Fast Search: Is This a Real License Document?
June 19, 2008
I was updating my Fast Search & Transfer files. Over the last two months, I have noticed that certain information has been removed from the Fast Search Web site. I ran my crawler scripts and saw in the hit list this link:
http://contracts.onecle.com/findwhat/fast.lic.shtml
I am not familiar with onecle.com, so I ran a whois search. The owner of the domain is listed with some data that are not particularly helpful The title of the Web site to which the domain points is “California MCLE, CLE and Continuing Legal Education.” The purpose of the Web site seems to be to provide sample agreements for people to examine.
What interested me is this document which you can view if you click here. It appears to me, and I am not an attorney and have zero qualifications to do anything other than obey the law, that this agreement sets forth the terms for a deal between FindWhat.com and Fast Search & Transfer. FindWhat.com has become MIVA, which is a vendor of pay-for-click software and services.
The Onecle splash screen. Access to the site is here.
Because I am not certain of the provenance of this sample license agreement, I will not reproduce it here. However, there were three parts of the agreement that I found interesting. Let me highlight each of these points and then offer several observations about my understanding of each. You will need to print out the entire agreement or have it one your screen as you read my post. I am not going to quote more than a sentence from the source document just as I would have done in the 7th grade when I wrote my first term paper. Miss Soapes was quite negative about using work by another as one’s own.
The Three Points
1. Maintenance and Support
The $7 million license fee may be bogus. I heard that Fast Search licensing began in the $175,000 to $250,000 range and could go higher depending on the customer’s requirements. But $7 million seems high to me. But set that questionable number aside. The agreement says in 4. Maintenance and Support:
Customer shall purchase maintenance and support services from FAST with respect to all software licensed hereunder for a three year term
The fee, if I understand this correctly, is the starting point. Additional fees will be assessed to maintain the system and support it. I learned that most enterprise software vendors charge anywhere from 15 – 25 percent of the license fee for maintenance and support, I think the cost of the installation jumps significantly. I also believe that customization of the system adds to the cost.
A segment of the alleged Fast Search license agreement. Full document is here.
What baffles me is that Fast Search stumbled into financial difficulty because revenue did not flow into the company quickly enough to off set its costs. My thought is that customers signed a deal and then balked at paying when the system could not be set up, made operational quickly, and then supported at the specified rates. Whatever the license fee, I think it was not enough to free Fast Search from of financial pressure.
2. Schedule B: Service Level Objectives
Fast Search spells out that the customer must try to figure out what the problem is. Okay, that’s reasonable. However, Fast Search then limits who can contact Fast Search about the problem. You will find this language in Schedule B, Paragraph A. The point that hit me is that if the “standard support” is not what the customer needs, then the licensee can sign up for “Premium Support”. Again more charges to make a system work. Furthermore, Fast Search offers “Resolution Objectives”. When I read these, I concluded that Fast Search may not be able to fix some problems; therefore, a work around may be provided. Some work arounds can take up to a month. My thought was that if I am using Fast Search to generate revenue for my company, I cannot be offline or down for a month. I would say, “This software is supposed to work, right?” I am not certain if procurement teams poke their noses into the legal documents for an enterprise search acquisition. An attorney, unfamiliar with information access systems, might overlook these nuances of support. When a problem arises, I can see that it would reach a flash point quickly as the procurement team tries to get the system working only to be told that the caller is not on the list and that the fix may take a month.
3. Schedule D and Schedule E: Customer Competitors and Fast Search Competitors
My thought, when I saw these lists, was that these are not timely, which casts doubt on the authenticity of this sample license agreement. On the other hand, I wondered if a licensee’s legal department would review an agreement such as this and routinely update the “you cannot work with these people” lists. Now that Microsoft owns Fast Search, I think Fast Search licensees need to revisit their agreements and I assume that the Microsoft-Fast Search team will be contacting licensees to update these lists. What I found interesting is that Fast Search listed Microsoft as a competitor along with Google, Yahoo, Verity, Autonomy, Convera, and Endeca. Now Microsoft owns Fast Search, and it will be interesting to see if a sample license agreement becomes available.
Observations
I have two observations about this agreement, which may not be a legitimate contract:
First, the fees seem designed to produce significant revenue. That is okay as long as the system works. When the system does not work, the fees become an issue. Big companies with big bills owed to Fast Search may quit paying. The alleged financial difficulties may be a result of big companies not paying their bills.
Second, I will be most interested in any changes in Fast Search’s pricing and business policies under Microsoft ownership. The changes may reveal the approach Microsoft will take with the Fast ESP technology.
If you have insights, or simply wish to disagree with me, use the comments section on the Web log.
Stephen Arnold
June 19, 2008
Comments
5 Responses to “Fast Search: Is This a Real License Document?”
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Fascinating document, although I share your suspicion that it may be rather out of date. I wonder if the Fast system was driving this:
http://findarticles.com/p/articles/mi_m0EIN/is_2002_March_14/ai_83758302
which became
http://www.miva.com/uk/content/search/results.asp
and less than impressive (try typing in ‘Stephen Arnold’).
The question (which may have been answered by FAST’s recent results) is whether this kind of business model can survive at all in today’s climate. Paying millions up front for a license, then more for customisation, then more for support, then more in lawyer’s fees…..especially when you can get a very similar amount of search power from an open source solution.
Thanks for your comments. I posted the link to this document, but I was suspicious. Please, feel free to offer comments of any stripe. I am delighted that some of this free information strikes readers’ fancy or their annoyance buttons.
Stephen Arnold, June 19, 2008 9 23 pm
Did you do this?
http://www.google.com/search?q=%22FAST+Company+Confidential%22
2005, it says. And $7M again. From what I know about FAST, $7M is quite possible.
FindWhat had filed that agreement with the U.S. Securities and Exchange Commission so that agreement better be “real.” That said, I was not able to find a date for the agreement, and the terms may have been changed by subsequent amendments.
Ken Chan,
Thanks for your comment. I located this document on the Web and was not sure if it was real. I lack the skill necessary to search SEC documents.
Stephen Arnold, August 13, 2008