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This document is published under the GNU free document license


Copyright (C) 2012 Daniel Griffin Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.3 or any later version published by the Free Software Foundation; with no Invariant Sections, no Front-Cover Texts, and no Back-Cover Texts. A copy of the license is included in the section entitled "GNU Free Documentation License".



https://www.gnu.org/copyleft/fdl.html



Table of Contents


This document is published under the GNU free document license 1

Table of Contents 2

1. Executive Summary 3

2. Introduction 4

3. Market 6

4. Marketing Strategy 9

5. Organisation / Management 13

6. Production and Operations 13

7. Costings and Finance 14

Appendix 1 – GNU Free Documentation License 15





1. Executive Summary


MyNetLock is a new and innovative online privacy service being developed by Hugbubble Ltd. MyNetLock takes advantage of the huge cost savings offered by virtual computing to offer a personal, secured Internet proxy server to the general public. Hugbubble has been in existence for nearly ten years, developing secure web applications and cost effective e-commerce solutions for a broad variety of clients. The company has a deep understanding of Internet technologies and methodologies, combined with a focus on security and best practices within the industry. The MyNetLock service will leverage this experience and reputation.

The company is composed of Daniel Griffin and Emmett Flynn, both of whom are the original founders. Currently Daniel Griffin is the only active partner and Emmett remains on the board solely in an administrative capacity.

Due to an increasing awareness of privacy concerns amongst general Internet users, plus the ever increasing threat of malicious software and cyber crime, there exists a massive unexploited segment of the market who are eager to purchase our service. Our market research has shown that almost 75% of all Internet users have at least some interest in online privacy, whilst 29% are actively searching for such a service. With a potential audience of 1.8 Billion users, we are confident that this 29% is an extremely lucrative market to enter.

Our research has also shown that this segment of the market are active social media users and this has helped greatly in defining our marketing strategy. We have a very definite profile both of our intended target market and the best strategies with which to create qualified leads.

This is the first time that such a service has been available to the general public. Due to the massive savings offered by virtual “cloud computing”, we are able to offer a service which until now was only available to large business customers with huge IT budgets and support systems. Although no direct competition exists, we have identified potential competitors who could move into this market segment. However, we will show that our service offers greater profit margins at a competitive price. We will also be in a first mover position, helping us to capture the public's imagination.

Once finialised, the MyNetLock service will be self-contained and entirely autonomous. It will run inside the Amazon Web Services EC2 or “cloud computing” environment and will not require any administration. The service is currently nearing completion and has been developed at the Hugbubble offices in Cork City.

Whilst our financial analysis is extremely conservative, the MyNetLock service will still be profitable almost immediately after launch. Since the service is completely autonomous, the only costs involved are variable costs associated with each new user account. Each new account will pay for itself and provide a profit to Hugbubble of $8.80 per year. We predict a first year sales target of 3640 new accounts, based on a gradual rise in sales per month, and seasonally adjusted for the traditional spike in online sales at Christmas. This will give a first year net profit of $29,020. Since the service is subscription based, this figure is also the minimum profit for year two. However our social media advertising campaign will be reaching critical mass at this time and we anticipate having 7800 subscribers. This will yield a year two net profit of $70,860, (Appendix 1).

MyNetLock will revolutionize the personal online privacy market and provide significant profit whilst doing so. We confidently predict that MyNetLock will be the household name for online privacy by our third year of trading.



2. Introduction


Hugbubble Ltd. is a Web Application and Multimedia development company begun in 2001 and based in Cork City, Ireland. The main focus of the business to date has been the development of secure web applications and website enhancement, however prior to this project the business has been effectively dormant for several years. The Hugbubble team has over thirty years of combined experience working with secure Internet applications, online database applications and e-commerce solutions, as well as network and computer administration for a number of high profile customers.
Due to the rapid and continual erosion of privacy on the Internet, Hugbubble plans to bring a new online privacy service to the global consumer market. We will do this by offering a private, self-contained webserver which will establish a personal, secured and encrypted tunnel through any open or unsecured network - effectively creating a private broadband connection anywhere, at anytime. This is in essence a personal virtual private network for every user. Our service will leverage the power of virtualization and cloud computing to drastically reduce our operating costs. Virtualization also allows us to forego the traditional IT infrastructure required to maintain a virtual private network (VPN).
The following diagram shows how traffic is traditionally routed over a typical network. As can be seen, other computers on the local network can easily intercept or “listen” to traffic which crosses that the network.

