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BBC adopts FCP X for news editing
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[Oliver Peters] “[James Ewart] ” Nobody really knew how things wee going to pan out and they made mistakes.”
Except they made that mistake with your tax dollars (license fee).”
Yes, but the standard that nobody can risk tax dollars unless it’s a sure thing is also not a very good process, IMO?
If you don’t take risk, you don’t grow. In fact, one of my best business lessons came from abject failure. Years ago, I chaired an event for a local charity and hired a 15′ outdoor LED sign to promote the event – thinking that because the event was adjacent to a local freeway – we’d WAY more than pay for the sign rental with extra ticket sales. Unfortunately, when the sign arrived and was lit up, it was simply too small to be seen from the freeway.
Totally my fault. And I wasted $3k of the charities money doing it. I also learned a HUGE lesson. And thankfully the overall event was a success, but a smaller one than it should have been.
Nothing teaches like trying and failing.
And government is not immune to that.
Sure we want the risk as best managed as possible. But that can be awfully difficult sometimes.
Just my 2 cents.
Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com – video editing curriculum complete with licensed practice content.
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[Bill Davis] “Now we can’t. Not if someone accepts ACH Rental Terms. Then it’s between the vendor the company and some form of outside “binding arbitration.” which essentially removes the transaction from the scrutiny of the legal system and absolutely abrogates traditional consumer rights, in my view. “
And you still have the ability to walk away from Adobe and never use them again. If Adobe gets heavy handed, the market moves away from them. There are other choices. But, at the moment the market favors Adobe. Not because you or I choose to use them, but rather because we have clients that insist on us using them by supplying and asking for files in Adobe’s formats (Photoshop, Illustrator, AE, etc.). If you don’t like the rental model, govt intervention is not the answer. Although rules related to credit card usage and billing might be a different story and certainly a valid point.
But let’s take a slightly different hypothetical, since we’ve added the concept of government rules or legislation into the picture. What IF the government decided that all software is a service and not a product? And as a service, all software should ONLY be sold via the rental model? My guess would be that the argument would swing in a completely different direction.
And finally, remember that it is in many ways due to govt intervention in the form of Sarbanes-Oxley that companies have embraced the subscription approach. So be careful what you wish for, 😉
– Oliver
Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com -
[Bill Davis] “Now we can’t. Not if someone accepts ACH Rental Terms. Then it’s between the vendor the company and some form of outside “binding arbitration.” which essentially removes the transaction from the scrutiny of the legal system and absolutely abrogates traditional consumer rights, in my view. “
You still have the ability to walk away from Adobe and never use them again. If Adobe gets heavy handed, the market moves away from them. There are other choices. But, at the moment the market favors Adobe. Not because you or I choose to use them, but rather because we have clients that insist on us using them by supplying and asking for files in Adobe’s formats (Photoshop, Illustrator, AE, etc.). If you don’t like the rental model, govt intervention is not the answer. Although rules related to credit card usage and billing might be a different story and certainly a valid point.
But let’s take a slightly different hypothetical, since we’ve added the concept of government rules or legislation into the picture. What IF the government decided that all software is a service and not a product? And as a service, all software should ONLY be sold via the rental model? My guess would be that the argument would swing in a completely different direction.
And finally, remember that it is in many ways due to govt intervention in the form of Sarbanes-Oxley that companies have embraced the subscription approach. So be careful what you wish for, 😉
– Oliver
Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com -
[Bill Davis] “Totally my fault. And I wasted $3k of the charities money doing it. I also learned a HUGE lesson. And thankfully the overall event was a success, but a smaller one than it should have been. “
But you are comparing a private example versus government. The rules are different as the BBC found out.
– Oliver
Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com -
[Bill Davis] “MUCH better a system that generates 109 cheap to produce “housewife reality shows” with a dash of Honey Boo Boo tossed in.”
The system you are lauding also spawned shows like Big Brother, Pop Idol (American Idol in the States), Paris Hilton’s British Best Friend, Trust Me – I’m a Beauty Therapist, Project Catwalk, etc.,. 😉
FWIW, Endmol, one of the biggest companies producing reality TV in the world, is Dutch.
If you are looking for some good ‘home grown’ series you should check out Justified, Bates Motel, Game of Thrones, Walking Dead, Battlestar Galactica (though the wheels fell off at the end), Deadwood, Gilmore Girls, Mad Men, Penny Dreadful (US + Brit joint venture), Sons of Anarchy, Orange is the New Black, Transparent, Silicon Valley, Buffy the Vampire Slayer, Bob’s Burgers, Firefly, The Americans, Blacklist, The Following, Supernatural, Arrow, Flash, Alpha House (not great, but fun), Sleepy Hollow (not a fave of mine but seems popular), Star Trek, American Horror Story (hit and miss depending on season, IMO). Law & Order SVU (love me some SVU), Tales from the Crypt (they hold up surprisingly well), etc., I’m also going to throw in Orphan Black (shot in Canada so it’s our side of the pond at least 😉 ).
