It was brought to my attention over the weekend that Scott Kelby chimed in on the pricing and policy change that Adobe has implemented on their latest episode of “The Grid”. It’s a great vidcast that hits on the meat of topics that photographers are talking about, and this episode was no exception, helping to dispel some of the myths that surround photographers. What I want to talk about here is what they prefaced the show with: a short five minute blurb about the Adobe policy, and what’s wrong/right with it. I was dumbfounded.
Fair warning – this is a long post….much longer than what I normally post – but it’s that important! Please take the time to read this whole thing because you will have a complete and clear understanding of these odd terms like Subscription Service, In Perpetuity, and Creative Cloud. You’ll understand the differences, and see why the new pricing scheme is not a good decision for anyone – personal or professional businesses!
So, in the interests of getting it right, I went back and listened to it several times, finally writing a transcript of it (which you can read here. Here’s the nuts and bolts though of what they had to say…
[Scott] And that’s my guess. I haven’t talked to Adobe on this. Nobody in Adobe’s pricing dept. said this. I can imagine the reason why Adobe did this is a couple of things:
1. I…and this is where all the controversy is, I don’t think it’s the pricing so much, I haven’t heard anybody gripe about the price it’s like $50 a month and you get everything they do. You get everything, right? You get like the whole Master Collection. Again, I didn’t look at all the numbers, so I don’t …I could be a little off.
[Matt] It’s ballpark and if you add up what it would cost you to buy the Master Collection, it actually in some ways can save you money.
They are looking at the Creative Cloud service, not the subscription pricing. Let me state that again, unequivocally:
They are confusing the subscription model with the Creative Cloud stuff.
These are two different things, so let’s get that on the table right away. The subscription service is not $50 a month! What’s the difference? It’s easy! A subscription service is something you pay a small amount for every month (or week, or year…whatever, you are a subscriber. How is that different from the current licensing? The current licensing (whether by download or media – it doesn’t matter)…means you own that license forever. In legal terms, it’s called an in perpetuity license. You’ve bought that license and are entitled to use it forever! Renting a house (or apartment) is far more expensive than buying one. Renting (or leasing) a car – the same. Would you rent a camera? For one time uses, sure…but who wants to use that model if you plan on doing anything regularly? The answer: no one! From Adobe’s perspective (or any provider for that matter), it’s a great business model because it makes the renter more money. The same holds true here for Adobe! Don’t believe me? Take a look…
We are assuming that we are starting from an upgrade perspective – people that already own a CS5 license. The following chart is based on the cost to upgrade an in perpetuity license (assuming that doesn’t change…) and shows what that same cost would be under the subscription model based on a 24 month cycle:
An important qualifier here – Adobe is also moving to an alternating schedule whereby dot releases are put out in alternating years to full version releases:CS5 – 2010 CS5.5 – 2011 Cs6 – 2012 CS6.5 – 2013 CS7 – 2014 etc.
This is why you are renting on a 24 month schedule. It’s also why there is no way that renting anything would cost you less. They said they hadn’t had the time to look into it. Several others have. In their defense, the 5 minute bit was full of qualifications – Adobe didn’t tell us, we don’t know, we can only guess…all that sorta stuff, which is fine in and of itself. But how can someone say with a straight face that renting costs less than owning? Seriously. Take any basic business course or economics course. The pricing factor aside (which is already been demonstrated as exorbitant…) at the end of renting – you own nothing!
How is the subscription model a better model for anyone besides Adobe? Scott and crew answered with the following:
“[Matt] The biggest problem I see, there’s gonna be a barrier to entry for someone who is on Cs3 or CS4.
[Scott] Especially hobbyists
[Matt] That’s who I’m really talking about. For a company I think…it’s not just better for Adobe…to put in a subscription model because now they know how much they are gonna take in every year…but now a company knows exactly how much money you’re gonna spend each month on software. So it’s easier for a company.
