Screen Shot 2013-05-07 at 9.15.43 AMAdobe announced yesterday that it was moving to a subscription model for what appears to be virtually all of its software. A subscription model has existed for about a year now; basically, for $50 per month ($600 per year) you get all of their creative software. For students and teachers, there are discounts. I subscribed as I often use some of these programs and this was cheaper than buying them outright. But what is interesting here is that the subscription model will now be the only game in town.

This has been a long time coming. Software publishers have for years wanted a subscription model. Basically, if you need to have an account in good standing to use software that would make piracy that much harder. In addition, the stream of revenues would be easier to forecast reducing the need for a ‘hard sell’ each time a new version was released. The flip-side of that is that there may be reduced pressure to release upgrades; although publishers still have to keep people subscribing.

The question is: what took so long? One thing that has changed is the cost structure. Software is no longer bought in store and instead it is bought by download. That has made delivery more efficient but, if anything, that is pressure away from going to a subscription model. Instead, the change on the cost side is cloud access and use. Right now, compared to Netflix, the cloud usage costs for software like Adobe (and also Microsoft with Office 365) are not necessarily that high in terms of marginal costs. But keeping the infrastructure going is a bigger issue. That means that you can’t just make software and have no costs. Once you acquire more users, they cost you so you will want to make sure they are using wisely — that is, you want to do something akin to increasing usage charges and a subscription fee can approximate that.

But I think a bigger force for change is underway. For so many years, as we transitioned from physical modes of digital delivery to digital ones, people seemed to have a surprising attraction to ownership. Of course, it was a legal fiction. Music downloaded was licensed and, indeed, the same was always true for software. And consumers were reminded of this every time they accepted terms and conditions but somehow the fact that you never really had to ask permission to use software gave a sense of ownership. I suspect it is a form of repugnance to non-ownership that kept this model going. A decade ago, Microsoft experimented with subscriptions for Office in Australia and failed miserably despite the very high comparative cost of software ‘purchases.’ That suggests a non-economic constraint to me.

Thanks to streaming music and video, the world appears to have changed. The Internet connection is reliable enough that subscription can work without mishaps. Moreover, the strategy of subscribing and then disconnecting from the net while not paying future subscription fees just isn’t feasible or convenient any more. So software publishers (although apparently EA with SimCity was an exception!) have moved away from requiring an Internet connection to use subscribed to software. These factors have released consumers from a bias towards ownership with more confidence that access will continue.

There are dangers here. Could subscription fees escalate as consumers get locked-in? That was always a danger for upgrades but this seems more serious. But there are also opportunities. For instance, I don’t use Adobe each month and if I was a little more sophisticated I would subscribe only when I needed it. And if Adobe were more sophisticated they would offer options for consumers like me; for instance, they could tap network effects by allowing easy and temporary access to transient users precisely when they have to interact with permanent users. They could also offer family deals; at the moment, you can only have subscriptions active on a couple of devices and need to dance around to allow other family members to use it for a project. Microsoft has much better targeting here but then again, they are closer to home in the market than Adobe is.

The one trend away from this has been the mobile app market. If it existed before, it was subscription but not very large. It is now an ownership market and doesn’t show any signs of becoming anything more any time soon. I don’t have an explanation for that except that it is “just different.” But with Adobe and Microsoft moving to subscription, one suspects, this will creep into the mobile space too.

2 Responses to Goodbye Software Ownership?

  1. raischub says:

    This kind of software distribution is absolutely not acceptable.
    If you think that out:
After you quit subscription, you lose the full access to your files!
Other: I have to hire my on work, if I like to end my  subscribtion.
That´s madness!
I am responsible for many thousands of customers files & I have to guaranty access to them by contract.
In case of the decision to end CC I have no longer a piece of software which can open/print/edit my files!
If I just want to open a file (eg print it out) I have to reactivate & pay min a month.
(I realy have not one day here, where I don´t have to open a file from my archive – which are normally 1-5 years old) 
In the case of Photoshop I can use Tif or else as alternative to convert to. OK. But it´s not fully editable. 
In Case of Illustrator and InDesign I can convert to PDF (also not real editable).
And a strange thing, if I have to convert thousands of files after a few years of subscription.
In case of Premiere and After Effects there is absolutely no solution. 
I just can store my created videos/films. 
(These both Formats are already not compatible between CS6 and CC if I can believe the Specs at Adobes Web-Site)
Adobe CC Specifications: There is no given guarantee from Adobe, that future CC Files are backward compatible in any way (and do you realy believe that Adobe will work on this? We all know them!).
In case Adobe will dictate new Hardware Specifications – you have to follow (else staying with old software but paying full license).
If I decide to change a part of Software, I further on have to pay twice a long time, if I want to use the files I created with CC any longer.  
For all of you, who won´t believe this: Read Product Specification or have a call to the Adobe Support! I did!
(But: These guys are realy bussy that days ;)
Other arguments: Will a Software Developer, who knows, his sheeps are paying next month, will be motivated to do great updates? Remark: Adobe is Monopolist in a fiew fields (I hope not very long, but…). 
It will be chaeper? Adobe promised stack holders to rise revenue in march. Any further word necessary? 
What will be with prices once enough users are in that cool cloud? Today they have to fix them on… Tomorrow?
Where is the NEED (from customers side) to make the cloud a MUST? Why not optional as before? 
Updates could be done via update tool as today – no need. 
    When this distribution model will find it´s place in the market – Others will follow! Be guarantied!
The end is: A big bill at the end of a month or many files you can´t open!
I won´t think about the consequences.
I hope all the cloud subscribers will have enough money till the end of their days. 
    Nothing against a cloud (for those who think they need that). Nothing against a monthly fee – BUT ONLY if they implement a ACCEPTABLE and GUARANTEED Buy-Out strategy! And better not. 
Classic model was fine for the most of us.
I (might sound arrogant) would pay a multiple amount of CC subscription to have my files in full access and safety and the freedom of choice! 
    I am a professional Adobe user for more than 22 years now. 
Always kept my CS Master Collection on the newest level. Liked PS and its brothers and sisters. 
But since Monday it´s totally different. Adobe isn´t Adobe any more.
I just dond´t like Photoshop to see start up.
    Here a monopolist uses his might ice-cold and with no ear to its users.
Have a look to all the other forums worldwide. I think 85-90% disagree with Adobes decision!  
    So I advise anyone here, no,… I beg you:
KEEP YOUR CS6 ALIVE AS LONG AS YOU CAN AND THEY LET YOU! 
Adobe is much to arrogant to hear to all this voices on the web. 
They just will come down to earth (from their cloud), when they FEEL a pain – eg thinking stock exchange prices.
Remember also: Those of you, who subscribe make them great and open the door for all the others! 
    I hate hiring! Esp. my own work. 
I want to buy. If it´s a house, a car or even the right to use software!
That´s it!
And Bye, bye Adobe!

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