Closed source
Definition
Closed source refers to software where the source code is kept private and fully controlled by its creator or owner. Users receive only the compiled version of the software, typically under licensing agreements that restrict modification, distribution, or reverse engineering. This ensures that intellectual property remains secure and competitive advantage is preserved.
The closed-source model is built around commercial control. Companies using this approach manage all updates, security patches, and feature development. By limiting access to the code, providers can monetise the software through one-time purchases, subscription models, or enterprise licensing agreements.
Businesses often choose closed-source solutions because of their stability, vendor-backed support, and formal accountability. However, this comes with tradeoffs, including limited customisation and higher dependency on the vendor for long-term maintenance. In highly regulated industries, closed source remains a dominant model due to its controlled development and compliance assurance.
Advanced
Closed-source software is distributed in executable or binary form, with no public access to the underlying source code. Licensing terms prohibit unauthorised duplication, reverse engineering, or redistribution. Development workflows are typically centralised, with proprietary build environments and secured version control. The closed model supports integration of patented technologies, proprietary algorithms, and restricted APIs, all of which strengthen intellectual property protection and revenue strategies.
Why it matters
Use cases
Metrics
Issues
Example
A bank licenses a closed-source cybersecurity platform. The vendor provides ongoing updates and compliance alignment, which reduces regulatory risk. The tradeoff is dependency on the vendor for pricing, upgrades, and future system integrations.