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> But our businesses are viable as subscription services, and not as one-off or ad-hoc puchase models. Doesn't explain businesses that had been per-purchase fo

by xg15 4y ago

> But our businesses are viable as subscription services, and not as one-off or ad-hoc puchase models. Doesn't explain businesses that had been per-purchase for a long time and are now still switching to subscriptions though. (E.g. photoshop, jetbrains...)

manigandham 4y ago
Restate it as "more viable".
- xg15 4y ago
  Yeah, I'll restate that as "more profitable", a.k.a. "we're greedy and if we can make more money by lowering the quality of our products and restricting the range of people who can use them, of course we'll do that."
  - manigandham 4y ago
    More profitable, of course. Why do you assume a corporation wouldn't do that? That doesn't mean the rest of your statement, but if that happened then competition in a free market would take care of it. Perhaps you can start the next billion-dollar Adobe?
isoprophlex 4y ago
Jetbrains actually aren't that user hostile: buy a yearly subscription now, and you get a perpetual licence for the current version.
cplli 4y ago
I wouldn't throw Jetbrains in the same boat. I quite like their pricing model. You get to keep the last version, so you're basically paying for updates in the end (which are worth it IMO). On top of that, you get a discount after the first year.
- xg15 4y ago
  Yeah, Jetbrains' model is one of the better ones in that. At least your money doesn't completely vaporize with that, even though you'll still lose a year of features and improvements once you cancel.
  - Semaphor 4y ago
    You’ll lose it now, but under the old model you would never have had those features and improvements. While it took a community outcry, I think Jetbrains now has the best subscription model, that’s a positive for both users and the company.
    - xg15 4y ago
      I still think there is a bit of a dark pattern in it, because when you cancel, you have to give up features which you've already been using for a year and likely integrated into your workflow. In the worst case, there were some breaking format changes and your project files are not compatible with the version you'll be rolled back to. They could just let me keep the version I already have and block me from future updates. The way, they set it up right now, they are deliberately causing some disruption when unsubscribing.
      - codq 4y ago
        My favorite pricing model is by the note-taking app Agenda[0]. It's called a Cash Cow[1] model—you make a one-time purchase, which allows you updates for the next year. At the end of the year, you can either purchase another year of updates, or enjoy the full-featured app you currently have. The thing keeping me from subscriptions is the fact that if you decide you no longer want to pay, you no longer get access. This encourages devs to continue to ship great updates, while not gimping your software at the end of the payment term. [0] https://agenda.com/ https://agenda.com/ [1] https://drewmccormack.medium.com/a-cash-cow-is-on-the-agenda-138a11995595 https://drewmccormack.medium.com/a-cash-cow-is-on-the-agenda...
ChildOfChaos 4y ago
Agreed, it's usually nothing to do with the fact they weren't viable before, it's just that subscriptions are more profitable. With cost of living crisis and such, soon enough though it won't be able to last. People are already cancelling one of the biggest main subscriptions they have (netflix). Also I fear this is really changing society. Many years ago, as you got older you got into a better place in life because you had saved up and bought all the stuff you need and slowly aqquired good equipment and everything you need. Now our lives are full of tech that needs to be replaced every couple of years, heck even now headphones have gone wireless, your headphones needs replacing every few years and now with more and more things being subscription, it's fine when your are young, but your not able to save so much as your constantly having to replace/buy new stuff, when your older what happens? You don't have the same stuff you would have built up in the past, you need to keep paying for it all.
- K0balt 4y ago
  This is a much bigger deal than most people appreciate.
- pakitan 4y ago
  > Also I fear this is really changing society. Many years ago, as you got older you got into a better place in life because you had saved up and bought all the stuff you need and slowly aqquired good equipment and everything you need. Your grandfather's wheelbarrow didn't need replacing every 2 years but he also didn't have Netflix. You can easily have your grandfather's lifestyle by buying a future-proof wheelbarrow and cancelling your Netflix subscription.
  - williamtrask 4y ago
    Believe it or not the wheelbarrow was considered modern technology at one point. Software is fixed cost to create and near-free to distribute. Sure there are tiny cloud costs for running things and maybe you need a couple engineers to fix bugs, but the subscription pricing model doesn’t fit this.
    - 4y ago
rco8786 4y ago
Dear customers: Also, we realized that even when our ad-hoc purchase models were working that we could triple our margins by making it a subscription service and most people just went along with it.
yarky 4y ago
It does though. Once a new money-making strategy is found to work by a market participant, others will try that same path (it's a competition). The fact that so many companies are moving to the subscription model shows that it works better than others.
- xg15 4y ago
  Yes, and if at some point drugging the users became legal, then the market would adopt this as well if it lead to more profit.
danielvaughn 4y ago
These weren’t online, so you had to pay for new versions of the software. Do you want to pay again each time a new version of a website is released?
