A method and system are disclosed for securely distributing a plurality of software files from a software distribution processor to a user processor, while selectively enabling the user processor to only use a subset of a lesser plurality of the software files. This is achieved by employing a customer key which includes a clear customer number and a derived portion derived from the customer number. The customer key is transformed into a second customer key which serves as a key expression for encrypting a file encryption key specifically intended for a respective one of the plurality of files. A plurality of software files can be stored together, for example on a CD-ROM, with each file encrypted under a corresponding file encryption key. The CD-ROM can be distributed to many user processors. When a specific user processor needs to run one of the software files, a request will be transmitted from the user processor to the software distribution processor. In response to that request, an encrypted file encryption key specific for the requested file, will be transmitted to the user processor. This will enable the user processor to decrypt only the requested file from the CD-ROM. All other files on the CD-ROM remain in their encrypted form and cannot be decrypted and used by the file encryption key received from the software distribution processor.