By Christina Warren2013-05-06 17:52:35 UTCAdobe's flagship product, Creative Suite, has new name and a host of new and updated features now that it's evolved into Adobe Creative Cloud. But the biggest change in the software is how Adobe will be selling it: It's going to be subscription only.
That means that users won't be able to buy Photoshop CC or other apps individually from Adobe for a flat rate (known in the industry as perpetual licensing). Instead, users can pay a monthly subscription to access all of Adobe's products.
Adobe introduced its Creative Cloud subscription service last year with Creative Suite 6. Users could pay $29.99 to access one Adobe product each month or $49.99 to access the entire Creative Suite (the equivalent of the CS6 Master Collection). The program has been a success, with more than 500,000 premium members signing up for Creative Cloud in the first nine months of availability, in addition to the 2 million free Creative Cloud members.
While the Creative Cloud offering was originally introduced for individual users, in December, Creative Cloud for Teams became available and the interest has been positive.
For that reason — as well as the changing nature of its business and an overall market shift into software as a service (SaaS) models, Adobe is going all-in with its latest version of its software. This means that no future versions of the core products available in Adobe CC will be available through a perpetual license.
Adobe will continue to sell current versions of Adobe CS6 but those products will not get any future feature updates. The products will get security patches and bug fixes, but no feature updates. Additionally, Adobe has committed to making sure that CS6 is compatible with the next major version of OS X and Windows.
Shifting completely to a subscription model — especially after building its business on perpetual licensing — is a big shift for Adobe. Still, the company maintains that this shift is necessary for the future.
"Our single highest priority has to be about blending tools and services and in order to do that, we have to make [Creative Cloud] our full focus," Adobe told me in a briefing last week.
Services are a key component of Creative Cloud. In the last few years, Adobe has acquired a number of startups — including TypeKit, PhoneGap and Behance — as a way of adding more collaboration and web service tools directly to its products.
The company has also built cloud storage offerings into Creative Cloud and the latest version includes a Dropbox-like system of adding and accessing projects shared with team members.
With the traditional perpetual model, product updates had to happen on a certain cycle. If the Photoshop team wanted to push out a new feature or update, it had to stay on the same cadence as the updates for other apps in the suite. The product life cycle was roughly 18 months, which meant that it would take at least that long for new features to make their way to the final product.
That's fine for some applications but it meant that Adobe couldn't be on the cutting-edge with its support for the latest web standards and technologies. To fill in the gaps, Adobe introduced its Edge tools and services as as a way of giving users access to tools developed on a more agile basis.
What Adobe found with its Edge apps was that customers really liked getting new features in their apps more quickly. Adobe could roll out the updates to users automatically and add support for new standards and features outside of the confines of a standard product cycle.
With Adobe CS6, the company started a dual-track for its development, focusing on a core set of features at launch for the product and then adding subscriber-only features for Creative Cloud members. Some of those features — including support for high-resolution displays such as the MacBook Pro with Retina — were rolled out to all users, but the team was basically on a dual-path.
That's not sustainable and so, moving forward, Adobe CC products will continue to see enhancements and updates throughout the year. Major releases will likely still have some general cadence but the product teams will no longer need to wait to release new features for an app.
Adobe recognizes that there are a lot of customers who bought the CS6 suites with a perpetual license, believing that they would have a clear upgrade path.
For those customers, Adobe says it will offer deep discounts for the first year for those customers that want to transition to Adobe CC. Right now, Adobe sells individual Creative Cloud subscriptions for $49.99. Users upgrading from CS3 or higher can get a discounted rate for their first year of $29.99 a month. CS6 users that want to upgrade will get an even deeper discount for the first year.
Moreover, Adobe has created an alternative for certain groups of customers that cannot migrate to a public cloud service for a variety of reasons. These customers, which include educational institutions, governments and large enterprises that can't access outside clouds, can buy a version of Adobe CC that doesn't contain the "cloud" aspect.
Adobe isn't the only company making the transition from perpetual license to subscription-based services.
The SaaS model may have originated with web-based software apps from the likes of Salesforce and Google but, increasingly, more and more perpetual software vendors are evaluating a model shift.
Microsoft is pushing its Office 365 subscription features on businesses and home users. Rather than paying for the software each generation, users pay by month or by year.
In the creative industry, even areas like typography are moving to subscription models. Last week, Monotype announced that fonts.com is offering a more comprehensive subscription option for its customers. Rather than selling typefaces and font families individually, customers can pay a monthly or yearly fee to get access to a whole swath of Monotype fonts for use not just on the web but in all projects.
While shifting to a subscription software model may be a change for consumers, most businesses operate on similar subscription models with other aspects of software. Moreover, it's possible that as consumers become used to paying a monthly fee for Netflix, Spotify and Hulu Plus, the idea of also paying a monthly fee for software won't seem so odd.
Although Adobe CC runs like a regular app, the app needs to talk to a server every time it is used. This means that its harder (though not impossible) for users to access without paying.
I asked Adobe if cutting down on piracy had any sway in the decision to switch to subscription and the answer surprised me.
"While reduced piracy might be a nice side effect, it was not a driver into our decision to move to a subscription model," Adobe told me.
In fact, in areas — such as Poland — where piracy is historically extremely high, Adobe has found that the percentage of Creative Cloud subscribers is significantly higher than average. Why? Because offering a monthly plan makes it easier for individuals to buy products that they may have not been able to afford with an up-front perpetual license.
Adobe believes that, just as customers had to transition from buying individual products into buying the Creative Suite bundles, they will also transition to the new subscriber model.
"We want to do this because we want to do more," Adobe reiterated. This model helps us give more to our customers and add new tools and features more quickly.
It's a bold move — and one that will likely receive lots of criticism. Still, I think it's a move that makes sense. For creative professionals that rely on Adobe tools, $600 a year for the latest updates isn't out of line with what a Creative Suite Master Collection bundle would cost every 18 or 24 months.
Ultimately, as long as the company continues to deliver tools that customers love, it will continue to keep its customers. The hurdle for Adobe isn't about pricing strategy — but remaining the defacto toolset for designers and creative professionals.
Let us know what you think about Adobe's decision in the comments.
Image courtesy of Adobe
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