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January 15
Adobe’s Profitability and Licensing

Meta: I wrote this a few months ago, but I'm finally posting it now. I've since had an opportunity to poke at some of the things I wrote here, some of which became true, and will have more thoughts on that later.

Outside of news at the high end of the enthusiast desktop microprocessor market, tech hasn't done anything that I specifically want to write a lot about for a while. I'm getting back into the swing of things after not posting for a while, due to NaNoWriMo, and I figured an easy thing to talk about would be Adobe. This is partly adapted from a tweet (and replies) I posted a few months ago.

For context, Adobe released some earnings information a few months ago.

Perhaps the most relevant bit is this:

Adobe achieved record quarterly revenue of $1.77 billion in its second quarter of fiscal year 2017.

Adobe says a few more things here, but what it boils down to is essentially… they killed off most of their perpetually licensed software products and replaced them wholesale with services that include desktop software.

Even though this ostensibly happened a few years ago, profits are up-up-up. It makes sense, you could buy Creative Suite 6 up through around a year ago by calling in, but that has since stopped.

Adobe Creative Cloud is kind of a near-and-dear subject to me in a weird way. Long ago, I was a photography student, so I came to the university with my Mac and very shortly after it was available, I purchased a copy of Adobe Creative Suite CS3 Design Standard, and a copy of Dreamweaver CS3 on the side. I did this because I wanted to be able to use Photoshop and Bridge, with Illustrator and InDesign, and I wanted to build a web site, but I didn't particularly care for Flash.

I used that copy until I stopped having a Mac and then I handed it off to another person who needed it and had gotten a Mac. They used it until it stopped working well with the current versions of Mac OS X.

Part of why this was possible was educational pricing. The other part is due to the perpetually licensed nature of software at the time I could keep using these tools for several years without paying for them over again. I had what I needed, I didn't have things I didn't need or couldn't use, and because I wasn't swapping files with other users of these programs, issues surrounding format compatibility weren't important.

When Adobe announced Creative Cloud, it was initially an alternative licensing scheme. It looked like it would be a great deal for people who frequently needed to buy newer copies of the software to keep up with feature needs or with collaboration, and for people who needed all or most of the different functions.

Despite the fact that Adobe didn't (and honestly, still doesn't) do a whole lot to make Creative Cloud really compelling as a cloud service, it's compelling pricing and it's interesting and likely effective as a way to encourage people to stay up to date, but as Creative Suite 6 is no longer available and as Adobe makes it more and more difficult to purchase licenses to Acrobat and Lightroom separately of the rest of the Creative Cloud (or outside of Document Cloud and the Creative Cloud Photography plan) it becomes less and less compelling for people who don't need all of these products to stick with Adobe at all. Lightroom 6 appears to still exist, but you need to dig deep to find it. The same is true of standalone versions of Acrobat Professional.

I would be more amenable to the idea of, say, using an educational discount if Adobe's terms for that product didn't dictate that students can now only use the "special" educational rate for one year. After that, the rate goes up to $360/year, which is still less than the $600 yearly retail cost, but less easy to swallow than the old cost, which might have been $300 once in an educational career, and certainly less amenable than the $240/year special they advertise heavily to students.

If I may, I'd like to take a detour into Office licensing. Microsoft releases new versions of its Office software suite every "few" years. Historically, they change the file format a bit less than once a decade, and they allow any "supported" (basically, today minus ten years) version of Office to connect to hosted services such as OneDrive, SharePoint Online, and OneDrive for Business.

Buying a full, perpetual copy of Office is still relatively easy to do and has always been an "expensive but not that expensive" proposition. $150 for the home version and $400 for the professional version is the current pricing. Buying Office 365 access ranges from $80 for four years to $150 yearly, depending on the customer and the desired functionality.

For the subscription service, Microsoft does the right thing by integrating Office with services people are likely already to have (Skype, Hotmail/Live/Outlook) and adding benefits such as a terabyte of storage space. On the "regular" home version of Office 365, the software can be installed on up to five Macs or PCs (compare with "One" for Adobe, and with no good way to license it twice for convenience) and up to five sub-accounts can be created with their own e-mail, Skype, and OneDrive service. In a family situation, these services can be used to reduce the cost of licensing Office for everybody's computer.

Adobe, on the other hand, provides 20 gigabytes of storage space which appears to include the space needed to host your portfolio web site. I can't imagine in what context 20 gigabytes of space is a particularly useful online storage bucket for tools like Photoshop and Premiere Pro. It's not unimaginable for a single large Photoshop project to exceed 20 gigs. The photo upload folder from my cell phone is just shy of 15 gigs. A single particularly active day shooting with my eight-year-old digital SLR camera can yield 15+ gigs of data. My newer camera has a 128-gig memory card in it, and can shoot video.

It seems preposterous that 20 gigabytes of space would have any use at all for work in most of Adobe's applications. And then Microsoft goes and gives you a whole terabyte of space to use for your resume and your taxes – documents that use mere kilobytes of space.

