That's how software used to work. The flip-side is that you bought "as-is" and you couldn't expect updates. Hell you might even have to re-buy a newer major version.

Because yes it doesn't really scale. I've worked at a place with software like that and it creates a lot of bad incentives. Where I was they sold a lot of custom development for revenue beyond the upfront licensing and you can imagine the toll that wrecked on the codebase over time.