Figure 1. Traditional Network Traffic.


In contrast to this, the following diagram shows how traffic is routed using the MyNetLock service. A secure connection is established between your computer on the local network and the server out on the Internet. Any unsecured browsing is therefore done via the server, which is acting as a proxy for the local user. Any traffic which passes through the (untrusted) local network is securely encrypted and private.



Figure 2. MyNetLock Encrypted Network Traffic.





3. Market

Overview

Trends


Our initial studies have shown that there is a strong desire, indeed a need for such a service amongst consumers and we feel that we are well placed to fill this need. Concerns surrounding online privacy are on the rise for the average computer user and we predict, and will show, that this entirely unexplored market segment will be extremely profitable. We have identified the following trends which support our claim.


  • Regular high profile media articles on the subject of online privacy and identity theft.

  • Surveys have shown that consumer concerns about online privacy are on the rise.

  • Increasing awareness among Internet users that their data is being sold on for profit to third parties.

  • Establishment of think tanks and organisations such as the Future of Privacy Forum which are attempting to advance responsible privacy practices.

  • Increase in the erosion of civil liberties for Internet users.



Size and Potential Market


Although there are now more than 1.8 Billion Internet users, to date privacy services have focused solely on business customers. This leaves the majority of internet users vulnerable to a wide variety of attacks, hacks, spyware, phishing issues, data and identity theft problems. Hugbubble intends to exploit this massive, underdeveloped source of revenue by providing an easy to use private, secure channel to the Internet for the average user. Although our ultimate aspiration is to provide secure Internet connections globally, our initial marketing research has shown (Appendix 2) that the largest segment of Internet users who are already concerned about privacy, consider themselves to be competent computer users but not experts. This target group are in their 30's to 40's and approximately 2/3 of the group are male. Considering the difficulties and high learning curves connected with our potential competitor's products, we are confident that our product will be more appealing to this group. Over 70% of our survey group expressed an interest in using a service to enhance their privacy online. Although it is difficult to estimate the total global population interested in this type of service, the growth rate of Internet users in general is staggering, with an 18% rise recorded between 2008 and 2009. At this point in time, the market structure is very simple, with no direct competitors.


Competition


Any competition is focused on business users but could potentially become competitors in our target market segment. The following table shows the top five providers of virtual private networks (hereafter VPNs). Whilst these are not identical services to the Hugbubble offering, they could be used to achieve the same result. The list below is taken from the statistics site, VPNTools.com. (http://www.vpntools.com/vpntools_articles/vpn-business.htm)

#

Company

Product Description

Turnover

Employees

Comments

1

strongvpn.com

Similar but not cloud solution

unknown

14

Higher price. Hardware solution.

2

blacklogic.com

Similar but requires special router

unknown

unknown

Higher price. Hardware solution.

3

LogMeIn Hamachi²

Similar but not cloud solution

unknown

unknown

Virtual network provider rather than privacy service – too complex for the average user.

4

Academy-networks.co.uk

Remote Access - VPN

unknown

unknown

Also a virtual network provider – same issues for the user. Hardware solution.

5

vpnuk.info

Similar but not cloud solution

unknown

unknown

Higher Price. Hardware solution.



Competitor

1

2

3

4

5

Broad Range

No

No

No

No

No

Guarantee

No

No

No

No

No

Quality

Good

Good

Good

Good

Good

Price

Higher

Higher

Much higher

Much higher

Higher

Service

Comparable

Comparable

Comparable

Comparable

Comparable

Proximity

US

Canada

US

UK

UK

Ease of use

Comparable

Comparable

Much lower

Much lower

Comparable


#

Differences

1

Requires dedicated datacenter therefore more expensive to run and maintain.

2

Requires dedicated datacenter therefore more expensive to run and maintain.

3

Complete network provider, i.e. larger scale.

4

Complete network provider, i.e. larger scale.

5

Requires dedicated datacenter, therefore more expensive to run and maintain.


SWOT Analysis

Strengths.


