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:

Adobe Pricing Licensing Numbers

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!

 

Sorry, there are no polls available at the moment.

Resources
http://finance.yahoo.com/news/Adobe-Reports-Third-Quarter-bw-2372560166.html?x=0&.v=1
http://blogs.adobe.com/conversations/2011/11/adobe-creative-cloud-and-adobe-creative-suite-new-choices-for-customers.html?PID=2159997
http://www.adobe.com/products/creativesuite/cssubscription.html?promoid=INPKB

Adobe Says No CS6 Upgrade Discounts from Older CS2, CS3, or CS4


http://www.adobe.com/products/creativesuite/upgradeinfo.html?PID=2159997

16 thoughts on “Why Scott Kelby and Crew Are Wrong

  1. Bob Roberts says:

    Clearly what Adobe is doing is announcing they’re going to target only the high end market and abandon low end users and hobbyists. This is actually a good thing, because as good as their products are, their existence tends to stifle the many other great ideas out there which now will have a space to develop, at much more reasonable prices.

  2. Come to think of it Adobe’s shift in licensing/pricing policies would make things more expensive for me. I like what you are trying to tell here and I think this is great in letting Adobe here our thoughts on their changes.

  3. There is one point being missed in this. Piracy.

    This is the ultimate in anti-copying scheme ever. You are tied to Adobe’s servers to use this. There are no cracks, keys, or mods that will make the software work.

    Up till now, their security measures have been non-existent or lip-service. And it really didn’t matter. Hobbyists and amateurs were not a market share worth angering the main buyers, IT managers. Now everybody has to have a copy of PS and there are no real alternatives now. GIMP or PaintShop – Not in the business world.

    The people that will be hurt the most with this model will be people like Scott – trainers and authors. I wonder how many of NAPP’s 70k actually own a legit copy of PS?

    If Adobe is successful in rolling this out, 3rd party sales of books and video will fall to pre-2005 levels. Photographers have migrated over to Lightroom and PS Elements. I have not seen the need to upgrade past CS3 for what I do. Although the de-blur does look interesting, I suspect that there will be single function deconvolution tools released from the Open Source crowd that work as well or better, HDR and stitching as examples.

    1. the line –
      Hobbyists and amateurs were not a market share worth angering the main buyers,

      should be –
      Hobbyists and amateurs were not a market share worth the security measures and angering the main buyers,

  4. i still feel i am missing something and if i missed it above i apologise. Are they taking away the good old perpetuity license or is it an additional licence? if it is just another option then the market will dictate if it sticks, if a large percentage move over to either cloud or subscription then other product will go that way, if nobody take it up then it’ll die. Companies test the market all the time the things that work become standard those that don’t fall by the way side.
    Is this a way to try to combat people using pirated copies of the software?

    1. No, the Creative Cloud license is scheduled to replace the existing subscription model…

      As far as I understand, the in perpetuity license model will continue to be available. But the policy of requiring an upgrade for every version is where I have an issue…for so many of us, it’s just not economical to upgrade every single issue. For people like myself who can justify the expense based on business models, training, education, and such – upgrading every version was going to happen anyway, but there is a distinct portion of users that are in effect being kicked to the curb so the goal is to voice the concerns of that under-represented group to hopefully get Adobe to re-consider.

  5. The point is this – each user will have to do their own calculations based on their own circumstances ONCE WE HAVE ALL THE INFORMATION. We’re jumping to conclusions on the basis of minimal facts.

    Some will decide that their current license will do just fine, and they don’t need to upgrade from some years. Some will decide they want to continue with perpetual licenses for as long as they’re available. Others who upgrade their software every time may decide the cloud subscription is better for their circumstances.

    We can’t point blank say that renting is better than buying, or vice versa. Each person has to make that decision based on their own circumstances and needs – ONCE WE HAVE ALL THE INFORMATION.

  6. You’ve said twice that “They are confusing the subscription model with the Creative Cloud.” Where? I can’t see that.

    Adobe aren’t hiding the fact that the Creative Cloud is a subscription.

    You ‘rent’ a lot of stuff. Web space. Dropbox. Email servers.

    Renting, if priced cheaper than buying, can be a better deal than buying IF you would upgrade every version and don’t continue to need the software after your subscription ends. So for Adobe’s loyal customers, it could be a very good deal.

    Yes, if you buy a perpetual license, you have something to show for it – but it’s only any good for as long as you have a computer and operating system that supports it, so there’s still a fixed lifetime on it.

    The point is, they’re not forcing a subscription service on us, at least for the foreseeable future. We don’t HAVE to buy into the cloud. We have choice based on our own personal circumstances. This is what’s on the table – a perpetual license or a subscription license. And we get to choose which we buy.

    1. That’s a big IF:

      1. Renting is cheaper IF you upgrade every version
      2. AND you don’t need the software after the subscription ends

      To Adobe loyal, it’s not a good path, because upgrade pricing is still the same as it not cheaper than subscription pricing…

      The only way it makes sense to rent is if the cost to own is higher – and I would qualify that as “considerably higher”…

      One last time – renting is never a good idea for the renter. Basic business tenet.

      This is why landlords are usually well off. Property owners make money, property renters do not. Car owners make money, car renters do not. Software owners (Adobe) makes money. Software renters do not. Only when Adobe either:

      a) lowers the cost of renting substantially, or
      b) increases the cost of ownership substantially

      will renting become an economically viable option over ownership.

      Thank GOD they are giving us that option – but my fear is that the option will go away…and that this subscription option will be spun in a favorable way such that people who don’t get shown the light will never realize they are paying more than they should! (given the current pricing model)

      For what it’s worth – I don’t pay for Dropbox – I use the free one. Same goes for Gmail. Webspace? Okay, ya kinda got me there, but only “kinda” because the cost of ownership isn’t just hardware – it’s also time and management of said web server…and my time is worth something to me. here we are talking about a physical commodity being subjugated to a service commodity.

  7. Jason, the problem is you’re comparing apples and oranges.

    Look at that top line in your table. Master Collection – total cost of ownership over 24 months = $3096. Now look at the comparable Creative Cloud subscription. $1200 for the same period. For anyone who every release, that’s a bargain! It’s also a far lower barrier to entry for anyone getting started.

    It all comes unstuck when we start comparing a single product perpetual license with the entire suite cloud. But then, that’s apples and oranges.

    WE DON’T HAVE ALL THE INFORMATION.

    All we have so far is an initial basic press release which gives a single price for a single package. We don’t know what else is yet to come – and that could include smaller packages, like their smaller suites. We don’t know yet.

    There’s some extra info on my blog post, which may be of interest, and I’ll carry on adding to it as I find out additional information.

    1. Again – the Creative Cloud is a subscription service though, and at the end, you’ve paid the same amount as you would have otherwise, but with nothing to show for it!

      And the $3096 is for the cost of renting under the current subscription model
      The cost under the Ccloud is $1200
      The cost under renewing a perpetual license is $1200

      How in this picture is renting a good idea?

      Renting is never good over buying outright…that’s point 1 of the conclusion

      1. I wondered where the $3096 had come from. Ok, difference figure. Buy Master Collection outright, $2599, plus one update during a 24 month period, at $599, is $3198, vs the cloud at $1200.

        For someone starting out, who intends to stay up to date, the cloud is worth considering.

        For someone who already has a license, it’s more debatable.

        For someone who doesn’t need the whole suite, the debate continues further and needs a lot more information before a decision can be made.

Leave a Reply

Your email address will not be published. Required fields are marked *