isitpro 4y ago
What explains some of that is that when the whole eco system shifts and now each of your competitors has recurring revenues you can not compete. Want to run an ad? Prices have gone way up because you're the only one that's clinging to the old model. Want to pay premium to hire someone better? You can't, your competitor can because they have turned to subscriptions. In many cases your hand is forced. Customers vote with their wallets and social shares. If you find a product that it a one time purchase, then you should share it, post about it since you will be rewarding the company, for they sure are not able to compete on customer acquisition.
cptaj 4y ago
Heated seats
Joeri 4y ago
Software used to require little maintenance work. You would buy your software and run it without a single byte changed for 5 or 10 years, and then buy a new version. This worked because OS updates were rare, and everything was local and file-based. In the modern era though software requires continuous maintenance, because we expect our data to move freely between all our devices and the cloud, because operating system vendors force breaking changes often (especially apple), because we expect more integrations with other software, and in general because we expect software to continually receive feature updates. This maintenance has to be paid somehow, and subscriptions have proven to be the most acceptable model. Jetbrains is a great example, because with a steadily growing ecosystem of third party developer tools that they must integrate with, their maintenance cost is probably high and rising. We expect our IDE’s to support everything under the sun but balk at paying for the never-ending work needed to support that. Something’s gotta give in that equation.
- microtonal 4y ago
  I fully agree with your JetBrains point. I use Rust and CLion and they have to continually adapt to new Rust features, etc. I happily pay for my JetBrains All Products Packs and their model is better than most subscriptions, since you get to keep versions that were released 12 months before the end of you subscription. However, there are a bazillion other applications -- password managers, note taking applications, Git clients, you name it, for which this is not true. I made a very niche-specific GUI application in 2010-2012 (a search application for Dutch treebanks), written with Qt. It runs on Windows, macOS, and Linux. It's effectively abandonware or just done (depending on your perspective). I have released updates since then to make sure it keeps running on the latest OS versions. It takes me, maybe 2-4 hours per year? (Typically replacing some deprecated Qt APIs and I there was one libxml2 API change.) I think a lot of software companies just want to get on the gravy train. Usually, their yearly price is close to what a perpetual license used to cost. So if you successfully switch to a subscription model, you have much more income than before. The primarily loser here is the user. You are poorer after an application switches to a subscription model. If a company goes bankrupt or decides to pull the plug, better hope that your data is not in a proprietary format (while I can still run some old WordStar in DOSBox and open old files).
- 4y ago
O__________O 4y ago
It does, as OP mentioned, they’re making money doing it and it’s a better business model for number of reasons. For example, Adobe is the largest SaaS by revenue: https://www.mikesonders.com/largest-saas-companies/ https://www.mikesonders.com/largest-saas-companies/ — Model clearly works if you look at Abobe’s revenue per year since 2004: https://www.statista.com/statistics/266399/revenue-of-adobe-systems-worldwide-since-2004/ https://www.statista.com/statistics/266399/revenue-of-adobe-... — Here’s a detailed history of Abobe, if you’re interested in the SaaS part, just search for “SaaS” on the page: https://producthabits.com/adobe-95-billion-saas-company/ https://producthabits.com/adobe-95-billion-saas-company/
bluepizza 4y ago
Photoshop was way too expensive. Adobe’s subscription system saw most of their illegal users drop their cracked versions and move to a subscription.
pyrrhotech 4y ago
take a look at ADBE stock chart before and after they switched to SAAS model
- ekianjo 4y ago
  stock pricings are poor indicators of performance.
  - pyrrhotech 4y ago
    in the short run, yes, in the long run, no
torginus 4y ago
These kinds of software used to be always kind of subscription based - as new language features came out, new IDE features got added, the platform got updated to support new OSes, you would find that Company X would release IDE 2.0 Even if for some reason you didn't need all of this, IDE 1.0 would eventually stop getting updated and the bugs would stop getting fixed, so you would naturally need to update. Considering people naturally want the latest and greatest, and devs hate maintaining legacy stuff, a subscription makes sense in this case.
- xg15 4y ago
  That's moving the goalposts. "Paying for updates" is not the same as a subscription. A subscription is if I pay automatically, no matter what - and usually, I will get some negative change to the status quo once I stop paying: I might lose access to the service immediately, I might be downgraded to a previous version, etc etc. > Considering people naturally want the latest and greatest They often don't. Especially with updates, those are often far more in the interests of the developers than of the users. That's why so much development effort has gone into auto-updating schemes. Remember how much effort Microsoft had to invest to get people off Windows XP. A large part of their userbase would have been perfectly fine with staying on XP for all eternity. It was Microsoft who wanted them to update to Vista, not the users.

