In a typical transaction, an Application Service Provider (ASP) uses certain software to provide services to customers. The ASP maintains the software, owns the servers on which the software resides, provides customer access to such servers and has the right to update and replace the software at will.
Customers on the other hand may not have possession or control over the software or the servers or the equipment on which the software is loaded. They access the software concurrently with other users and may pay a fee based on the volume of transactions processed by the software.
Such transactions are generally regarded as provision of services by the ASP rather than receipt of rental income from licensing the software.