PaaS embraces client access licensing

Back in the early days of application service providers (ASPs, the doomed precursors of SaaS), software licensing was a huge barrier to growth, simply because conventional enterprise software licenses assume you already know who all your users are going to be, and expect you to pay up front for all of them. Enterprises encountered similar problems with their early extranet deployments. The licensing that vendors offered simply didn't cater to the new opportunities opened up by the Web.

Platform as a service (PaaS), which provides hosted infrastructure for developing and deploying custom SaaS applications, is now going through the same rite of passage. Yesterday, Coghead became the latest PaaS vendor to introduce a subscription that recognizes a separate class of casual or less frequent user. Until yesterday, the price per logged-in user was around $10 per month. Now Coghead has added the option of an unlimited user subscription (confusingly named the 'Limited User' option) for an additional $50, which allows any number of either anonymous or authenticated users to access the application via specified access points (eg a widget or an API).

The approach is different from that taken by Bungee Labs, another PaaS provider, which charges according to the actual compute resources used. As I mentioned when I discussed this in April, Bungee's approach can lead to jaw-droppingly low costs for occasional users, but it does have the disadvantage of being less predictable than Coghead's approach. Paul McNamara, Coghead's CEO, told me last week that a utility pricing scheme had been rejected because of this uncertainty: customers "don't want this to be like cellphone bills in the 1990s." On the other hand, the fixed pricing means that Coghead has to somehow put caps on usage "in case someone wants to create a YouTube on Coghead," as McNamara told me.