user or per device, the company pays a single organization-wide fee.

Example: A company buys an enterprise license for antivirus software → all employees’ computers are protected.

Conclusion

Understanding software licenses is very important before using or buying any software. Licenses define what can be done, how long the software can be used, and what rights remain with the company. Closed-source licenses such as Perpetual, Subscription, Trial/Demo, Concurrent, and Site/Enterprise each serve different needs — from individuals to large organizations.

Choosing the right license is not just about cost, but also about flexibility, scalability, and legal safety. For personal use, a subscription or perpetual license may be enough, but for businesses, concurrent or enterprise licenses can save money and improve efficiency.

In the end, knowing the differences helps in making smart decisions, avoiding legal risks, and ensuring the best use of software for both individuals and organizations.

What do you think? Which type of license do you use the most, and why? Share your thoughts in the comments below — I’d love to hear your perspective!

Happy reading !