Hugbubble is small scale with very low costs, allowing us to pass on cost savings to our customers. The company has many years of experience in the Internet industry and already possesses the broad range of skills required to develop this service. We understand the market and are intimate with the mindset of the intended target market segment.

Weaknesses.


The software stack in our product contains a large portion of open source code. This could potentially be used by a competitor in a similar way to our product. To mitigate this we are focusing solely on the virtualized version of the service for year one, thereby speeding up our time to market.

We are also concerned that the Hugbubble brand is more closely associated with Web Application Development rather than an online privacy service. For this reason we have chosen to provide the service under a new brand which will be allied to Hugbubble. To promote this new service we will be pursuing an aggressive advertising campaign. Please see the promotion section of this document for further information.


Opportunities.


Large under-developed market with measured growth.

As yet, all competitors are focusing on much larger customers and have substantially larger operating costs.


Threats.


Due to the open source nature of the software stack, it could be copied in time. However Hugbubble intend to take advantage of the fact that we will be first vendor in our target market segment, allowing us to capture the public imagination. In response to this potential threat, we have focused primary development on this virtual version of the server rather than the bespoke hardware version envisaged at our initial concept stage.

4. Marketing Strategy


Since ease of use is one of our unique selling points, Hugbubble will spend the next two months refining the user experience before we go to market. We will then be ready to launch one month prior to the traditional spike in online shopping for the Christmas market. Concurrently during this period we will be running several social media campaigns to seed the market. We plan to be the household name for online privacy by the end of 2011.

Sales Target


As this is a new service that Hugbubble is introducing, we consider ourselves to be in a start-up position – but having the realistic expectations of a company working in the Internet industry for the last ten years. As mentioned earlier, our operating costs are essentially insignificant. However the research and development period required to streamline and perfect the user signup process, plus the development of the Facebook application and viral video campaign (see Promotion section) is factored into our figures below. Since all development will be completed in-house, salaries are the only costs involved. The figure for owner's drawings is $1,000 per month for year one and $1,500 per month for year two.
Please note that the following figures are ex VAT. For a complete balance sheet including VAT, please see Appendix 1. Our business model is based on subscription to the service for a small yearly fee. The maximum cost to Hugbubble to maintain a user is $1.35 per month. However the true cost to Hugbubble is based on the usage of the customer, therefore when a user creates less traffic on the network, our costs for that customer are reduced. We plan to offer the service for $25.00 per year. This will yield a minimum profit of $8.80 per customer, per year; therefore a conservative sales target of 3,640 units in year one (based on a seasonally adjusted monthly growth in sales), will provide a comfortable net profit of $29,020.
Since our model is based on a subscription, zero new customers in year two would still provide profit; however our social media campaign will be reaching critical mass during year two and we plan to double our sales during this period. This will give a total profit for year two of $70,860.
A year three projection is unrealistic due to the fact that our fixed costs per customer are tied very much to the pace of technological change. We confidently predict that these operating costs will fall by as much as 50% in the middle to longer term, based on Moore's Law of computing power and the continual reduction in bandwidth and data storage costs for cloud computing solutions.

Break-even Analysis


Development is nearing completion and has been funded by the personal savings of Daniel Griffin. The project is projected to become profitable after the very first sale, therefore no break-even analysis is required under ideal conditions. However, assuming the worst case scenario of 50% sales as described in our sensitivity analysis, the business will become profitable during it's forth month of trading. Given that the service is self perpetuating and entirely automatic, Hugbubble will have time to focus on web development projects, therefore we consider this figure to be acceptable. Please see Appendix 1 for figures describing this scenario.

Service / Product


The service we are offering is a virtual private proxy to the Internet. It exists in a virtual space on the Internet and runs only when demands are made of it. The user is guided through setting up a connection on their laptop and is then free to connect to the Internet from any public network with the peace of mind that all of their traffic across that network is encrypted. It is in essence a virtual private network but without the overheads of dedicated hardware and IT administration staff to maintain it.

Key competitive advantages


  • Ease of use and setup. New accounts are automatically created on the fly as the user signs up over the web.

  • Far lower cost to the consumer, (even lower cost to Hugbubble).

  • All competitors offer hardware solutions, which require 24 hour IT staff to maintain them. Our virtual server solution eliminates this cost.

