Adobe Moves to Subscription Model for Photoshop

[Mike Farley]

Adobe is a company with multi billion $ revenues, so it is safe to assume that they are not numpties when it comes to marketing. Photoshop CS/CC is a premium professional product which is sold at more than ten times the cost of Elements, which does not reflect the difference between the two products when it comes to using them for photography - they are much closer than that. However PS CS/CS has capabilities beyond photographic purposes and is used across a variety of industries. To protect its revenues, Adobe will not want to dilute the perceived value of PS CS/CC by underselling it.

It also knows that by pricing it's product too high it's losing sales to a ton of other third party and open source products - releasing Elements shows that. There is a difference between "pile em high, sell em cheap" and losing business with a radically different strategy and then shunning a sizeable portion of the amateur photography market. If they ARE going to create a package targeted at the Elements crowd then setting it at a HIGHER price isn't going to work - the Elements-only consumer has proven they do NOT want to pay high prices. So setting a higher priced subscription to tempt them in won't work when they've proven they are unwilling to spend.

I doubt if the situation is anything like as black and white as you describe it. Adobe will continue to sell to its different markets in different ways. Elements is the non professional product, but Adobe knows that many amateurs have aspirations to use the best tools available. Elements is one way of introducing Photoshop to people who might want to upgrade to the full version later on.

Adobe have it arse about face if they come up with a higher priced package. They should have offered Elements CC and LR5 for $10 and done PS CC & LR5 for $20 a month.

It makes no sense to lease products that have a combined value of around £150, so Elements CC / LR does not work. If my earlier calculations about the annual cost of the photographers package for existing CS owners being in the region of £100 are correct, that is in the right ballpark to retain existing users. Adobe is pitching at the US market, where traditionally prices have always been lower and your suggested prices might well be too high in that context.

I think it's highly likely that anyone who had CS3 has upgraded since it came out, at least once - you yourself are a prime example - so I still maintain the tactic of giving people who have spent lots on a PS already a chance to upgrade to PS CC isn't going to actually attract that many people. If they wanted CC they'd have upgraded already. If they hate the rental model they'll have left. So it really is a paper fanfare for an offering that really doesn't have much of an audience to hit.

Don't forget, that this is a one-off time limited offer, so users are being bought in for the long term. £100 a year is less than I would expect to pay in Adobe "tax" for my LR and PS upgrades, so I am happy. So are lots of other people, I suspect. Adobe is happy because it knows that its customers will not be walking off into the clutches of its competitors.

Adobe seem desperate to me.

Adobe spent 18 - 24 months planning the change from perpetual licences to subscription services. It would have known that the move would be controversial and generate a lot of flack, so it would have planned counter measures. For example, it has already said that it expects revenues to fall in the short term as part of the strategy to keep investors on side. I doubt if the introduction of the photography package is a knee jerk reaction, but something which has been in the wings for a while waiting for the right moment.

[Mike Farley]

Luminous Landscape has just released a video interview with Thomas Knoll, the co-inventor of Photoshop, who talks about the history of the application, people's concerns about migrating to the Cloud and the new solution for photographers. I have not yet viewed it, but it promises to be very informative and give some insights into Adobe's thinking.

http://www.luminous-landscape.com/inter ... noll.shtml

[Mike Farley]

I have now viewed the Luminous Landscape video, which was filmed back in June just after the annoucement of the move to a subscription model, but long before the details of the new Lightroom/Photoshop bundle were made known. Nevertheless, it does look in general terms about the issues which arise.

The first half or so is interesting for those who like to know how Photoshop evolved, but the last section from 32:01 onwards addresses more recent concerns. One surprise is that Thomas Knoll did not become an Adobe employee until the beginning of 2012. Until around 1995, he received royalties from Adobe until they bought him out and he became an independent consultant to the company. He did not go into great detail about why he eventually joined other than to say that moving to California necessitated a change in his his arrangements for healthcare insurance.

