Author's note:  The subject of this essay necessitates the mention of brand names.  The author does not have a financial relationship with any company mentioned -- nor with any of the mentioned companys' competitors.

One of the most unpopular and controversial, and yet lucrative developments in commercial software is the migration of certain products from a perpetual license model to a subscription payment approach.  Included in this trend is a giant in the image postprocessing field, Adobe, with their various photography and graphics arts products such as Photoshop and Lightroom.  Despite adamant complaints from those opposed to monthly payments and the lockin thus produced (significant features stop working once a subscription lapses), Adobe has become enormously profitable under the scheme -- no doubt due in part to the fact that their overwhelmingly dominant position in the market leaves customers with few alternatives.  However, every action has a reaction, and a number of competitors have been given a new lease on corporate life, at least in part due to the pent up demand for an alternative.

Because the subscription model represents a fundamental change in the way commercial software, and image processing software in particular, is delivered, it seems worthwhile to take a look at the phenomenon and to examine its pros and cons.  We begin, however, with a few observations on the nature of the evolution of software from its infancy to maturity -- and, most relevantly to the current topic, beyond maturity.

The Software Sweet Spot

Software programs usually begin life as a useful idea, codified into a computer based product that meets a particular need or preference.  Early versions are sometimes not particularly feature-rich and may be a bit buggy in the beginning.  But, despite these shortcomings, if a product fulfills a need -- and particularly if it is among the first available with a particular set of features -- the product may establish a solid position in the marketplace, generating enough cash flow to foster continued development and delivery of successive generations of enhanced versions.  At some point, the initial program architecture may require revamping as new features are added.  But for customer/consumers, the key is that the addition of new and useful features generates a demand for succeeding releases of the product.

However, at some point a natural critical mass of features is reached, and from that point on the thinking-up and implementation of new useful and attractive features begins to reach a point of diminishing returns from a user perspective.  For implementations based on the perpetual license model, this means that customers tend to begin skipping a generation or two of the software upgrades, resulting in a reduced cash flow and financial pressure on the development team and their managers and investors.  But no company wants to work itself out of business, so the cycle of periodic upgrades continues, with each new version delivering less and less new primary functionality and more and more nice-to-have but not fundamentally game changing frills and user interface eye candy.

As a result, many commercial software products reach an apex, a just-right balance point in their development, where form and function are in maximum harmony -- and then they proceed down a path toward ever more baroque and bloated artifacts, the core functionality of which is increasingly overtaken by developer flights of fancy rather than essential features.  If the product is unique and dominant enough in the marketplace then customers will often continue to use the software despite a growing rumble of complaints and searches for viable alternatives.  Some will upgrade but others will stand pat with what they have -- think Microsoft Windows 8 and 10 vs. Windows 7, as well as generations of Adobe's various perpetual license image processing products.  But despite a strong overall market position, the viability of the enterprise may come to be at risk once the rich vein of useful features is depleted, and the company may be forced to consider the prospect of reducing the workforce -- something no enterprise manager wants to do.

Cash Flow Perpetual Motion

How to keep the workforce employed and the cash rolling in -- that is the question faced by managers of mature commercial software products, especially those based on the perpetual license model.  Enter the subscription payment model -- the cash flow equivalent of the mythical perpetual motion machine.  From a business perspective, subscription leased software is almost ideal.  It produces a steady and endless cash flow without really requiring anything creative or useful from the development team.  It's almost like printing money rather than earning it.  This is especially true if the developer can sell or embed ancillary services -- such as cloud-based operations -- entangling customer workflow with the company's products and services to the point where exiting the current approach becomes increasing difficult and expensive, not only in terms of initial outlay but in the time and effort required to migrate to a different product line.

The subscription model has many advantages for the seller and few disadvantages, at least in the short run.  But what about consumers?  Clearly with the success Adobe has had there must be advantages to consumers as well.  With that in mind, let's take a summary look at the pros and cons for each side.