  • Fault tolerance. If a competitors hardware solution fails then the customer may be without access for days at a time. Hugbubble can re-spawn (i.e. create a new instance of) a new virtual server in minutes.


Comparison with closest competitors.


Buying Motive

Customer Importance

Relative Strength




High

Medium

Low

Strong

OK

Weak

Ease of use

X







X







Price

X







X







Ease of administration

X







X







Hugbubble's marketing will focus on the ease of use of our product compared to large scale virtual private network (VPN) offerings. We will also stress the extremely low cost due to the lack of any IT staff requirements for the customer.

In the short term the product offering will not change, however in the medium to longer term we plan to introduce a bespoke hardware version of the service, which the customer can locate inside their own network (i.e. connected to a home broadband connection, etc). There will be a research and development period required before the release of this product to perfect and streamline a technique known as dynamic domain name system addressing, that is, to make the device contactable from outside of the users own network, while still ensuring tight security.


Risks


Fortunately the financial risk exposure to Hugbubble is minimal. The cost of maintaining an account is zero until such time as the account holder begins to use our service.

Technologically, the exposure to risk is larger, since it is technically feasible to produce a similar service with the right expertise. We expect that our competitors’ reaction to our product will be minimal since we are competing in entirely different market segments. However complacency is a poor strategy and we will be aiming to firmly fix our service in the minds of the target market segment through a blended advertising mix.


Marketing Mix

Price


We plan to offer the service for $25.00 per year. This price is based on the projected cost per new account, plus profit. Although the total price to the consumer appears low in comparison to enterprise scale business offerings, it is based on our understanding that this is a new service which will need to be appealing to customers who have done without it until now in order to maximize the number of sales conversions. This is essentially a market penetration strategy, which will allow us to build solid relationships with as many customers as possible. This large user base will be extremely useful for targeted upselling of future projects.
In comparison to our nearest competitors (who are offering enterprise scale solutions), our prices are well placed. A typical consumer VPN is priced from 80 to 200 dollars per user, per year.

Place


Since our intended target market segment is regular computer users, with a large exposure to social media, the product will be sold entirely online, however we will be leveraging many tried and trusted online marketing techniques to drive visitors to the site (see Promotion section). Our service will be supplied under standard terms of trade, (see Appendix 3). The site will be based on the open source Magento shopping cart system and payment will be facilitated via Sage's SagePay payment gateway. Setup and integration of these services will be performed by Hugbubble staff and will not incur any costs other than time.

Promotion


The service will be loosely connected to the Hugbubble brand to leverage its reputation and emphasise our many years of experience, however it will have its own identity, website, logo, etc. with a strong focus on security. Launch will be a slow and steady viral campaign using a combination of social media, a video campaign and Facebook application, (to be produced in-house).

Primarily, we will employ vigilant Search Engine Optimization (SEO), however we will also begin a viral marketing campaign on Youtube and other video sites to raise brand awareness. The video campaign will be released under the GPL 3 license so as to encourage remix and redistribution amongst its viewers, but will have embedded branding wherever possible.

Our research has shown (Appendix 2) that most of our target market segment are frequent users of social networks, therefore Facebook and similar sites will be essential in raising awareness of our service. We will be developing a Facebook application in-house, which will essentially use scare tactics in an effort to educate the public of the dangers of leaked personal information and identity theft. It is well understood that Facebook exposes large amounts of private data. We will be designing a Facebook application which displays this information to the user and explains how it could be used against them. This application will be heavily branded to drive traffic to our own site.

We also intend to pursue a Google Adwords campaign, the keywords for which have yet to be chosen. We will proceed with this portion of the promotion only after the viral campaign has been given enough time to seed a large enough user base – a period which we estimate should take one to two months, based on projections of meme's through social networks.



Resource

Emphasis

Cost ($)




Strong

Weak

Not Applicable

To be considered in the future




Social Media Apps

X







X (i.e. more to follow)

0

Viral Marketing (video)

X







X (i.e. more to follow)

???

Email campaign




X







200

Adword Campaign

X










???

Magazines










X

???