by xg15 4y ago

manigandham 4y ago

Restate it as "more viable".

xg15 4y ago
Yeah, I'll restate that as "more profitable", a.k.a. "we're greedy and if we can make more money by lowering the quality of our products and restricting the range of people who can use them, of course we'll do that."
- manigandham 4y ago
  More profitable, of course. Why do you assume a corporation wouldn't do that? That doesn't mean the rest of your statement, but if that happened then competition in a free market would take care of it. Perhaps you can start the next billion-dollar Adobe?

isoprophlex 4y ago

Jetbrains actually aren't that user hostile: buy a yearly subscription now, and you get a perpetual licence for the current version.

cplli 4y ago

I wouldn't throw Jetbrains in the same boat. I quite like their pricing model. You get to keep the last version, so you're basically paying for updates in the end (which are worth it IMO). On top of that, you get a discount after the first year.

xg15 4y ago
Yeah, Jetbrains' model is one of the better ones in that. At least your money doesn't completely vaporize with that, even though you'll still lose a year of features and improvements once you cancel.
- Semaphor 4y ago
  You’ll lose it now, but under the old model you would never have had those features and improvements. While it took a community outcry, I think Jetbrains now has the best subscription model, that’s a positive for both users and the company.
  - xg15 4y ago
    I still think there is a bit of a dark pattern in it, because when you cancel, you have to give up features which you've already been using for a year and likely integrated into your workflow. In the worst case, there were some breaking format changes and your project files are not compatible with the version you'll be rolled back to. They could just let me keep the version I already have and block me from future updates. The way, they set it up right now, they are deliberately causing some disruption when unsubscribing.
    - codq 4y ago
      My favorite pricing model is by the note-taking app Agenda[0]. It's called a Cash Cow[1] model—you make a one-time purchase, which allows you updates for the next year. At the end of the year, you can either purchase another year of updates, or enjoy the full-featured app you currently have. The thing keeping me from subscriptions is the fact that if you decide you no longer want to pay, you no longer get access. This encourages devs to continue to ship great updates, while not gimping your software at the end of the payment term. [0] https://agenda.com/ https://agenda.com/ [1] https://drewmccormack.medium.com/a-cash-cow-is-on-the-agenda-138a11995595 https://drewmccormack.medium.com/a-cash-cow-is-on-the-agenda...

ChildOfChaos 4y ago

Agreed, it's usually nothing to do with the fact they weren't viable before, it's just that subscriptions are more profitable. With cost of living crisis and such, soon enough though it won't be able to last. People are already cancelling one of the biggest main subscriptions they have (netflix). Also I fear this is really changing society. Many years ago, as you got older you got into a better place in life because you had saved up and bought all the stuff you need and slowly aqquired good equipment and everything you need. Now our lives are full of tech that needs to be replaced every couple of years, heck even now headphones have gone wireless, your headphones needs replacing every few years and now with more and more things being subscription, it's fine when your are young, but your not able to save so much as your constantly having to replace/buy new stuff, when your older what happens? You don't have the same stuff you would have built up in the past, you need to keep paying for it all.

K0balt 4y ago
This is a much bigger deal than most people appreciate.
pakitan 4y ago
> Also I fear this is really changing society. Many years ago, as you got older you got into a better place in life because you had saved up and bought all the stuff you need and slowly aqquired good equipment and everything you need. Your grandfather's wheelbarrow didn't need replacing every 2 years but he also didn't have Netflix. You can easily have your grandfather's lifestyle by buying a future-proof wheelbarrow and cancelling your Netflix subscription.
- williamtrask 4y ago
  Believe it or not the wheelbarrow was considered modern technology at one point. Software is fixed cost to create and near-free to distribute. Sure there are tiny cloud costs for running things and maybe you need a couple engineers to fix bugs, but the subscription pricing model doesn’t fit this.
  - 4y ago

rco8786 4y ago

Dear customers: Also, we realized that even when our ad-hoc purchase models were working that we could triple our margins by making it a subscription service and most people just went along with it.

yarky 4y ago

It does though. Once a new money-making strategy is found to work by a market participant, others will try that same path (it's a competition). The fact that so many companies are moving to the subscription model shows that it works better than others.

xg15 4y ago
Yes, and if at some point drugging the users became legal, then the market would adopt this as well if it lead to more profit.

danielvaughn 4y ago

These weren’t online, so you had to pay for new versions of the software. Do you want to pay again each time a new version of a website is released?

