V.i. Labs’ Technology Could Turn Software Pirates Into Paying Customers, for Software Vendors Big and Small

12/13/10Follow @xconomy

The best solution to software piracy isn’t shutting down the offenders, but finding out who they are, says Michael Goff, marketing director at V.i. Labs.

The Waltham, MA-based company makes software for other software vendors to find out who’s using—and misusing—their product, and to turn them into paying customers.

V.i. was started in 2002 and began with the intent of shutting down software piracy before it happens. In fact, V.i. stands for the photography term virgin image, a nod to the company’s focus on keeping original software code intact and protected. V.i. founder David Pensak’s resume includes DuPont, Raptor (provider of the first commercial Internet firewall), and digital rights management company Authentica, which was acquired by EMC in 2006. But V.i.’s scope has evolved and expanded since it released its first software protection product in 2006, Goff says.

“What we found is that software protection has its place; it’s something we still offer,” Goff says. “The way piracy works is you’re never going to really be able to stop people from cracking your software. You’re just making it harder for them.”

So rather than trying to prevent the inevitable, V.i. is trying to identify the source of the problem, with its CodeArmor Intelligence software. The idea is that many of those pirating software and downloading free copies could make for viable customers. Most are already customers, in a few senses, Goff says. They’ve done the research and shopped around and have determined a certain product is the best, they’ve just decided to download it for free, Goff says. And often, bigger enterprise customers just happen to be using more software licenses than what they’ve paid for, and are unaware that they’re not in compliance. So V.i.’s aim is to help its customers target those who are using their product illegally and sell them the right number of products and licenses to be compliant.

“Now you’ve taken this lost revenue opportunity and you’ve turned it into a customer,” Goff says. In fact, across all of V.i.’s clients, there’s potentially more than $750 million in revenue to be tapped into, through targeting sources of piracy. It’s a number V.i. keeps track of with a ticker on its homepage.

CodeArmor Intelligence offers an application programming interface for software makers to set up triggers that notify them when someone is using their technology. It provides them with a dashboard that can follow software users and offenders based on factors like network domains, IP addresses, and e-mail domains, and determine their geographic location. And rather than just shutting them off from the software, V.i. clients can identify and connect with those found to be pirating their data. “Our tool provides them with the data and they can decide how they want to act on it,” Goff says.

V.i. last raised outside funding in 2008: a $4 million financing that came as an add-on it to its $8 million Series B round. Its backers include Ascent Venture Partners, Core Capital Partners, and Rockford Capital. The roughly 20-person company is also adding to its sales team and working on putting out research on how customers are using the data its technology provides, Goff says.

This past summer, V.i. launched a software-as-a-service product called GetViSi targeted at smaller, younger businesses. “Their stuff is being pirated too, but they might not be at the point where they’re ready for full solution,” Goff says.

In addition to offering the tracking and monitoring services that CodeArmor does, GetViSi can home in on other key information about a company’s customers and users—beyond cases of piracy. The product can tell smaller software companies things like which product features users take to most, and the time gap between download and installation, so companies can know how to best reach and market to users in the future. The new product and functions takes V.i. technology beyond the anti-piracy space and into a customer and business intelligence role, Goff says.

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  • http://www.theblackninja.com/ Jeb

    That is genius. If they go through all the trouble of cracking it, then of course they are potential customers. They would probably be the most dedicated customers since they are also obviously talented and skillful enough to try and beat the system.

  • Johannes

    So essentially this is a spy software for pirated software.

    “It provides them with [...] network domains, IP addresses, and e-mail domains, and determine their geographic location.”

  • http://www.vilabs.com Michael Goff

    Just to clarify – CodeArmor Intelligence is not spyware. It is integrated into the application by the software vendor and only runs when piracy is detected. It can also be configured so it does not collect any personal information. It is nonintrusive and is comparable to phone home functionality in a wide range of applications that check for the latest updates, report crashes, etc.