Adobe Moves to Subscription Model for Photoshop

[Mike Farley]

Adobe has just announced that it is moving to a subscription only model for its Creative Suite products, including Photoshop CS, which is based on its recently introduced Creative Cloud suite. This does not affect Lightroom, or presumably Photoshop Elements, where it will still be possible to purchase perpetual licences for a one off fee. CS6 will continue to be supported (although I would expect Adobe to cease this at some point, most probably in 2014 when the next version was due), but it will not benefit from the addition of new functions such as the camera shake reduction feature which has just been introduced in Photoshop CC as it will be now be called.

http://www.youtube.com/watch?feature=pl ... tUD-DRhTZg

The new model has the advantage that it will not be necessary to wait for a new version to be released to get updated features as there will be a rolling programme of upgrades. Existing users can subscribe to Creative Cloud, either for a single application or the complete suite, at a discount until the end of July. Long term, life just got more expensive for those who want to use the latest full version of Photoshop rather than rely on PS Elements.

Further details are at DPReview.

http://www.dpreview.com/news/2013/05/06 ... e-cloud-cc

This pay as you go pricing model has been mooted for some time and Microsoft has just introduced something similar for its Office suite of applications. (It is still possible to buy Office at a one off cost, but unlike previously the licence is non transferable from the machine on which it is initially installed.) I would expect to see more of this in the future as the software producers attempt to increase revenues.

[Mike Farley]

UPDATE

I have just found out that Microsoft has backed down from its approach of prohibiting the transfer of a boxed version of its Office 2013 software from one machine to another, albeit there are some restrictions. I'd like to think that this came about as a result of the power of this forum, but the change happened a while back.

Microsoft is definitely taking a gamble that individuals will buy into the licencing model where software is rented rather than owned outright, even though this will end up costing users considerably more in the long term. It is this desire to boost revenues that lead to the imposition of such a draconian measure in the first instance and I would not be surprised if the company tried to do something similar at some point in the future. Nor would I be surprised if such a move did not eventually extend to the Windows operating system as well. At least with Office there are alternatives which are free (I have heard good reports of LibreOffice 4, although I have not tried it), but the OS is a different matter and I suspect that there are few who would want to rely on Linux.

[Mike Farley]

DRPreview has published a response by Adobe to the reaction from photographers about the move to a subscription model for its premium products.

http://www.dpreview.com/news/2013/05/08 ... otoshop-cc

As I have been pointing out for some time, Adobe affirms that many pictures can be processed using just the Raw controls in Lightroom and this has been extended by the new features being introduced in LR5. It also supports the use of Photoshop Elements for subsequent manipulation where images do not need to be processed as 16 bit, which will apply to the majority of images amateur photographers are likely to take.

Photoshop CS6 will have its own version of ACR8, but it will not support the new features being added for LR5 and Photoshop CC, the advanced healing brush for example. Neither will CS6 be enhanced to include new features being added to Photoshop CC. That said, Adobe does tend to trickle down features from the full Photoshop product to Elements, albeit in a more restricted form. Content Aware Fill is one such example and I would not be surprised to see a version of camera shake reduction in Elements at some point. This could be as early as PSE 12 which will be be available later this year if Adobe keeps to its annual release schedule.

For those interested in Adobe's Cloud offerings, prices are here. The $ prices definitely look more attractive than those for sterling (what exchange rate does Adobe use?), but I doubt if they are available in this country.

https://creative.adobe.com/plans?plan=i ... re_code=gb

[davidc]

The impact on photographers is going to be massively outweighed by the impact on graphic designers. Although I currently far prefer PS versus LR, it seems Adobe are trying to push LR as the photographer's tool and keep PS for graphic designers/artists.

It seems like a scheme simply designed to raise the bottom line - they freely admit this won't stop piracy and their excuse that "this is the price you pay for a continually updated product" doesn't wash, we've been able to continually update when WE the consumer wanted to for years now. Considering even their student pricing looks disproportionately expensive they could end up shooting themselves in the foot by pricing new, younger users out of their application and losing business.

This is all over the net today and universally thought of as a bad idea. I tend to agree.

[Mike Farley]

Most of Adobe's customers are professional users and this change will make very little difference to them. The cost of the software is trivial compared to paying someone to use it and in any event it is tax deductible as a business expense. In some ways, paying for the software on a monthly basis rather than as a one off cost might also be a benefit for cashflows.

People like you and I do not matter so much to Adobe, particularly when you consider how we buy our software, which is typically through intermediaries. That means that Adobe was having to share the proceeds with the likes of Amazon, whereas now Adobe gets to receive the full revenue stream from each and every one of its customers.

Adobe can pull this stunt as it has a near monopoly in its markets and offers integration between its products. Indeed, less than £50 a month looks reasonable to be able to use all its products which if bought as a one off purchase would run into four figures. Admittedly, it looks less attractive if only a proportion of tjem are needed. It is unlikely to lose future business as it offers a cost affordable way into Photoshop via Elements and all the other products are already only available in premium versions. Nor should we lose sight of the fact that it has reduced the price of Lightroom, although it looks as though this could be offset by upgrades being annual in future.