5. Organisation / Management

Management Overview


The business owners are Daniel Griffin and Emmett Flynn, each of whom hold one ordinary share. No other shares have been issued. Daniel Griffin is the company secretary and is in effect operating the business alone. The company president is Emmett Flynn however Emmett’s involvement in the company operations is minimal and for the last several years he has been a board member on paper only. Both of the director’s curriculum vitae can be found in Appendix 4. Daniel Griffin has been responsible for all development work to date. He will also be taking care of the product launch and final administrative details required before offering the service to new customers.

Staff Requirement


MyNetLock.com is an entirely automated service and therefore requires no further staff input after it has been launched. In the distant long term we anticipate a requirement for helpdesk staff, but that requirement is beyond the scope of this document.

6. Production and Operations

Premises


MyNetLock.com is a software service which runs entirely online within the Amazon Web Services environment. No physical premises are required after launch. During the initial development stage however all programming work with be carried out at the registered office of Hugbubble Ltd. which is also Daniel Griffin's home address.

Equipment


Hugbubble currently owns all equipment required to develop this service. The service will run “in the cloud”, i.e. within a virtual machine, which is itself running within the Amazon Web Services EC2 environment.

Quality Issues


The service is to be delivered via the www.mynetlock.com website. All source code for this site will be W3C compliant code and will be validated as such. The service itself will run within the Amazon Web Service (AWS) EC2 environment, which has a guaranteed “up-time” of more than 99%. Amazon's availability guarantee will be advertised on the My Net Lock website. We have already created an AWS account and have begun our initial tests. Amazon's terms of trade are 30 days credit.

All web traffic between the customer’s machine and their private proxy server will be encrypted using a securely encrypted connection (Transport Layer Security v 1.0).

The proxy server itself is based on a standard Amazon Machine Image and has been validated both by Amazon and the Amazon Developer community.

The service adheres to the following standards.


  • Web Code – WC3 HTML4 compliance.

  • Network Traffic – TSL 1.0 (RFC 2246).

  • Webserver – Peer reviewed Amazon AMI.



7. Costings and Finance

Financial Assumptions

Sales Issues


Our research has shown that at least 75% of internet users have some privacy concerns, however only 29% of those have a very strong interest in the service. This same group are also known to be frequent users of social networks. We will therefore be targeting those 29% at our initial launch with a viral marketing campaign. Once this campaign has gained momentum, the marketing strategy can be broadened to target the remaining 46%.

Although this group is potentially 29% of the current 1.8 Billion internet users, we have opted for a conservative prediction of our sales figures, starting with 120 sales in the first month of year one. Based on the general rules of viral marketing, but tempered with real expectation for uptake, we see this figure rising to an average of 250 sales per month until the pre-Christmas spike in online sales, during which time we predict a climb to 400 new accounts per month. In year two we predict a similar pattern of sales figures but with the volumes at least doubled.



Our only costs to maintain the service are incurred from the hosting company (Amazon Web Service). This cost is calculated on a per megabyte (MB) basis. Given that most home user broadband account are limited to 10 gigabytes (GB) per month, we have taken 10GB as a typical user requirement for our service. This allows us to calculate our costs per user, per month, which comes to $1.35.

Cash-flow Issues


Amazon Web Service's terms of credit are 30 days before payment is required. Since MyNetLock is an on demand service, we will require payment upfront and will not be offering credit to our customers. A very brief research and development period will be required however this will be covered by personal savings. Further advertising or programming will also be carried out in-house by Daniel Griffin and will therefore be financed by director's drawings.

Sensitivity Analysis


Even though our sales targets are rather low, for completeness we have calculated a sensitivity analysis on the assumption that only 50% of our projected sales are actually realised. In this scenario, the service will still become profitable during the fourth month of business. Please see the balance sheet in Appendix 1 for these figures.

