This entrepreneur started a business with 100 % certainty he would be sued by multinationals
We wrote recently about Redigi, which wants you to sell your second hand iTunes music on its platform.
We wrote then that there was about 99,9 % certainty that the record labels would sue Redigi, but that there was an important precedent: a July 2012 decision by the European High Court of Justice.
In July 2012, German reseller of ‘used’ software licences UsedSoft won a major victory over Oracle when the Court said that when a software company sells a licence, it “exhausts” its rights to revenue on that software. Meaning: a software producer can’t forbid a user to sell his licence to someone else, nor can it ask for a piece of the pie when the software is resold.
The Court went as far as to specify that by buying a used licence, the new buyer has the right to download latest version of the software from the original software producer.
It’s an interesting legal ruling, but I was interested in the entrepreneur behind the Usedsoft story. Why on earth would you start a business, knowing with 100 % certainty that you will be sued by companies like Oracle, Microsoft and other software giants with deep, deep pockets? It sounds like commercial suicide. So I contacted Peter Schneider of Usedsoft to ask him.
He said the idea of selling used software licences came by coincidence.
Schneider: “A client asked me if I would buy some of his old software back. I immediately thought it would be an enormous business opportunity. Although I also knew from the start that the manufacturers would try anything to defend their monopoly. But I was pretty confident that I had the law on my side, and it turned out I was right.”
Which isn’t to say that it has been a smooth ride: “The software industry has fought tooth and nail to beat us – in every fair and unfair way they could think of. One claim after the other, for nine years,” says Schneider in a video on the Usedsoft site.
Before starting Usedsoft, Schneider had been selling software since the 1980′s. First as a member of IBM’s sales team in Germany, later as an independent software broker. When he announced his plans to sell second hand software licences in 2003, the reactions in his professional network were mixed, he says.
“Some were enthusiastic, others more cautious – I guess that’s normal when you try something new. Over the years, I saw the mood change. People have really adopted the idea now.” Just to be on the safe side, though, Schneider sought out former IBM and Siemens executives for his board of directors.
Today, Usedsoft is selling “tens of thousands” of used software licences each year, Schneider says. He adds that the company has been profitable from day one.
But since the ruling of the European Court of Justice, he’s seen an influx of new customers. Customers, mainly SME’s, feel a lot more secure now to buy ‘second hand’ software licences. And the discounts of up to 40 percent compared to buying a new licence certainly help, he says. “The ruling of the Court is quite clear and final. Selling used licences is legal in Europe. I don’t expect any more lawsuits, to be honest.”
With the legal hurdles finally and conclusively cleared, Schneider will also expand his offerings to other software makers like SAP and Adobe. And he’s looking to roll out his business throughout Europe. “I’m looking for partners in the UK, Southern Europe, Scandinavia and Central and Eastern Europe. I want to develop Usedsoft from a German to a truly European brand now,” he said in a recent interview.
As to Redigi, the marketplace for iTunes songs, Schneider prefers not to speculate whether it will benefit from the July 2012 decision of the Court of Justice. “The decision specifically mentions ‘software’. I wouldn’t dare to speculate on whether it applies to music.”
Asked which business lessons his experiences with Usedsoft taught him, he is short and to the point: “Set yourself a goal. And pull through.”
Photo: Mark Turnaukas, Flickr
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