As photographers, we have a choice. The combination of LR and PSE is cost effective, covers most requirements and is still available to us. Nothing has changed here. If the full version of Photoshop is really important, then Adobe has put a new, higher price on that. Unfortunate, maybe, but Adobe is in business to make as much money as possible and doubtless has carefully calculated how much it can charge to maximise its revenues.

I contend that there is very little in PS CC that is "must have", other than possibly camera shake reduction. The CS6 update was also less than compelling, in my view. In a few months time, when the initial Creative Cloud discounts for existing users have lapsed, we will probably see a form of CSR in PSE 12. Similarly, LR seems to be a maturing product and provided Adobe does not change its policy to one of having to upgrade from the previous version, updating to each new version will become less essential. On the same basis, little has changed in PSE since version 9 other than the revised Raw conversion in PSE 11. Regular updates are not essential there either, especially if LR with its superior functionality is used for Raw conversion.

[davidc]

Most of Adobe's customers are professional users and this change will make very little difference to them. The cost of the software is trivial compared to paying someone to use it and in any event it is tax deductible as a business expense. In some ways, paying for the software on a monthly basis rather than as a one off cost might also be a benefit for cashflows.

I'm curious how you know this? As in, how do you know what proportion of their client base is professional vs. semi pro vs. the rest, and also of those professionals how many of those are working for large design firms who likely won't have any option but to continue with the change, or who are perhaps more like Scott Kelby - independent design or photography professionals who still need a professional tool and for whom this represents an overall net increase in price. I've googled for a revenue breakdown for Adobe by product and by user type/sector and couldn't find one. Granted I agree it's probably true, same as Canon/Nikon cameras are a small part of their respective company turnovers, but not sure how you know it will make very little difference?

Also bear in mind that one of the reasons that businesses continue to upgrade is so they get the benefit of Adobe customer service. When CS6 support is stopped they'll have to move regardless or management will take the opportunity to look for a cheaper option, especially in the current financial climate.

People like you and I do not matter so much to Adobe, particularly when you consider how we buy our software, which is typically through intermediaries. That means that Adobe was having to share the proceeds with the likes of Amazon, whereas now Adobe gets to receive the full revenue stream from each and every one of its customers.

Totally agree we are a small % of the market share but it doesn't mean that the same frustration isn't being felt by others - MAJOR photo houses are expressing anger over twitter/facebook/online. Although the shift to remove the third parties like amazon is probably a major driver for them, I'd be interested to see their calculation that shows the loss from one off purchases vs. their projected revenue from increasing the cost to those who go with the subscription model. Doubt we ever will though!

However I think there will be a subset of people for whom they would have debated over getting photoshop or not will be put off completely, and the product will just be pirated. If 1000 people worldwide do that because of this change that's over 600k revenue they just lost.

Adobe can pull this stunt as it has a near monopoly in its markets and offers integration between its products. Indeed, less than £50 a month looks reasonable to be able to use all its products which if bought as a one off purchase would run into four figures. Admittedly, it looks less attractive if only a proportion of tjem are needed. It is unlikely to lose future business as it offers a cost affordable way into Photoshop via Elements and all the other products are already only available in premium versions. Nor should we lose sight of the fact that it has reduced the price of Lightroom, although it looks as though this could be offset by upgrades being annual in future.

I think one of the drivers for this is because it DOESN'T have a monopoly, not anymore. The open source stuff that was lagging behind has caught up rapidly and that's only for the Photoshop style apps. Lightroom is merely one among many other options for example, most of them free or considerably cheaper that do exactly the same job (you should see the debate on the work photo channel when a newbie says "What photo management tool should I use?"!). I use a freeware tool for editing images at work for those occasions I need to and it does 80% of what I need, for instance. If I upgraded no doubt that figure would rise.

Also the model of full digital distribution has been tried before, many times, and often fails. The early days of selling music online failed miserably simply because people who wanted that product just found ways to get it for free. It's only when places like iTunes have lowered the price to where people want to pay for it that it reached a tipping point and people switched over. People hate feeling like they are being taken advantage of and ripped off!

There are few digital distribution models that are actually working and let's not forget that many people and business like the reassurance of having a set of physical media they own forever. This is a very different psychological switch and one that business management will no doubt consider - do we want to fully invest in a toolset we need to continuously pay for and that will mean we are stuck with, or do we take this as an opportunity to look at the competition?

As photographers, we have a choice. The combination of LR and PSE is cost effective, covers most requirements and is still available to us. Nothing has changed here. If the full version of Photoshop is really important, then Adobe has put a new, higher price on that. Unfortunate, maybe, but Adobe is in business to make as much money as possible and doubtless has carefully calculated how much it can charge to maximise its revenues.

Yes, that's clearly the driver behind it all - but that doesn't mean it's misguided and not elicited a massive backlash among their users!

