Escrow – Now You Know

I have been tackling a bit of work concerning source code escrow. Source code escrow is the deposit of source code of software with a third party escrow agent. This source code can be released to a licensed user of the software – but only if the business or party licensing the software files for bankruptcy (or similar), or otherwise fails to maintain and update the software as it promised in the software licence agreement.

Unlike most compromises, escrow doesn’t leave both parties grumpy. The software provider can keep its source code secret, while the licensee can be safe in the knowledge that if anything goes wrong then software which is valuable (or even central) to its business can continue to be maintained and work properly.

Source code escrow originated around 1975 and today the NCC Group is the world’s largest software escrow provider. In order to enliven this post I called them for some interesting statistics about how many source code escrows they process annually. Unfortunately they declined to provide any details.

So let’s discuss instead the provenance of “escrow”. The word is apparently derived from the French word escroue meaning “scoll” or “roll of writing”. In France in the middle-ages an owner of property executed a kind of deed conveying land to another party on the fulfilment of certain conditions. This deed, the escroue, was given to a third person with instructions that it would take effect as a deed on the performance of an act or event – such as payment of a designated sum of money, or perhaps delivery of a delicious pain au chocolat. This concept was brought to England and in time the term escroue was Anglicised – to escrow.

So now you know. And If you ever win a pub quiz off the back of this you owe me a pint.

2 Responses to “Escrow – Now You Know”

  1. 1 douglasmathie August 31, 2009 at 3:11 pm

    Is source code escrow worth it?

    As a former programmer I have serious reservations about whether a licensee can self-maintain even with the source code.

    That said, as I have seen recently, the right to get the source code will force an administrator of an insolvent software company to pay attention, and can be a useful bargaining chip in negotiations with him/her.

    On final thought – if you are a licensee you should regularly make sure the software in escrow is up to date.

    • 2 damienbehan September 2, 2009 at 12:28 pm

      As a former programmer myself, I share Douglas’ reservations. The length of time it will take to get the source code out of Escrow, combined with the expense of trying to find programmers who can get to grips with a complex system and modify its code mean its value is limited from an application development point of view.

      Usually you’ll think about Escrow for a really big critical system. However, if the provider went to the wall and you were concerned about this critical system, you would really look at replacing it with something else that can be supported and maintained in the longer-term. Though Escrow may help to bridge the gap if you can invest in programming resource.

      Having said that I could see that there may be some systems, perhaps in Banking or Manufacturing, where the cost of replacement would be crippling, and the “if it ain’t broke, don’t fix it” mantra would apply.

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