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A Critical Analysis of the Subscription Economy

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Re: A Critical Analysis of the Subscription Economy

#41

Post by zAy0LfpBZLC8mAC »

specialist wrote: post #26
ColanR wrote: post #18

Earlier quoted context omitted.

I think parent's point is about how the company is drawing in cashflow. If the customer owns perpetually a copy of the software, the only reason they'll buy a new copy is if the new one is substantially better than the old: hence, the only way the company makes cash next year is if they've been improving their product. With the subscription model, the company is still going to make that income regardless if they have…

I have a different view. Perhaps because I used to publish my own shareware. Today's current Patreon model is pretty close to how shareware used to work (for me). Buying a license today is investing in future development. I wouldn't pay to use software that's not actively being maintained. Nor would I expect my customers to either.

Which is exactly not the case that's being discussed here?

What is discussed here is the case where you lose the right to use the software if you don't continue to pay, completely independently from what that money is used for, which is why it removes one important incentive to improve the software.

And if your skillset and your data is locked up in some software, it's questionable whether you really would stop paying, and thus stop using the software that you depend on.

Re: A Critical Analysis of the Subscription Economy

#42

Post by zAy0LfpBZLC8mAC »

cwyers wrote: post #27
zAy0LfpBZLC8mAC wrote: post #6

Earlier quoted context omitted.

> As a counter point, I hope that by paying a subscription, I get a continuous stream of small patches with bug fixes, security updates, and design improvements. But you do realize that the subscription model is exactly the thing that removes the incentive to do that, right?

> But you do realize that the subscription model is exactly the thing that removes the incentive to do that, right? Can you name a single case where this has happened with subscription software, though? The big named examples in the article (as far as I could stand to read it, at least) are Adobe Creative Cloud and Microsoft Office 365. Here's the What's New page for Photoshop CC 2017, along with links to the changes…

>> But you do realize that the subscription model is exactly the thing that removes the incentive to do that, right?

> Can you name a single case where this has happened with subscription software, though?

Every single one of them. It's just a matter of logic that that incentive is removed. There might be other incentives that still keep them innovating or whatever (like, say, competition, if it's reasonably possible to migrate away), but that one just logically isn't.

Re: A Critical Analysis of the Subscription Economy

#43

Post by zAy0LfpBZLC8mAC »

softawre wrote: post #36
Houshalter wrote: post #31

It's worth considering what a subscription would be worth as a fixed cost. Like say the company was going to invest the fixed cost into the market, and take the interest as if it was continuous income from subscriptions. Or if a user wanted to just invest a fixed amount of money so the interest will always be there for to pay for the subscription. At 5% interest, a subscription of $1 a month is worth a fixed cost of…

Can you explain why considering the dollar amounts that would earn interest equal to subscription costs has any relevancy into how much these services cost? Or put another way -- what?

I think they meant to use the concept of the time value of money, like this:

https://en.wikipedia.org/wiki/Time_value_of_money#Example_2:...

But their calculation was ... let's say wrong :-)

Re: A Critical Analysis of the Subscription Economy

#44

Post by nobodyorother »

softawre wrote: post #36
Houshalter wrote: post #31

It's worth considering what a subscription would be worth as a fixed cost. Like say the company was going to invest the fixed cost into the market, and take the interest as if it was continuous income from subscriptions. Or if a user wanted to just invest a fixed amount of money so the interest will always be there for to pay for the subscription. At 5% interest, a subscription of $1 a month is worth a fixed cost of…

Can you explain why considering the dollar amounts that would earn interest equal to subscription costs has any relevancy into how much these services cost? Or put another way -- what?

It seems like GP is calculating 20 years worth of subscription cost.

Seems reasonable, but I'd also stop using most subscriptions before 20 years: 5 years seems more likely. I'd probably cancel a subscription if I stopped using the product after a few years or if the related hardware died.

Re: A Critical Analysis of the Subscription Economy

#45

Post by maxxxxx »

ptero wrote: post #25
maxxxxx wrote: post #22

Earlier quoted context omitted.

I think you can open and view them with Photoshop, just not edit. At least that's my understanding.

I suspect you can still edit them with an older version of the Photoshop. PSDs have been around forever. I am not arguing that subscription models forced by Adobe on users is a good thing. It is, IMO, horrible and is the reason I am still using CS3 for my photography hobby.

I left Adobe because of the subscription model. The fact that they don't handle Fuji images well made this decision easier.

Re: A Critical Analysis of the Subscription Economy

#46

Post by pspeter3 »

diggum wrote: post #34
toyg wrote: post #24

Earlier quoted context omitted.

