Where’s the Money? Options for Commercializing Technology, Part 2: White-Label Arrangements – Tech & Sourcing @ Morgan Lewis

In our prior put up on this two-part collection on much less generally mentioned expertise commercialization choices, we addressed how open-source software program (OSS) suppliers might generate income on their merchandise. On this Half 2, we’ll take a look at one other expertise commercialization technique, white labeling.


The “white label” terminology originates from the music trade, extra particularly from the time of vinyl information. On the promo stage, vinyl disks have been produced with out the business label bearing the standard brand and copyright particulars, and there was as an alternative a clean white disk in that house. Such anonymized information have been used to ship to producers or check if an viewers appreciated a brand new music with out disclosing the artist’s id.

White labeling later turned a typical time period most frequently used within the retail sphere to explain merchandise that have been produced by one firm after which offered to a different firm that put its personal model on the product and marketed the product as its personal; for instance, supermarkets that place their very own branding on mass-produced generic items and market them as “retailer model” whereas not being concerned within the manufacturing.

White labeling can also be typically seen in house home equipment and electronics. White labels typically attraction to shoppers not by way of the distinctive options of the product itself however by way of their visible id, positioning of the model, packaging, and advertising technique, amongst different elements that kind the shopper expertise.

Lastly, white labeling has additionally turn into widespread in informational applied sciences and communications companies. In precept, it’s much like the licensing of an off-the-shelf product, however the licensee is permitted to make use of its personal model and brand on the product and current the software program as their very own to the end-users, nearly the other of franchising. So, are we talking of one other apparently selfless strategy to commercialize expertise right here? Let’s take a look at the main points.


Advantages of White Labeling

There are a couple of elements in favor of a enterprise selecting to make use of a white label technique for expertise, particularly at its early phases when sources could also be restricted. These embrace (i) a fast rollout on the idea of an current and operating expertise, (ii) avoiding pointless upfront prices for software program improvement and an in-house help staff, and (iii) counting on a developer’s help and experience. Because of this the enterprise can focus on its product and advertising, whereas the developer will focus on the core resolution and its help.

The developer of a white label resolution, then again, retains all of its rights within the supply code and is ready to generate revenue by promoting the identical core resolution to a number of companies.

License Phrases

A white label software program license contains all of the widespread options of a software program licensing contract, however will particularly regulate to what extent a licensee could have a proper to make use of the software program in its personal enterprise and below its personal trademark or model vis-à-vis its prospects. These preparations will usually be mirrored within the sublicensing or related phrases.

Many occasions, the end-customer doesn’t know that the software program was developed by a 3rd social gathering that owns the supply code, though in different preparations the customer-facing resolution will embrace some indication of the final word supply of the software program (e.g., “powered by . . .”). In any occasion, the settlement will embrace the standard obligations of the licensee to not infringe the software program developer’s copyright and different mental property rights.

Along with branding, customization or modification of the core software program could also be an vital difficulty to deal with in an settlement. Generally, the settlement may even embrace options of a software program improvement service contract, if the licensee needs to interact the software program supplier to assist with particular further options or modifications.

White label software program is usually made obtainable on a software program as a service foundation, during which case the settlement may even regulate mutual obligations with respect to internet hosting and help, service ranges, entry to end-customer knowledge, reporting, and so forth.

White label software program licenses will typically be constructed nearer to cooperation agreements, the place each events contribute to the creation of a white label platform, however the product is branded by one social gathering solely. Such preparations might embrace exclusivity provisions to allow the branding social gathering to capitalize on the platform rollout throughout some specified interval earlier than it turns into obtainable to different market gamers.

Market Alternatives

White label options could be fairly profitable, particularly the place the aggressive benefit is related to front-end and tailor-made person expertise slightly than the core expertise. By means of analogy, totally different manufacturers of bottled water are differentiated not essentially as a result of there’s a distinction within the water formulation, however slightly due to the distinction in every model’s packaging, branding, and advertising technique.

You’ll find examples of white label software program licensing within the following markets:

  • Adtech and every little thing associated to digital advertising, planning advertising campaigns, and market knowledge analytics
  • Social media administration
  • SEO
  • Occasion and reserving administration
  • Referral and loyalty platforms
  • Elearning platforms
  • Egaming platforms
  • Ecommerce platforms
  • Monetary companies
  • On-line media platforms the place streaming companies differentiate by the content material they make obtainable, not essentially by expertise they make use of

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