Other interesting points made are:

• The move to a subscription model has been controversial within Adobe as well.
• Perpetual licence product marketing requires eye catching features to sell upgrades, but often it is often the smaller changes which are more useful and aid producivity. A subscription model allows more emphasis to be put on improving usability.
• In future there will be closer integration between Lightroom and Photoshop.
• Adobe realised that a single application Creative Cloud subscription, at around 40% of the full package price, did not offer good value to photographers and a more attactive offer was necessary.
• A product that is constantly updated makes it more difficult for writers such as Scott Kelby to keep their books current. Even now, I occasionally find text in Martin Evening's books where it is obvious he was using a beta version and a feature changed before it went into production. This is something which Adobe is still considering about how to define what consitutes a major release.
• Photoshop is a widely distributed application, but the large majority of copies are pirated.

[davidc]

Adobe is a company with multi billion $ revenues, so it is safe to assume that they are not numpties when it comes to marketing.

Heh I did laugh at this - I think the assumption that just because a company is big it doesn't make mistakes is flawed reasoning. There are loads of cases where companies changed tack in the assumption "they knew best" and the results were catastrophic. Coca Cola, Gap even the BBC have made absolute clangers to name but a few. And to make a decision like this at the time of the worst economic situation in 60 years was startling.

If they ARE going to create a package targeted at the Elements crowd then setting it at a HIGHER price isn't going to work - the Elements-only consumer has proven they do NOT want to pay high prices. So setting a higher priced subscription to tempt them in won't work when they've proven they are unwilling to spend.

That's exactly what I've been saying. If they are going to tempt in the prosumer audience not using Photoshop already, or just advanced amateurs, they need an offering in that space which currently is missing. This is marketed, by Adobe, as the "Photographer's Package". But as a package it's still pointless - the elements users can't partake because they don't have CS3 or above and the prosumers who, like yourself, DID have a CS3 or above have already upgraded to PS CC. Who, exactly, is this supposed to entice in?

While I agree a pile high, sell cheap model would in the short term appear to devalue their core product, let's not forget photoshop is only ONE of their core products - I read a bunch of stats that shows the DTP/In Design stuff actually has a bigger audience, I'll try and dig it out. But for a subscription model to work, and for Adobe to stop hemorrhaging users like it is, it needs to offer products under it's new system to ALL market sectors. THAT is what it currently isn't doing.

Look at Starbucks, you can go in there and buy any size, flavour or strength coffee you want and Starbucks has a price for them all. It's great marketing. Adobe sort of had that with PS/Elements but have lost it in the transition, it's creating uncertainty in it's userbase and at the same time it's competitors are getting better.

It makes no sense to lease products that have a combined value of around £150, so Elements CC / LR does not work. If my earlier calculations about the annual cost of the photographers package for existing CS owners being in the region of £100 are correct, that is in the right ballpark to retain existing users. Adobe is pitching at the US market, where traditionally prices have always been lower and your suggested prices might well be too high in that context.

Why do you say there is no sense in it?
Personally, it makes no sense to force leasing of products that have a much higher price that £150

Don't forget, that this is a one-off time limited offer, so users are being bought in for the long term. £100 a year is less than I would expect to pay in Adobe "tax" for my LR and PS upgrades, so I am happy. So are lots of other people, I suspect. Adobe is happy because it knows that its customers will not be walking off into the clutches of its competitors.

YOU are happy, but you'd already upgraded! So adobe are basically saying "here, you were already a customer, here's a discount". So using you as a case study, they have LOST money with this pricing change! They don't gain money for reasons above.