Comparison of Perpetual License and Subscription Software
Developer Perspective Pros Cons
Perpetual license
  • Large influx of cash in early stages
  • User skipping of upgrade cycles as useful new features become less frequent
  • Resulting pressure to reduce workforce
Subscription model
  • Endless cash flow, profitability
  • Stability of development team
  • Customer dissatisfaction
  • Competing products may gain following
Customer Perspective Pros Cons
Perpetual license
  • Freedom to choose when to upgrade
  • Cost of individual upgrades
Subscription model
  • Expense predictability and balance -- may be more attractive to pros than casual users
  • New features available more quickly
  • Possible unjustifiable high cost as software matures and desirable new features appear less frequently
  • Lockin to vendor products, services and workflow

Sacking the Strawmen

The subscription model is often justified to potential consumers by companies on the basis of ready and quick availability of new features -- as opposed to waiting until enough new capabilities can be bundled together to justify a more costly major upgrade.  This strikes us as a highly disingenuous strawman argument.  Beyond a certain point in the lifecycle of a product, useful new features become scarce and successive upgrades tend to be less rich in essential workflow features and instead all too often consist of largely nice-to-have-but-not-essential offerings.  Given that over time new features tend to be less and less of the essential variety, subscription-based rapid availability is a byproduct of the subscription approach rather than an advantage to consumers.

An apparent exception in the image postprocessing world is the frequent updates needed to handle new cameras, with their unique RAW file tweaks.  However, in reality even perpetual license software stays current by means of free intermittent releases that incorporate the new cameras.  Thus, this is not the advantage to subscription service that it would first appear.

Another favorite developer claim -- and one that is sometimes parroted by consumer subscription devotees -- is a putative resemblance of the subscription model to the monthly cost of utilities such as power, phone and internet or to auto lease agreements and the like.  However, this is once again a self-serving position on the part of suppliers.  One consumes power, communication services, etc. and thus derives a separate and distinct benefit -- often a very nearly essential benefit in the modern world -- for each month of service.  No such ongoing relationship exists for subscription software that has reached a point where new features can seldom be classed as essential.  Even in the case of auto lease contracts, one has the option to rent with the option to buy and subsequently purchase outright along the way.

The bottom line is that Adobe has become enormously profitable from the subscription model -- great for stockholders and employees, but is it equally great for consumers?  For many the answer has to be no -- if for no other reason than that the relevant products long ago reached a point where essential functionality was in place and new mandatory features have become increasingly sparse and difficult to justify as a customer and user.  If one backs away from the details of the situation and looks at the big picture objectively, it's clear that Adobe is taking in far more money and delivering far less mandatory workflow product than was once true.  It is therefore an inescapable conclusion that, taken as a whole, the total base of customers are paying more for less -- nice work if you can get it but hardly a boon to those paying the bill.

A personal example helps illustrate the point.  I jumped off the Photoshop upgrade bandwagon at version 5.1.  It had everything I needed, and version 6, the last perpetual license version, changed the crop tool in a way that I simply refused to adopt.  Also, as RAW file converter software became more full featured I found myself using Photoshop less and less, to the point where it now forms only a tiny fraction of my workflow.  Likewise, Lightroom was never an alternative, in part because of the same obnoxious crop tool that is in version 6, but also because Lightroom is both a RAW file processor and a digital asset management system -- something that I not only do not need but that I absolutely refuse to be locked into.

Bring on the Alternatives

The subscription model undoubtedly serves many users well or it would not be so widely accepted.  But, on the whole its benefits accrue primarily to developers and not uniformly to everyone across the customer base.  Two factors seem relevant.  First, the existence of capable competitors would materially alter the landscape for customers.  And second, a better alternative is the availability of both approaches in the marketplace.  My current RAW converter offers both options, and I can only hope that that level of choice continues to exist for the foreseeable future.
  © 2017 Michael W. Masters   Return to top