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The problem with free (2019)

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Re: The problem with free (2019)

#31

Post by blinzy »

Gordonjcp wrote: post #24
blinzy wrote: post #23

Earlier quoted context omitted.

If that company, the one that develops DaVinci Resolve, only produced software, would that model of £200 fixed one-time payment be sufficient to be financially viable? Let's say the company's headcount to develop/maintain such software, plus a bunch of other required roles such as marketing, sales, hr, etc., is around 25 people averaging £80,000/year each (not that far off considering employees cost more than just th…

As I said most of their money comes from cameras. £2M per year would be a couple of thousand cameras, which feels like a fairly easy number to hit.

Yes, I know you said they do sell hardware and that's probably how they survive.

If you look at my comment I said "if they only produced software", because I wanted to use it as an example (just from your £200 figure) with back of the envelope estimates to show why many companies move to subscriptions, because if you have a niche product, having new customers in the thousands or tens of thousands every year is incredibly difficult compared to having a reliable set of recurring customers with subscriptions.

Re: The problem with free (2019)

#32

Post by dale_glass »

"Consumer software barely existed just 20 years ago."?

I'd say not only it existed, but it existed more than today, if you exclude games.

Eg, things that used to be for sale, and aren't really much of a thing anymore: various system tools like Norton Utilities, desktop toys that did junk like animated cursors in Windows 3.1, file compression tools, disk compression tools (Stacker), replacements for the Windows program manager, special purpose tools (PawSense is a funny one), memory managers (QEMM), PartitionMagic, Web browsers (Netscape was a packaged, paid product), mail clients (Eudora), possibly antiviruses (it's my impression that these days Windows Defender does the job)

The likes of DOS and Windows 3.1 were barren of almost all functionality out of the box compared to a modern system. If you wanted to get something done legally, you had to buy a bunch of stuff. And then often times you'd want a bunch of misc tools on top.

These days pretty much all of that has been absorbed into the OS, or has perfectly good free alternatives, or is functionally obsolete and not really a concept anymore.

Re: The problem with free (2019)

#33

Post by blinzy »

yakubin wrote: post #27
blinzy wrote: post #23

Earlier quoted context omitted.

If that company, the one that develops DaVinci Resolve, only produced software, would that model of £200 fixed one-time payment be sufficient to be financially viable? Let's say the company's headcount to develop/maintain such software, plus a bunch of other required roles such as marketing, sales, hr, etc., is around 25 people averaging £80,000/year each (not that far off considering employees cost more than just th…

Other companies which sell (only) software based on one-time payment model: - ACD Systems (ACDSee) - Serif (Affinity) - Freron Software (MailMate) - Sublime HQ (Sublime Text) I use them all. Wouldn't pay for a subscription. I don't want a service. I want a product. I also pay for services, but for other purposes: mail (Fastmail), online bookmarking (Pinboard), music streaming (Spotify, mostly for discovery; after I d…

I'm not saying it's impossible to sell software with one-time payment model, I'm saying it's noticeably harder. There's always going to be companies that make do with such business models, but what's the ratio of successful companies with one-time payment out of all companies that have tried that? How does that compare with companies that go for subscription model (or ad-supported model)?

And are there any behemoths (i.e., hugely profitable companies) that do one-time payment software? Because as far as I know Microsoft would have been one of the few or only such cases (and obviously it only applies to a subset of their products, many others are using other business models) and they are also moving towards a subscription model, e.g., for Office, which considering they probably have a legion of financial analysts, accountants, etc. I assume they have done their due diligence to figure out it's worth it.

Re: The problem with free (2019)

#34

Post by bartread »

wmf wrote: post #4

"Consumer software barely existed just 20 years ago. At that time, it was mostly large enterprise software or companies focused on developing software for professionals." I kinda hate to be that guy but there was a whole store at the mall called Babbage's that sold consumer software. Sure, half was games but there was still plenty of other stuff.

Yes: this piece kind of lost me with the opening. Consumer software barely existed in 1999?

Even ignoring games, have you ever seen the contents of a PC World cover CD? It's all over the map: there was consumer software for every conceivable reason and purpose. Commercial, shareware, PD, and open source were all alive and well - in rude health, in fact - in 1999.

Going further back, I remember the 80s. Even the little market town I lived in had at least half a dozen different places you could buy software, and the mail order scene for software, and weird hardware devices paired with software, was very much alive and well. I'd go as far as to say that, budget games aside, mail order was my default mechanism for buying computer software until well into the 90s when online became more prevalent.

Chevrolet, of all companies, used to literally distribute a program that was effectively a virtual and deeply pixellated car showroom to consumers in 1987: https://www.youtube.com/watch?v=I89vPzhpNNA.

Consumer software back in the day was widespread, diverse, weird, and wonderful. Going back into the 70s and early 80s, much of the early innovation in consumer software for personal computers, came from the very consumers - the hackers, hobbyists, and tinkerers - who bought them.

Remarks like "Consumer software barely existed just 20 years ago" simply come off as out of touch and ignorant of history, which has the effect of undermining the credibility of any other point the piece is trying to make (especially as an opener - WTH?).

Re: The problem with free (2019)

#35

Post by cassianoleal »

jobigoud wrote: post #30
ZephyrBlu wrote: post #26

Earlier quoted context omitted.