I fully disagree with the latter sentence though, it's quite clear looking at a spread of even just photography forums that the bulk of people are not happy with the change - even former Adobe stalwarts - and while you could argue there might be a massive crowd of people 100% happy with Adobe's move and they are just staying quiet, I think it's unlikely. People love arguing over the internet and if there were huge swathes of Adobe fan-boys they'd be arguing right back at those criticising the switch

Adobe spent 18 - 24 months planning the change from perpetual licences to subscription services. It would have known that the move would be controversial and generate a lot of flack, so it would have planned counter measures. For example, it has already said that it expects revenues to fall in the short term as part of the strategy to keep investors on side. I doubt if the introduction of the photography package is a knee jerk reaction, but something which has been in the wings for a while waiting for the right moment.

Ouch, if that's true then they REALLY need a better marketing/product planning team!

Sadly I doubt we'll ever see Adobe's figures about falling user numbers and profits directly linked to the subscription model (let's not forget Photoshop is small beans next to the other products in the overall CC package), but I'd be extremely interested to see if the numbers they ought to have match up with the level of persistent outrage online. I mean, it happened in May and people are STILL complaining

Again, we have to remember that the photoshop side of things is just a small part of the equation, I wonder how the amateur film-makers and other users of Adobe products feel about it!

Your comment about the pirating is what I'd suspected but I think that there is a partially historic element too (Adobe were the best for a long time, with no real rivals, now that has changed) and it's also down to price. Back when the music industry was trying to sell songs online they set the price absurdly high and tried adding in all sorts of copy protection - none of it worked. They then reasoned that if they set the price lower, far more people are willing to pay for it than they are to pirate it and the savings they made more than made up for the loss. If Adobe dropped the price of Photoshop, I wonder how many additional copies they'd have to sell to offset the "loss" of revenue? I suspect the number of people Adobe have priced out of photoshop outweigh the potential loss.

£10 a month would have enticed me in - I even went on ebay trying to buy an old copy of CS3! - but the CS3 barrier means they have lost someone who would happily pay otherwise. I want more than element and lightroom can provide but Adobe have priced me out of the market and I certainly won't be the only person in this category - THAT is bad product strategy on Adobe's part. I wonder, of photographers, how many people would want to pay several hundred pounds on software or put that towards a lens?

Do you personally believe that this move is good for photography, both in terms of empowering existing photographers, encouraging the growth of enthusiastic amateurs and making it open to new people who want to start?

[Mike Farley]

Adobe is a company with multi billion $ revenues, so it is safe to assume that they are not numpties when it comes to marketing.

Heh I did laugh at this - I think the assumption that just because a company is big it doesn't make mistakes is flawed reasoning. There are loads of cases where companies changed tack in the assumption "they knew best" and the results were catastrophic. Coca Cola, Gap even the BBC have made absolute clangers to name but a few. And to make a decision like this at the time of the worst economic situation in 60 years was startling.

Agreed that every company is capable of making a right hoohar of things - predicting the future is not yet a science after all. It's a bit like making a financial investments when there is only past performance to go by.

If they ARE going to create a package targeted at the Elements crowd then setting it at a HIGHER price isn't going to work - the Elements-only consumer has proven they do NOT want to pay high prices. So setting a higher priced subscription to tempt them in won't work when they've proven they are unwilling to spend.

That's exactly what I've been saying. If they are going to tempt in the prosumer audience not using Photoshop already, or just advanced amateurs, they need an offering in that space which currently is missing. This is marketed, by Adobe, as the "Photographer's Package". But as a package it's still pointless - the elements users can't partake because they don't have CS3 or above and the prosumers who, like yourself, DID have a CS3 or above have already upgraded to PS CC. Who, exactly, is this supposed to entice in?

Er, you have just quoted yourself. At least you were being consistent in your response by agreeing with what you originally said.

I suspect that the Photographer's Package will not be limited to existing CS customers, but will be offered to everyone, although non CS users will probably have to pay a bit more and will not have a future price guarantee.

