Chronicles of an Indian Start-up Owner

Once you decide to run an online business, you will most likely end up provide some sort of software or product to your customers. Eventually, you will ask the dreaded question,

How do I protect my IP? What if one of my customers steal our work and start re-selling or upload it somewhere for free?!?

As a startup founder, if you are spending a lot of time worrying about this, then I suggest you to slap yourself and get real.

Because, you are not supposed to worry about this as you have even bigger problems to worry. For eg.,

• How do I get more customers to buy our product?
• How do I provide excellent value for money to our users?
• How do I keep expenses low and processes smooth?
• How do I find, hire & retain awesome employees?
• How do I eliminate un-necessary tasks, stuff from my work so that it is an enjoyable journey?

Worrying about IP should be least of your concerns. Right below sudden apocalypse of world, hacking of your bank account and forgetting your spouse’s birthday.

My answer to all IP problems for small startups

So what should you do about IP protection?

Simple. Just don’t over protect your IP. Read on for specific solutions for your situation.

If you have unlimited budget (VC funding etc.) and enjoy the sight of your lawyer buying a new BMW:

Then you should go all out and find the best possible solution to prevent your IP. You may spend a million dollars finding securest hashes for your code, setup tracking beacons in your software copies and create a fool proof (almost) installation setup with registration keys and what not.

While at it, you can also draft 98 pages long EULA and sue anyone and their cat when they violate your copy right.

Cost: prohibitive.

If your software requires installation

Then you are in luck. Create registration key upon successful purchase and tie to user’s email address. Upon installation, prompt for this and be done with it.

Cost: very low, can be completely automated.

If you offer a web service

You too are in luck. Just set up a login mechanism so that only paid users can get in.

Cost: very low.

If you offer ebooks, videos or music files

You have 2 options.

Option 1:

Use a platform like Amazon Kindle, Apple iTunes or Google Play to deliver your files. These platforms take care of content protection for you and ensure that piracy is minimal.

Cost: % share of revenues. Usually 30%.

Option 2:

While platforms can be very useful, they are often restrictive (for example, certain plans in Kindle Direct Publisher program require that you do not offer your ebook anywhere else etc.) and require quite some background work. The other alternative is to deliver the files yourself. You can verify a purchase and automatically delivery files using digital shopping cart applications like e-junkie. These are very good and cheap.

Cost: Fixed cost per month (usually $5-$25).

If you offer membership programs:

Use a good membership software like Wishlist member to protect your content & files. Let users access content as long as their membership is valid.

Cost: One time cost for software ($100-$300) and monthly web hosting costs.

If you offer consulting services:

Then you can almost forget about IP issues. This is because, consulting is personalized by nature. So any work you do for one client is not transferable to another easily. Also, just to be safe, mention your copyright terms to your clients before starting the assignment.

Cost: Nothing.

What to do when someone steals my IP

As a small web-based business that sells software, ebooks, videos & templates, I have faced my fair share of IP theft. I suggest the following approaches.

• Make your copy right & licensing terms very clear: Tell your customers what their rights are. Whether they are allowed to keep copies of files on multiple computers, what to do in case they loose the files and how to order more copies. Also tell them clearly that it is illegal to share the files with others (although it is ok to share short snippets, extracts).
• Give them option to buy bulk: Offer bulk discounts so that teams of people can all enjoy your product.
• Track usage and warn: For membership programs & online training courses, you can easily track usage patterns and see if anyone is using multiple ip addresses to log in to your course. If so, you can warn them or automatically block them for 24 hours etc.
• Warn the offending site: If a site is found to be hosting your files for free, then you can warn them and complain to Google, web hosting providers using DMCA route. Usually, when you mention that you are the rightful owner, the file hosting sites comply and take down.
• Ignore: Just ignore the offenders. It is highly unlikely that people downloading pirated files would actually pay you if you take down the pirated versions. They will likely find pirated versions of some other similar software and use it. So just ignore as these are not your target customers.

And most importantly:

TRUST your customers: As a small business owner, you have more to gain by trusting your customers and genuinely helping them. Rather than subjecting them to un-necessary checks and constantly making them feel like intruders, just trust them and let them use your files as they see fit. Majority of human beings are honest, caring & straight forward. So just be normal and simple. (more discussion on why you should trust your customers)

Should you offer free version too?

Ideally no. Unless you have plans to become next Facebook, Twitter, Firefox or Google, giving away free will not work in your favor. Instead create a robust, useful & valuable product and charge reasonable amount for it. If you want, you can offer multiple variants with different prices. But stay away from free.

By giving your valuable work for free, you will only encourage people with out any real need to come and waste their time on your product. Chances are, these people will not become your paying customers.

But there is an exception:

Instead of having a free version of your product, have a separate category of product that is completely free.

For example, at Chandoo.org we sell several products (all paid with no free options). But we also have a free product. Our Excel blog. It is free for anyone to tune in and learn. We post new articles every week. These are juicy, useful, detailed and contain full length workbooks. This works very well. People join the blog (newsletter or RSS) and learn more about our business. And then when they have a pressing need (project management, financial modeling, dashboards etc.), they buy one of our products.

[Related: Read A Smar Bear's discussion on so called freemium business models]

What should I do if a customer says she lost her files?

Simple. Offer her a link where she can re-download your software / ebook / videos. Do not subject them to additional scrutiny. If they are part of a membership program, give them good discount to re-enroll or offer them few weeks of free extension.

Again, the basic rule is – trust your customers.

So that all… Go ahead and unchain your mind from un-necessary IP issues. Instead focus on your customers and how you can serve them better. You will be rewarded better than you can imagine.

And in comments, tell me how you handle your IP, what measures are you taking.

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