Don't understand the hate for subscriptions. Some companies moved to subscriptions purely for a money grab, but for a lot of companies a subscription model makes more sense and a lot of them are really good value. 1password for example is only $3 USD a month. I don't understand why you would stop loving 1password because of a $3 subscription.

You want to build a stable system. Set it up so that the lower level pieces work and will continue working if untouched so you don't have to think about them and instead focus on the higher level stuff. A software that is subscription based means your computer system seen as a whole will stop working at some point in the future if you don't remember to take a specific action (like updating the payment method or some…

My main gripe with 1Password is that it used to be a great product. It worked well, was relatively fast and stayed out of the way.

All those things have gone in later versions though.

Now it's very laggy and keeps getting in the way of my browsing, and I have lost passwords for new websites just because the modal to create the entry would "freeze" although not completely - I could still press the cancel button which would then ... cancel the creation, but also delete the temporary password item.

This modal stops you from using anything else on the browser as well, so there's no way out of it.

Re: The problem with free (2019)

#36

Post by yakubin »

blinzy wrote: post #33
yakubin wrote: post #27

Earlier quoted context omitted.

Other companies which sell (only) software based on one-time payment model: - ACD Systems (ACDSee) - Serif (Affinity) - Freron Software (MailMate) - Sublime HQ (Sublime Text) I use them all. Wouldn't pay for a subscription. I don't want a service. I want a product. I also pay for services, but for other purposes: mail (Fastmail), online bookmarking (Pinboard), music streaming (Spotify, mostly for discovery; after I d…

I'm not saying it's impossible to sell software with one-time payment model, I'm saying it's noticeably harder. There's always going to be companies that make do with such business models, but what's the ratio of successful companies with one-time payment out of all companies that have tried that? How does that compare with companies that go for subscription model (or ad-supported model)? And are there any behemoths…

Adobe used to be such a behemoth. They didn't switch to subscriptions due to unprofitability. They just wanted more and more. Same with Microsoft. They're a behemoth switching to subscriptions now. But that's not because they're running low on money. And most games are still one-time payment today. So you can count Ubisoft, EA etc. Of course there are other sources of payment for them than just the nominal price of the game, but most gamers only pay for the game and ignore everything else.

Besides, I don't think I want a market dominated by behemoths. If popularity of one-time payment model would lead to a market dominated by Also, most software companies today are startups which exist only thanks to investor money. It's hard to say what a customer-driven market would look like. Although maybe recession is going to clear this up.

Re: The problem with free (2019)

#37

Post by NeoTar »

forty wrote: post #13
robbrown451 wrote: post #11

The reason things tend toward free in software... at least consumer software... is that capitalism is really optimized for things that have significant marginal cost. Over time, supply and demand tend to cause the price to approach the marginal cost. (the cost to make one more product) But software has effectively zero marginal cost. Meaning normal competition and the free market just don't work. Say a company makes…

This assumes an infinite market. If you address a market with only 10000 consumers, it's unlikely competition can succeed with prices assuming 100000 sales.

Which can also create another problem.

The second company might think there is a market for 100k users, and price accordingly at $10, but only sell 10k copies and go out of business.

Now, however, people see the product as only being worth the lower price point of $10, and won't pay $100 for it anymore. So company A can only sell 1000 copies at $100, and also goes out of business.

Re: The problem with free (2019)

#38

Post by rollcat »

brutusborn wrote: post #17
zombiephysicist wrote: post #14

I have no problem paying for software. The problem is most software is total crap these days. And I refuse to pay subscriptions. There are great examples of stuff I'm HAPPY to pay for. iStat menus, KeyboardMaestro (and I used to love 1password before they went subscription).

Why do you refuse subscriptions? I always thought they made more sense, especially for software that needs a lot of maintenance.

It should be up to the company/developer to choose their business model, and it should be up to the market to accept or reject it.

Subscriptions do have some advantages for the customer: they often come with a free trial, and if you later on decide that they're not worth the value, you can (hopefully, easily) cancel; whereas getting a refund for a one-off big purchase might be more tricky, or even impossible; your resale ability might also be limited. The subscription model also helps align incentives: the developer must continue providing good value, or risk losing subscribers.

But on the other hand: people want to own things they pay for.

Re: The problem with free (2019)

#39

Post by marginalia_nu »

trinovantes wrote: post #12
gabmartini wrote: post #5

This is definitely an article that hit (some) right ideas based on incorrect assumptions or an inaccurate historical context. Don't know if I would recommend it to a broader audience. tl;dr: If the product is free, you are the product.

Even if it's not free, you may still be the product (Windows)

Isn't windows sort of quasi-free these days? They've been aggressively pushing free version upgrades for Windows on me several times.

Re: The problem with free (2019)

#40

Post by Joker_vD »

robbrown451 wrote: post #11

The reason things tend toward free in software... at least consumer software... is that capitalism is really optimized for things that have significant marginal cost. Over time, supply and demand tend to cause the price to approach the marginal cost. (the cost to make one more product) But software has effectively zero marginal cost. Meaning normal competition and the free market just don't work. Say a company makes…

Oh, that's easy: just require that every copy sold/downloaded incurs a 5¢ tax on the the publisher. Now the marginal cost is non-zero and we can yet again let the market sort things out.
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