While I agree a pile high, sell cheap model would in the short term appear to devalue their core product, let's not forget photoshop is only ONE of their core products - I read a bunch of stats that shows the DTP/In Design stuff actually has a bigger audience, I'll try and dig it out. But for a subscription model to work, and for Adobe to stop hemorrhaging users like it is, it needs to offer products under its new system to ALL market sectors. THAT is what it currently isn't doing.

Look at Starbucks, you can go in there and buy any size, flavour or strength coffee you want and Starbucks has a price for them all. It's great marketing. Adobe sort of had that with PS/Elements but have lost it in the transition, it's creating uncertainty in its userbase and at the same time it's competitors are getting better.

See previous response.

It makes no sense to lease products that have a combined value of around £150, so Elements CC / LR does not work. If my earlier calculations about the annual cost of the photographers package for existing CS owners being in the region of £100 are correct, that is in the right ballpark to retain existing users. Adobe is pitching at the US market, where traditionally prices have always been lower and your suggested prices might well be too high in that context.

Why do you say there is no sense in it?
Personally, it makes no sense to force leasing of products that have a much higher price that £150

This is getting a bit circular with responses earlier in the thread. I suspect that Adobe is faced with applications that are functionally rich and it is becoming more difficult to sell regular updates to perpetual licences by creating new whizzy features. Not just for Photoshop, but for all its products. Leasing addresses that and also helps smooth revenue flows.

Note that it is not just Adobe which is making such a change and Microsoft is doing something similar with Office, albeit its tactics are different. I would be surprised if it is not already considering how it can move Windows to a leasing model.

Don't forget, that this is a one-off time limited offer, so users are being bought in for the long term. £100 a year is less than I would expect to pay in Adobe "tax" for my LR and PS upgrades, so I am happy. So are lots of other people, I suspect. Adobe is happy because it knows that its customers will not be walking off into the clutches of its competitors.

YOU are happy, but you'd already upgraded! So adobe are basically saying "here, you were already a customer, here's a discount". So using you as a case study, they have LOST money with this pricing change! They don't gain money for reasons above.

I fully disagree with the latter sentence though, it's quite clear looking at a spread of even just photography forums that the bulk of people are not happy with the change - even former Adobe stalwarts - and while you could argue there might be a massive crowd of people 100% happy with Adobe's move and they are just staying quiet, I think it's unlikely. People love arguing over the internet and if there were huge swathes of Adobe fan-boys they'd be arguing right back at those criticising the switch

Had Adobe not introduced this package, I would probably have stuck with CS6. Based on the last Lightroom update, those upgrades are also becoming less essential. Adobe will probably end up getting more money out of me in the long term and I will be content to pay. That strikes me as very shrewd marketing.

Incidentally, the Ctein articles at The Online Photographer to which I linked earlier in this thread put a balanced view for and against the change to the leasing model. Not everyone thinks that it is a bad move if they are using a number of Adobe's products, when it can be good value especially for new entrants. As Thomas Knoll said in the Luminous Landscape video, Adobe recognises that it does not work for photographers, hence the introduction of a package especially for them.

Adobe spent 18 - 24 months planning the change from perpetual licences to subscription services. It would have known that the move would be controversial and generate a lot of flack, so it would have planned counter measures. For example, it has already said that it expects revenues to fall in the short term as part of the strategy to keep investors on side. I doubt if the introduction of the photography package is a knee jerk reaction, but something which has been in the wings for a while waiting for the right moment.

Ouch, if that's true then they REALLY need a better marketing/product planning team!

Soothsayer are we? Doubtless there will be those in the marketing team who will suffer if this does not pan out as Adobe expects.

Sadly I doubt we'll ever see Adobe's figures about falling user numbers and profits directly linked to the subscription model (let's not forget Photoshop is small beans next to the other products in the overall CC package), but I'd be extremely interested to see if the numbers they ought to have match up with the level of persistent outrage online. I mean, it happened in May and people are STILL complaining

Again, we have to remember that the Photoshop side of things is just a small part of the equation, I wonder how the amateur film-makers and other users of Adobe products feel about it!

