MicrosoftMike Crowley we had a previous FAQ similar to this and pasted below. In short, you still need AIP licenses if you want to use the AIP client for downlevel versions of Office, to use the AIP scanner for on-premises files, etc.
You still need Azure Information Protection P1/P2 for all the capabilities included in Azure Information Protection before the unified labeling experience was released (such as using the Azure Information Protection client, the Azure Information Protection scanner, etc.)To be able to configure sensitivity labels in the Security & Compliance center, you need either Azure Information Protection P1/P2 licenses OR Office 365 E3/E5 licenses (you don’t need both). Users do not need a license if their Azure Information Protection client (classic) is running in protection-only mode.