There are rumors (although, nothing solid from Adobe) that a next-generation Lightroom component or perhaps a stand-alone Lightroom service will offer more storage space, to do something Apple and Google (and Microsoft, to a certain extent) have been trying to do for a few years now: put The Cloud at the center of a photo workflow.

I think this could be the pivot that would make paying monthly for an Adobe cloud service centered around having enough room to store a full photo and video library make sense. In total, I probably have a bit under 400 gigabytes of photos and videos I have shot over the years. A perpetual problem of mine has been managing the library with multiple computers, and quickly accessing images when I am not at my "main" or "photo" computer. (Mostly because good software to manage photo libraries costs a lot to license for several computers.)

The rumor that has been floated was that Adobe is working on a browser-based version of Lightroom that uses the library stored primarily in a new terabyte of online space, and presumably syncs to mobile and desktop versions on client computers. With the correct synchronization and setup (As I mentioned on Twitter, I have wanted to use my iPad to view and organize photos since I've had one, which was literally the day they were available at retail) it should be possible, perhaps even easy to pull a bunch of new images into an iPad and have them magically go to your main photo computer and your online account, where they are backed up.

iPads are fast enough to view and work with photos, and their beautiful, accurate, high-resolution displays should make them particularly good at it. Apple has also been selling USB connectivity hardware to make image transfer from cameras and storage hardware for long enough that it feels like a shame this doesn't already exist.

This one change on its own doesn't justify the fact that Creative Cloud is $600 yearly. It seems problematic that there's no good way for somebody who wants to run a simple pure HTML web site to do so with Dreamweaver, or that Flash should be perpetually locked behind one of these plans.

I don't know if there's a good way to solve this problem. Without doing things like watermarking the output of programs (which can dampen even hobbyist or educational output) or returning to a system where subscription tiers are based on what applications are available, and adding the highest end applications, such as those used for audio and video processing, is what gets you to the most expensive bundles.

I understand why Adobe did it, I understand the product stack simplicity and the fact that this allows users to grow into parts of the suite they may previously have considered unavailable. (For example: using Premiere Pro to build videos to put on your web site, to add a video track to a podcast you edited in Audition, or to build a title sequence for your video in After Effects.)

As somebody who uses other tools for some of these tasks, and doesn't have time to grow out of some of the more basic tools, the best option really does appear to just, as I said in the last tweet of the thread, go elsewhere.

Not every Adobe product has a viable competitor, but realistically, most of them do. If my focus is print design with inDesign, I can go look at Microsoft Publisher or Quark XPress (whose financials might be interesting to look at these days.)

In the early days as Adobe started to push Creative Cloud and announced that CS6 would not be updated and would not be replaced with a CS6.5 or CS7, many opined that it would be their undoing. It appears clear now that Adobe has no trouble maintaining profitability with every product they sell being a subscription. I would further argue it has always been clear subscription-based licensing is best for software vendors, and that they have a lot of incentive to move in that direction. The primary limitation has always been connectivity, which by the late 2010s had been resolved.

It's possible that in the overall computing market, the good of this will outweigh the bad, as people who can't bear Adobe's licensing model move to competitors that once looked like they would languish to their death (I'm looking at Quark with this one), and as new competitors (Affinity, Pixelmator, Pinegrow) appear to attempt to undercut high end graphics software.

As such, I don't think Adobe is looking to "fix" the "problem" that their software is largely inaccessible. I don't even believe they believe it's a problem. There's also the question of what it means to be accessible, in this sense. Just because you could go to CompUSA and buy a copy of Flash MX or inDesign CS off a shelf, were those products any more "accessible" at their prices and with the complexities of licensing them, especially with issues such as upgrade pricing and cross-platform changes.

This kind of issue is part of what motivates open source software developers, which is good. However, most open source software makes a poor or barely viable replacement for these kinds of tools. Often, while you're learning generic concepts in an education program, you're also learning the mechanics of specific tools that are common in an industry. Using a variant of Blender meant for video editing may be worthwhile for a home movie, and is probably even a good tool in general, it's unlikely to be or to even be like what is used in professional contexts, and could teach "bad" workflow habits or techniques.

Likewise, the interface on GIMP is intentionally very different from that of Photoshop. Compare with LibreOffice, which aggressively styles itself after Microsoft Office 2003, for a variety of reasons. Scribus, similarly, avoids making itself look like InDesign or Xpress, the industry standard print layout tools.

Whether this is meant because these developers think they can design better software than professionals who both do this work and have been working on this software for years, or if it's done out of malice, I couldn't tell you. That also sidesteps the fact that most of this software simply isn't set up to deal with certain issues. Scribus is, at best, a competitor to Microsoft Publisher, and GIMP is, at best, a competitor to Paint Shop Pro, essentially.

At the end of the day though, a budget is a budget and it's up to computer users to decide what theirs is and find solutions that work within it. Adobe has never been about building budget conscious software, and Creative Cloud is nothing if not an affirmation of Adobe's believe that they are at the top of their markets.


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