isitpro 4y ago

What explains some of that is that when the whole eco system shifts and now each of your competitors has recurring revenues you can not compete. Want to run an ad? Prices have gone way up because you're the only one that's clinging to the old model. Want to pay premium to hire someone better? You can't, your competitor can because they have turned to subscriptions. In many cases your hand is forced. Customers vote with their wallets and social shares. If you find a product that it a one time purchase, then you should share it, post about it since you will be rewarding the company, for they sure are not able to compete on customer acquisition.

cptaj 4y ago

Heated seats

Joeri 4y ago

Software used to require little maintenance work. You would buy your software and run it without a single byte changed for 5 or 10 years, and then buy a new version. This worked because OS updates were rare, and everything was local and file-based. In the modern era though software requires continuous maintenance, because we expect our data to move freely between all our devices and the cloud, because operating system vendors force breaking changes often (especially apple), because we expect more integrations with other software, and in general because we expect software to continually receive feature updates. This maintenance has to be paid somehow, and subscriptions have proven to be the most acceptable model. Jetbrains is a great example, because with a steadily growing ecosystem of third party developer tools that they must integrate with, their maintenance cost is probably high and rising. We expect our IDE’s to support everything under the sun but balk at paying for the never-ending work needed to support that. Something’s gotta give in that equation.

microtonal 4y ago
I fully agree with your JetBrains point. I use Rust and CLion and they have to continually adapt to new Rust features, etc. I happily pay for my JetBrains All Products Packs and their model is better than most subscriptions, since you get to keep versions that were released 12 months before the end of you subscription. However, there are a bazillion other applications -- password managers, note taking applications, Git clients, you name it, for which this is not true. I made a very niche-specific GUI application in 2010-2012 (a search application for Dutch treebanks), written with Qt. It runs on Windows, macOS, and Linux. It's effectively abandonware or just done (depending on your perspective). I have released updates since then to make sure it keeps running on the latest OS versions. It takes me, maybe 2-4 hours per year? (Typically replacing some deprecated Qt APIs and I there was one libxml2 API change.) I think a lot of software companies just want to get on the gravy train. Usually, their yearly price is close to what a perpetual license used to cost. So if you successfully switch to a subscription model, you have much more income than before. The primarily loser here is the user. You are poorer after an application switches to a subscription model. If a company goes bankrupt or decides to pull the plug, better hope that your data is not in a proprietary format (while I can still run some old WordStar in DOSBox and open old files).
4y ago

O__________O 4y ago

It does, as OP mentioned, they’re making money doing it and it’s a better business model for number of reasons. For example, Adobe is the largest SaaS by revenue: https://www.mikesonders.com/largest-saas-companies/ https://www.mikesonders.com/largest-saas-companies/ — Model clearly works if you look at Abobe’s revenue per year since 2004: https://www.statista.com/statistics/266399/revenue-of-adobe-systems-worldwide-since-2004/ https://www.statista.com/statistics/266399/revenue-of-adobe-... — Here’s a detailed history of Abobe, if you’re interested in the SaaS part, just search for “SaaS” on the page: https://producthabits.com/adobe-95-billion-saas-company/ https://producthabits.com/adobe-95-billion-saas-company/

bluepizza 4y ago

Photoshop was way too expensive. Adobe’s subscription system saw most of their illegal users drop their cracked versions and move to a subscription.

pyrrhotech 4y ago

take a look at ADBE stock chart before and after they switched to SAAS model

ekianjo 4y ago
stock pricings are poor indicators of performance.
- pyrrhotech 4y ago
  in the short run, yes, in the long run, no

torginus 4y ago

These kinds of software used to be always kind of subscription based - as new language features came out, new IDE features got added, the platform got updated to support new OSes, you would find that Company X would release IDE 2.0 Even if for some reason you didn't need all of this, IDE 1.0 would eventually stop getting updated and the bugs would stop getting fixed, so you would naturally need to update. Considering people naturally want the latest and greatest, and devs hate maintaining legacy stuff, a subscription makes sense in this case.

xg15 4y ago
That's moving the goalposts. "Paying for updates" is not the same as a subscription. A subscription is if I pay automatically, no matter what - and usually, I will get some negative change to the status quo once I stop paying: I might lose access to the service immediately, I might be downgraded to a previous version, etc etc. > Considering people naturally want the latest and greatest They often don't. Especially with updates, those are often far more in the interests of the developers than of the users. That's why so much development effort has gone into auto-updating schemes. Remember how much effort Microsoft had to invest to get people off Windows XP. A large part of their userbase would have been perfectly fine with staying on XP for all eternity. It was Microsoft who wanted them to update to Vista, not the users.