Appendix 1 – GNU Free Documentation License


Version 1.3, 3 November 2008

Copyright (C) 2000, 2001, 2002, 2007, 2008 Free Software Foundation, Inc. Everyone is permitted to copy and distribute verbatim copies of this license document, but changing it is not allowed. 0. PREAMBLE The purpose of this License is to make a manual, textbook, or other functional and useful document "free" in the sense of freedom: to assure everyone the effective freedom to copy and redistribute it, with or without modifying it, either commercially or noncommercially. Secondarily, this License preserves for the author and publisher a way to get credit for their work, while not being considered responsible for modifications made by others. This License is a kind of "copyleft", which means that derivative works of the document must themselves be free in the same sense. It complements the GNU General Public License, which is a copyleft license designed for free software. We have designed this License in order to use it for manuals for free software, because free software needs free documentation: a free program should come with manuals providing the same freedoms that the software does. But this License is not limited to software manuals; it can be used for any textual work, regardless of subject matter or whether it is published as a printed book. We recommend this License principally for works whose purpose is instruction or reference. 1. APPLICABILITY AND DEFINITIONS This License applies to any manual or other work, in any medium, that contains a notice placed by the copyright holder saying it can be distributed under the terms of this License. Such a notice grants a world-wide, royalty-free license, unlimited in duration, to use that work under the conditions stated herein. The "Document", below, refers to any such manual or work. Any member of the public is a licensee, and is addressed as "you". You accept the license if you copy, modify or distribute the work in a way requiring permission under copyright law. A "Modified Version" of the Document means any work containing the Document or a portion of it, either copied verbatim, or with modifications and/or translated into another language. A "Secondary Section" is a named appendix or a front-matter section of the Document that deals exclusively with the relationship of the publishers or authors of the Document to the Document's overall subject (or to related matters) and contains nothing that could fall directly within that overall subject. (Thus, if the Document is in part a textbook of mathematics, a Secondary Section may not explain any mathematics.) The relationship could be a matter of historical connection with the subject or with related matters, or of legal, commercial, philosophical, ethical or political position regarding them. The "Invariant Sections" are certain Secondary Sections whose titles are designated, as being those of Invariant Sections, in the notice that says that the Document is released under this License. If a section does not fit the above definition of Secondary then it is not allowed to be designated as Invariant. The Document may contain zero Invariant Sections. If the Document does not identify any Invariant Sections then there are none. The "Cover Texts" are certain short passages of text that are listed, as Front-Cover Texts or Back-Cover Texts, in the notice that says that the Document is released under this License. A Front-Cover Text may be at most 5 words, and a Back-Cover Text may be at most 25 words. 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Termination of your rights under this section does not terminate the licenses of parties who have received copies or rights from you under this License. If your rights have been terminated and not permanently reinstated, receipt of a copy of some or all of the same material does not give you any rights to use it. 10. FUTURE REVISIONS OF THIS LICENSE The Free Software Foundation may publish new, revised versions of the GNU Free Documentation License from time to time. Such new versions will be similar in spirit to the present version, but may differ in detail to address new problems or concerns. See http://www.gnu.org/copyleft/. Each version of the License is given a distinguishing version number. If the Document specifies that a particular numbered version of this License "or any later version" applies to it, you have the option of following the terms and conditions either of that specified version or of any later version that has been published (not as a draft) by the Free Software Foundation. If the Document does not specify a version number of this License, you may choose any version ever published (not as a draft) by the Free Software Foundation. If the Document specifies that a proxy can decide which future versions of this License can be used, that proxy's public statement of acceptance of a version permanently authorizes you to choose that version for the Document. 11. RELICENSING "Massive Multiauthor Collaboration Site" (or "MMC Site") means any World Wide Web server that publishes copyrightable works and also provides prominent facilities for anybody to edit those works. A public wiki that anybody can edit is an example of such a server. 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The operator of an MMC Site may republish an MMC contained in the site under CC-BY-SA on the same site at any time before August 1, 2009, provided the MMC is eligible for relicensing. ADDENDUM: How to use this License for your documents To use this License in a document you have written, include a copy of the License in the document and put the following copyright and license notices just after the title page: Copyright (c) YEAR YOUR NAME. Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.3 or any later version published by the Free Software Foundation; with no Invariant Sections, no Front-Cover Texts, and no Back-Cover Texts. A copy of the license is included in the section entitled "GNU Free Documentation License". If you have Invariant Sections, Front-Cover Texts and Back-Cover Texts, replace the "with...Texts." line with this: with the Invariant Sections being LIST THEIR TITLES, with the Front-Cover Texts being LIST, and with the Back-Cover Texts being LIST. If you have Invariant Sections without Cover Texts, or some other combination of the three, merge those two alternatives to suit the situation. If your document contains nontrivial examples of program code, we recommend releasing these examples in parallel under your choice of free software license, such as the GNU General Public License, to permit their use in free software.


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