The first calculates the fee by counting the total number of people who use the software. This method correlates poorly with actual use. There may be a significant number of potential users who rarely or never actually use the software. Worse, some licenses define a chargeable seat as an instance of a user accessing the software from a particular machine (virtual or otherwise). Consequently, a single user or device can give rise to multiple seats -- causing the licensee to pay multiple times for use by one individual or device.
The second method determines the license fee by calculating the total number of concurrent users permitted to access the software at one time. This more closely corresponds to licensee use patterns than the total-seat license because occasional users can be discounted when determining how many seats to purchase.
Of these two, the concurrent-user seat license may be the most desirable if you're moving to grid computing and a virtualized infrastructure. Under concurrent-user models, licensees should be charged based upon the greatest number of seats (whether individuals or devices) that use the application at any one time. Whether the users operate one or more physical or virtual machines shouldn't matter.
This can be an imperfect indicator of usage patterns, however, because not all users are equal. A company that has many power users would pay the same fee as a company with an equal number of users whose usage is average. And from the licensor's perspective, the concurrent-user model is undesirable for back-office or middleware software, since a few administrative users can serve as transaction conduits.
The enterprise or site license allows the licensee to use the software without geographic limitations, specific limits on the number of users or devices accessing the software, arbitrary processor accounting rules, or prohibitions on the number of copies made or used by the licensee. There may be restrictions on the types or configuration of the equipment on which the software may be installed, as well as some business operation boundaries.
The site license is a variant that restricts to a specific site either the installation or the location from which users can access the software. Each additional site requires a new license.
Large companies regularly negotiate long-term custom enterprise and site licenses. These require lengthy negotiations and large lump-sum payments to the licensor. Given the cost and negotiation leverage necessary to make this strategy work, enterprise and site licenses are often impractical.