On the other hand, this removes a big incentive for "featuritis". A developer can sit back and only add features that really matter to the product or fix minor but annoying bugs, rather than pushing unnecessary flashy changes dictated by a sales cycle. I'm not particularly happy about moving to what is effectively a rent society, but I think this is one of the few silver linings of the subscription model.

I am employed by one of the companies discussed, and while I was on the fence about subscriptions originally, I've come to change my opinion. While not ideal for a subset of users who might use only one or two applications, it is less expensive for the majority of users. It's also lowered the barrier of entry significantly, which has invited a lot of new users, reduced piracy, and encouraged use and exploration of ap…

This is what I thought would be the natural outcome. I'm glad to hear it's working out for you!

Re: A Critical Analysis of the Subscription Economy

#47

Post by specialist »

zAy0LfpBZLC8mAC wrote: post #41
specialist wrote: post #26

Earlier quoted context omitted.

I have a different view. Perhaps because I used to publish my own shareware. Today's current Patreon model is pretty close to how shareware used to work (for me). Buying a license today is investing in future development. I wouldn't pay to use software that's not actively being maintained. Nor would I expect my customers to either.

Which is exactly not the case that's being discussed here? What is discussed here is the case where you lose the right to use the software if you don't continue to pay, completely independently from what that money is used for, which is why it removes one important incentive to improve the software. And if your skillset and your data is locked up in some software, it's questionable whether you really would stop payin…

GP wrote:

"...only reason they'll buy a new copy is if the new one is substantially better than the old..."

The obvious, intuitive cause & effect isn't always the case.

I bought software to encourage future development, vs wait for new release then decide to upgrade. Push vs pull.

Re: A Critical Analysis of the Subscription Economy

#48

Post by jonny_eh »

Houshalter wrote: post #31

It's worth considering what a subscription would be worth as a fixed cost. Like say the company was going to invest the fixed cost into the market, and take the interest as if it was continuous income from subscriptions. Or if a user wanted to just invest a fixed amount of money so the interest will always be there for to pay for the subscription. At 5% interest, a subscription of $1 a month is worth a fixed cost of…

If you play World of Warcraft for 20 years, it's easily worth $3600, especially paid out in monthly installments.

Re: A Critical Analysis of the Subscription Economy

#49

Post by Houshalter »

softawre wrote: post #36
Houshalter wrote: post #31

It's worth considering what a subscription would be worth as a fixed cost. Like say the company was going to invest the fixed cost into the market, and take the interest as if it was continuous income from subscriptions. Or if a user wanted to just invest a fixed amount of money so the interest will always be there for to pay for the subscription. At 5% interest, a subscription of $1 a month is worth a fixed cost of…

Can you explain why considering the dollar amounts that would earn interest equal to subscription costs has any relevancy into how much these services cost? Or put another way -- what?

Economically you can convert between a fixed price and a subscription price. A subscription has a fixed economic value governed by the interest rate. That is if you have a thing that generates $10 every year, you should be able to sell it for $200 (if the interest rate is 5%.)

I think this is something people don't often think about. But it makes it very easy to compare different costs and benefits that involve time. E.g. imagine a building is costing $1000 a year to maintain, and a new building would cost $50,000 to build. You can figure that it would be easier just to invest $20,000 and use the interest to pay for the maintenance. And save $30,000.

But if building a new building cost only $10,000. It would be a good investment. And you would expect to save more money than you would gain from anything else you could invest in with that money.

The same logic applies to subscription fees. If a software license costs either $120 a year, or a fixed price of $5,000. You should prefer the subscription. Hypothetically you could just invest $2400 and use the interest to pay the subscription. Saving $2,600.

Re: A Critical Analysis of the Subscription Economy

#50

Post by mortenjorck »

ladon86 wrote: post #39
samsolomon wrote: post #16

The case of Adobe is interesting. I think the move to a subscription model has been a hostile move for customers. The second you stop paying for the software, you lose the ability to open your old files. This has allowed smaller software applications such as Sketch, The Affinity Suite and Capture One to grab marketshare. I think Sketch’s current business model is perfect. Customers pay for a year of updates. If a cus…

I kind of disagree about Sketch having a customer-friendly model, because files produced by a newer version can't be opened by an older version - regardless of whether any new features have been used in that file. So you pay for a year of updates, but if anyone you collaborate with updates their software, you have to as well, because you can't open the files they produce or even edit and save. Most of the time you're…

While I still consider Sketch's model leagues more customer-friendly than Adobe's, I'm not happy that they appear to have given up any attempt at meaningfully versioning the file format. I can completely understand something like an overhaul to the way symbols are handled breaking compatibility with older versions of the app, but when an update is adding things like a new color picker and tweaking vector snapping, it seems like a stretch that the previous version can no longer open files created by the latest one.
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