I contend that there is very little in PS CC that is "must have", other than possibly camera shake reduction. The CS6 update was also less than compelling, in my view. In a few months time, when the initial Creative Cloud discounts for existing users have lapsed, we will probably see a form of CSR in PSE 12. Similarly, LR seems to be a maturing product and provided Adobe does not change its policy to one of having to upgrade from the previous version, updating to each new version will become less essential. On the same basis, little has changed in PSE since version 9 other than the revised Raw conversion in PSE 11. Regular updates are not essential there either, especially if LR with its superior functionality is used for Raw conversion.

You're entitled to make your own view on these things of course. I've looked at CS5 and CS6 and decided there was little I needed in them either so I didn't upgrade. So the version I have is still providing value for money long, long, long after purchase. I can continue to use this now for as long as I want. I can use freeware raw conversion, such as DNG or the tools Canon provides, to access future camera raw files. With CC you simply won't be able to do that - the moment you stop paying, you lose the ability to work within your hobby (or business) using that tool. As a consumer I do not like that option so would take business elsewhere.

Remember too that when Adobe DO add something you want, to get it you are tying yourself into that outlay for as long as you want to use it. Simply saying "well I don't mind because there's nothing I want out of it now" is a bit short sighted, there'll be something you DO want from it soon enough. And if Adobe know they make money by forcing people into subscriptions there is no guarantee they will continue to incorporate it into cheaper products - certainly not at the same timescales as they have in the past and they could well introduce another subscription model for enthusiasts like us. Let's also not forget that because they've done this once, if Adobe management thinks it's provided them a benefit to their bottom line they'll look for places to do it again and Lightroom will be one of their options.

[davidc]

Actually this has prompted further reading, with more interesting facts emerging. The primary motivator for Adobe doing this is to "smooth out" their revenue stream, removing the huge spikes every two years with CS package releases for something more predictable. This makes them look better to investors. Or potential buyers.

Also there is a development benefit for them in that they can continuously upgrade rather than be tied to two year dev cycles.

Still, a lot of commentary is focusing on the fact it's consumer base are unaccustomed to subscription models and are already rejecting it (as I guessed might happen), switching revenue model often leads to a fall in revenue for the same period your previous cyclical stream lasted - i.e. because they are going to a subs model, people will simply refuse to switch/upgrade so whereas they would have received income with the next CS release, now they won't. Adobe have apparently started making profits warnings for years hence based on this already. Also, if the transition is delayed or botched it'll lead to an even more protracted dip in revenue. There are problems too with the continuous upgrade approach - if they have another fiasco like the first few versions of LR for instance - then it could lead to even bigger backlash and cause them serious problems with people simply leaving the service having had enough.

Adobe's share price dropped 8% on this when trading started which has led some to speculate that it may make them (intentionally or unintentionally) a target for a takeover. Who knows what state that'd leave their product offering in then!

It's certainly going to be interesting what happens going forwards.

[davidc]

Apparently Adobe are surprised by the response from the community, particularly photographers for whom Photoshop & Lightroom are essential workflow components, and although they are still proceeding with the CC plan have acknowledged a need to find a solution for photographers.

[Mike Farley]

..... a lot of commentary is focusing on the fact it's consumer base are unaccustomed to subscription models and are already rejecting it ........

I think that this is what is at the heart of it, people generally react adversely to any form of change. Over a period, they become accustomed to it and accept it as the norm. As you say, going from a model where software is a one-off purchase to where it is rented was always going to be controversial, especially when Adobe is hiking prices upwards at the same time. As with anything, there are advantages as well as disadvantages, both for Adobe and its customers.

It's certainly going to be interesting what happens going forwards.

There are going to be a lot of companies taking a very close look at what Adobe is doing. My view is that we are going to start seeing a lot more of this type of selling of software as a service. Moreover, it is actually an interim step to the time when everything is done in the cloud and users will pay a monthly fee to login from a terminal. In some ways, just like the early mainframes when everything was centralised.

Where I will criticise Adobe is how badly it has handled its marketing messages to customers over the past few years. In 2011, towards the end of life for CS5, it suddenly announced that future CS upgrades could only be from the previous version rather than the past three. I had not intended buying CS5, but felt compelled to do so on the basis of this statement. Then Adobe changed its mind and announced I could have gone to CS6 from CS4 after all. It also said that its premium products would be released in two yearly cycles and gone back on this as well. I suspect that the only reason why CS6 is still being supported is because people thought they were buying a product with a two year life span. If it is still being supported at the end of next year I will be astonished. Even then, there is now the issue of incompatibility between the Raw processing of LR5 and CS6, which was one of the drivers for my CS6 purchase.

I will be looking carefully at my options, but at the moment I see very little that offers the same level of user experience as Adobe's products. I just wish that the company would adopt a marketing strategy that is consistent, rather than this constant chopping and changing.

[Mike Farley]

Apparently Adobe are surprised by the response from the community, particularly photographers for whom Photoshop & Lightroom are essential workflow components, and although they are still proceeding with the CC plan have acknowledged a need to find a solution for photographers.

That sounds promising, but I am amazed that Adobe was not already aware of this. That said, its messages have been mixed over the past couple of years as I described in my earlier post. One possible solution is to bundle LR and PS CC at a reduced monthly rate for those who do not need all the other tools, although I would still prefer an outright purchase option for PS.