If you combine the 90-9-1 rule with a proprietary licensing arrangement (as I have in the info graphic above) you can see why: the return is only about ten cents on a dollar.
Let's consider the following:
- 500 person organization
- Enterprise wide solution at $130/license
Making the total cost to the organization $65,000
The participation breakdown within in a organization of 500 people is approximately:
- 5 heavy contributors
- 45 intermittent contributors
- 450 non contributors (lurkers)
Therefore the approximate cost breakdown under this model is:
- $650 spent to enable heavy contributors
- $5,850 spent to enable intermittent contributors
- $58,500 spent to enable lurkers
The production breakdown within this model is:
- 1% producing 90% of the outputs
- 9% producing 9% of the outputs
- 90% producing 1 % of the outputs
Overall licensing is cost neutral but with significant differences:
- Licensing heavy contributors is highly cost effective because they produce at a 1:9 ratio.
- Licensing intermittent contributors is cost neutral because they produce at a 1:1 ratio.
- Licensing lurkers is cost burden because they produce at a ratio of 9:1.
Looking over this example, it is no surprise why I recommend against engaging with vendors that use per user licenses as a distribution control. The model absolutely breaks down when you look at participation models. I personally think there are two caveats worth discussing from here: (1) what does this mean for vendors and in house resellers and (2) what is the value of lurking.