Hobbyists though, ya know, it’s hard to swallow six or seven hundred dollars…
[Scott] A year…
[Matt] And then go into the subscription model too…
[Scott] Oh no no…you’ve gotta upgrade…it depends on what you have…if you have the Suite..I don’t know…
[Matt] It does get, it can get hairy…”
As you can see – it’s not that hairy – it doesn’t matter what you own: CS2-Cs5 will cost more to go to a subscription model than it would to stay on an in perpetuity license. One more time for clarity, here’s where Scott Kelby and Crew got it wrong:
They are confusing the subscription model with the Creative Cloud.
Not only is it not that complicated – even for businesses, it’s very easy to extrapolate out the Total Cost of Ownership over time and see how this is not a good economic move for anyone (unless you are Adobe). With all due respect to Scott and crew – I would ask them if they will switch to the subscription model? My guess is no. They also provided, in my estimation, a pretty lame explanation for why Adobe is changing their policy. Here’s what they said:
“[Scott]I’ve been getting so many people asking about Adobe’s new pricing and all that stuff.
Adobe does not call us and ask what we think about pricing. We learned when everyone else did. I haven’t had any time to really look into it. I think there are some good things about it. I think the subscription model is really great, and by the way, you might as well get used to the subscription model, because it’s the wave of the future. You’re going to be subscribing to everyone’s software. Especially when the big people like Adobe start moving into that thing. I think the days of you going to the store and buying off the shelf – it’s either going to be direct download or it’s going to be subscription based. And everyone wants the subscription model because it gives you revenue all year long ya know
[Matt] Well, it’s predictable they know Jan through December what they are going to get.”
Huh? So they can get revenue year round? They do already! Different folks buy at different times…it’s called effective management of resources. This isn’t about regular revenue – it’s about more revenue! And we all know Adobe isn’t hurting.
That isn’t on the NAPP gang though – that’s just Adobe greed. But I do think where Scott and crew are misunderstanding the outcry is that they think we are upset over the subscription offering. It’s not that we are against the subscription offering per se. It’s the exclusive and disingenuous way that people are being set up into that option. Let me state more unequivocally what I think is wrong:
1. The sudden elimination of 3-versions back upgrade options. The solution to this is rather than just cutting it off immediately, to phase it out. (This was posted in the comments from last week here.)
Since there was no major outcry when Adobe said that only 3 versions back could upgrade you would think that if they wanted to do this to go 2 versions back for CS6. Then they could offer a graduated sliding scale something like this:
Upgrade 2 versions back. Upgrade price $189.
CS3 and CS2 Upgrade at $249.00
Older Versions Upgrade at $329.00
Every Quarter or so offer older versions a 20% discount if purchased directly from Adobe.com
2. For those that want the subscription program, fine, but I am here to tell you from a financial perspective: It is a horrible idea for anyone…personal or professional! The TCO is 4x what it would be for an in perpetuity license, and if you ever end the subscription program for yourself or your company – you have nothing left to work off of. It’s like renting. For most outfits, that makes no sense for any software (or hardware) used on a regular basis. Now if I had a one time need for In Design or something, that’s another story – but we are talking regular use here. Heck, I’ll rent glass I can’t afford, but I also am not using that glass every day! Only for 2 or 3 days.
3. The last part I have a beef with is whether this will ripple over to other products. We don’t know yet, but I can only assume that Lightroom and Acrobat are soon to follow if this subscription service takes off. The installation base for Acrobat is far more extensive – going into regular businesses, not just creative businesses, and the impact there could be dire. I suspect Adobe is merely giving an indication of what’s to come by testing their leading products in this model. Unless we want to see everyone adopt this method of sucking that much more from our own wallets – we need to tell them to stop now!
So, chime in now, and share on Twitter, Facebook, and Google Plus – as well as to Adobe. I gave out links on how to do this here. Here’s the on-going poll too if you don’t want to comment. Speak up now and let Adobe know how you feel. We still have a chance to change their minds.
EDITOR NOTE: This post was written and published before I had a chance to read Scott’s Open Letter to Adobe on his blog today. That letter pretty much takes Scott and Crew off the hook – they are advocating on our behalf and I’ve already given my accolades to Scott over there. Please read that post as well!