It's time for Photoshop customers to think carefully about how to pay for the software, because Adobe Systems is curtailing upgrade deals to steer people toward a new $600-per-year subscription for a wide range of its products.
Subscription pricing, in which a person gets rights to use software for period payments, has been a mixed success in recent years. Red Hat has made it work with Linux and related server software, but Microsoft's enthusiasm for subscription pricing seems to be emerging mostly through online services such as Office 365.
Adobe--a software powerhouse going through a rough patch with layoffs and with Web standards hurting its Flash business--is making a big bet on subscriptions for its Creative Suite (CS) products. Some customers, though, aren't happy about the change.
Adobe announced the new upgrade and subscription pricing earlier this month--but the issue started ringing alarm bells for many only yesterday when one authority--Scott Kelby, president of the National Association for Photoshop Professionals--objected in an open letter to Adobe.
Kelby asked Adobe to reconsider its position that only those who already owned Photoshop CS5 would be able to pay a lower upgrade fee when Photoshop CS6 is released, saying it was the wrong thing to do:
While I understand that Adobe needs to make business decisions based on how it sees market conditions, I feel the timing of this new pricing structure is patently unfair to your customers (and our members). Here's why: You didn't tell us up front. You didn't tell us until nearly the end of the product's life cycle, and now you're making us buy CS5.5 for just a few months on the chance that we might want to buy CS6 at a discount when it's released. Otherwise, we have to pay the full price as if we were never Adobe customers at all.
Kelby's post generated plenty of ill will toward Adobe in more than 300 comments. Several people pointed to Netflix and Bank of America pricing changes that generated a loud customer backlash.
"Plenty of businesses will upgrade software/equipment/cars/cameras every second or third cycle. Especially in the current economic environment," complained Paul Wright. "This forced upgrade [is] punishing the individuals and small businesses that form the backbone of Adobe's client base...Goodwill and credibility are hard won over time, but can evaporate in a heartbeat."
And Doug Evans said, "We at Evans Cooling Systems have Adobe software installed at three different locations and have no budget for upgrades. We use Adobe and Autodesk products, but have sought out alternatives for the Adobe offerings as we prioritize our upgrade paths," including Phase One's Capture One and QuarkXPress.
For a perpetual license, Photoshop CS5 and costs $699 for the full version and $199 for an upgrade. (Photoshop version numbers can get complicated: the current CS5 version is part of various CS5.5 suites.)
When CS5.5 arrived in May, Adobe started offering a subscription plan that let people obtain access to the software by paying monthly or annually. Photoshop, for example, costs $49 per month or $348 per year, while the full Master Collection suite of just about everything Adobe makes costs $199 per month or $1,548 per year.
Given how close those prices are to the perpetual license, there's not much incentive to move to the subscription plan. Sure, you'll get upgrades for free as long as you keep paying, but on the flip side, but if you stop paying you have to stop using the software.
The new order
But beginning with a newer plan called the Adobe Creative Cloud that's just entered beta testing, those subscription prices will start looking a lot more compelling.
When the Creative Cloud launches in full in the first half of 2012, $49.99 per month will get customers access to the full suite--Illustrator, InDesign, Premiere Pro, Flash Pro, After Effects, Dreamweaver. It'll also cover new Web-standards development tools, Edge and Muse. And it'll include the Adobe Touch apps for tablets, a collection of six pro-oriented programs that just were launched for Android tablets. It may not be a great deal for Photoshop-only customers, but the more apps a person uses, the more compelling the offer becomes.
Some caveats: $49.99 is the monthly rate if you sign up for a whole year. And it's the individual price; for "workgroups," the corresponding cost will be $69.99 per seat. Adobe hasn't released the month-to-month pricing for those skittish about a longer-term commitments.
In a response to Kelby's letter, the company said it plans to make its case starting next week:
Our aggressive subscription price for Adobe Creative Cloud--$49 per month for every Adobe Creative Suite application, our new touch apps and new cloud-based services--will provide incredible value for the creative community and we will clarify and promote these benefits to our customers over the next few months. The changes to our upgrade policy, for customers who would like to continue to purchase CS software as a perpetual license, benefits customers who are on the latest versions of our software. We have promotions that enable customers to upgrade to the latest CS version ahead of CS6 at a reduced rate--at the moment we are offering 20 percent off any upgrade to the latest version of their Adobe software.
A 20 percent discount helps cushion the blow for those who choose to keep buying software the same old way, of course. But it's clear Adobe has a lot more convincing--and explaining--to do.