Your comment about the pirating is what I'd suspected but I think that there is a partially historic element too (Adobe were the best for a long time, with no real rivals, now that has changed) and it's also down to price. Back when the music industry was trying to sell songs online they set the price absurdly high and tried adding in all sorts of copy protection - none of it worked. They then reasoned that if they set the price lower, far more people are willing to pay for it than they are to pirate it and the savings they made more than made up for the loss. If Adobe dropped the price of Photoshop, I wonder how many additional copies they'd have to sell to offset the "loss" of revenue? I suspect the number of people Adobe have priced out of Photoshop outweigh the potential loss.

£10 a month would have enticed me in - I even went on ebay trying to buy an old copy of CS3! - but the CS3 barrier means they have lost someone who would happily pay otherwise. I want more than element and lightroom can provide but Adobe have priced me out of the market and I certainly won't be the only person in this category - THAT is bad product strategy on Adobe's part. I wonder, of photographers, how many people would want to pay several hundred pounds on software or put that towards a lens?

Looking at the articles about free or low cost alternatives to Photoshop, the only application which comes close is Elements. If Adobe has got this wrong and klartzed it up, it will open up the market to the likes of Corel to introduce a competing product.

Regarding piracy, CC is aimed at the professional community, many of whom will pay to use it. Most illegal copies are probably used by individuals and companies in countries where there is general acceptance of the use of unlicensed software. If individuals had not stolen Photoshop, they would probably have ended up buying Elements or something similar. Adobe has actually lost very little, since those people would only be prepared to pay a small amount for anything.

Similarly, copyright protection is very difficult to enforce without governmental support in the countries concerned. Some revenues are easier to obtain than others, so I expect Adobe (and other software producers) put up with leakage and concentrate their efforts where they can get the best return.

Do you personally believe that this move is good for photography, both in terms of empowering existing photographers, encouraging the growth of enthusiastic amateurs and making it open to new people who want to start?

I would prefer that things stayed as they were, but Adobe failing due to falling revenues is not a good prospect either. If Adobe gets it wrong and the demand is there, someone will step in to fill the gap.

[Mike Farley]

Here's Scott Kelby's take on the recent announcement from Adobe. One thing he mentions, which I have not seen anywhere else, is the regular price for the photography package of $19.99 per month. Based on the UK price of £7-14 for the CS3+ deal, that will work out at just over £14 a month. It's interesting as well what Kelby has to say about the effect of Adobe's move to subscription pricing on its share price.

http://scottkelby.com/2013/adobe-announ ... expecting/

[Mike Farley]

Michael Reichmann at Luminous Landscape explains why he has moved to CC and taken up Adobe's introductory offer for the full suite, although he does not say what he will do when the initial 12 month subscription period lapses. What is interesting is that he says his own site will be moving to a subscription model for ithe videos it produces which are currently available to download for a one time fee, although there no details yet.

http://www.luminous-landscape.com/essay ... side.shtml

[Mike Farley]

Adobe's Photoshop Photography Programme has now been launched and it looks as though it is restricted to existing customers only for a limited period. It remains to be seen whether Scott Kelby was correct and that it will eventually be offered to all comers at a higher price. It turns out that Adobe used an exchange rate of $1.40 to £1 and the £7.14 sterling price did not include VAT. If, like me, you are wondering how 20% on top of that comes to a total of £8.78, the answer is that it doesn't. In an excruciating on-line chat this morning where "Victor" consistently failed to understand the point, it turns out that although Adobe is giving a price in sterling, its European division is based in Eire and charging VAT at that country's rate of 23%.

Of course, for those who are registered for VAT, the rate paid is irrelevant. Quote Adobe a valid VAT number and they will happily knock the tax off from the monthly bill. The rest of us end up supporting the Irish economy.

https://creative.adobe.com/plans/offer/ ... +lightroom