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[James Ewart] “At the heart of a lot of big companies’ philosophy is putting their customers first. That’s how they get the edge on the competition. “
And the intended result of putting the customer first is to attract more customers which will make the company more money. If putting the customer first cost them money instead of earning them money then they wouldn’t do it. For example, Costco used to have an open ended return policy on all items except computers. Buy something a year ago, two years ago, and wanted to return it? No problem. They would take it back (assuming it wasn’t broken or damaged of course). But too many people started buying expensive items like TVs (which have a very low markup) and returning them on a regular basis so Costco had to change the return policy because it was costing them too much money. Now they offer a 90 day return window on electronics (which is still much better than the 14-30 day window that most stores offer).
[James Ewart] ” If people start dipping in and out of their subscriptions as the need arises according to what jobs they’ve got on I can see some advantage. But if enough people do it then Adobe will surely start insisting on a one year minimum contract.”
Why would Adobe “surely” do that? Pay for it when you need it and not when you don’t is one of Adobe’s own selling points for CC. If I had to venture a guess I’d say most already sign up for a year because of the cost savings vs going monthly. When CC was first introduced (at the same time as CS6) it was much more expensive than it is now. The ‘Adobe will most certainly price gouge customers and there’s nothing we can do about it’ is a total fabrication.
As long as Adobe keeps making compelling products people will keep paying the subscription price and Adobe will keep making money. If Adobe becomes too expensive, restrictive or lackluster then people will leave. Just like people really started leaving Avid for FCP Legend a decade ago (and it’s way easier to switch NLEs today than it was back then). As others have said, there is a whole lot of viable competition in the NLE space right now.
[James Ewart] “I have yet to read one argument that explains how the subscription based model is better for customers. Until now. You are the first”
Lot’s of discussion about his here at the COW so I’m surprised you haven’t come across it before. Besides what Walter already listed, here are a few more.
1. Lower cost of entry. On a number of filmmaker boards I’ve seen people remark that they never could afford the upfront cost of Adobe’s suites in the past, and I was one of those people. Until rather recently I didn’t use Adobe products very much so I never could afford to pay full retail for them (I was the guy that was got a year or two old version for cheap off of eBay).
2. Freedom from Sarbanes–Oxley Act. Basically, an unintended side effect of accounting regulations in the US that impacted how publicly traded companies sell products, including software (If you search for “Sarbanes Oxley” or “SOX” on the COW you’ll find more on-point discussion about this). By moving from selling a discreet product with a perpetual license to selling a subscription Adobe is free to add feature upgrades whenever they like (under SOX feature upgrades cannot be free).
Avid most likely faced a similar problem though only those at Avid know for sure. The working theory is that Avid was in trouble for violating SOX which is why they withheld their public filings (which led to them delisting from NASDAQ) until they could get it all sorted out. Now they’ve started submitting their public filings again, they are back on NASDAQ and they killed their old perpetual licensing and upgrade model (coincidence, I think not). Avid took a slightly different course but they effective ended up at the same, SOX-restriction free place like Adobe.
3. More predictable revenue. By moving a way from the feast/famine cycle of releasing an omnibus upgrade (ready or not) every year or two it’s changed how Adobe can approach software development. The pressure to create whiz-bang new features that ‘demo well’ on an artificial schedule is no long hangs over the head of the software teams at Adobe (from what Ive read, being forced to focus on features that ‘demo well’ is a rather common complaint at large companies in general, not just at Adobe). The teams are more free to focus on useful, if not headline grabbing features.
For example, at request from users, the After Effects team spent most of the past year retooling the inner workings of AE to make it significantly faster than it was before (it’s my understanding that this was phase one of a three phase process to speed up AE). According to the team this is something that wouldn’t have been possible under the old model because they don’t have the resources to tackle something this big plus create enough shiny, new features to help entice users to upgrade.
Perfect? No. Right for everyone no? But it does have advantages and unique potential that I hope are fully realized by Adobe.
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[Bill Davis] “The marketplace is wonderful. Right up until the moment it gets perverted by economic clout. “
I agree, though this isn’t limited to just Adobe though. Everyone loves BM in large part because they give away very powerful software for free. How many companies have the economic clout to do that? Raise your hand if you love the fact that you bought FCPX in 2011 and there hasn’t been a paid upgrade in 4 years? How many companies of the economic clout to do that?
Look beyond Adobe and you’ll see a growing number of software-only companies pushing subscriptions. Sure, when it’s from ‘giants’ like Adobe or Microsoft people scream ‘money grab’ but what about more midsized companies like Autodesk or much smaller companies like Red Giant? It’s not a coincidence and I think part of it certainly has to do with a general devaluation of software in the eyes of customers.
[Bill Davis] “In our system, the ONLY hope for restraint of big business abuse is government. Because there isn’t anyone else with even a smattering of standing that can counterbalance the power that any business bent on market consolidation and dominance (the PURPOSE of business, after all) can be restrained by. “
I agree with you, though I also agree with Oliver that we have to be careful what we wish for. Government is supposed to be a tool of the people, by the people, for the people but that’s not always how it works out unfortunately.
-Andrew
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Nicely said, Andrew.
While many here just want Adobe to sell versions of the same software they’re offering subscriptions for, I see CC — development, marketing, sales — as one big ball of yarn; pull on it in one place, it affects all the others, too. Changing the sales model also changes marketing and development as you’ve outlined.
There are also some perverse incentives built into the perpetual license/upgrade model. You mentioned CC’s focus on useful features. Why do good-demo features generally make it into software at the expense of long-time issues for daily users? The higher margin from a new sale versus an upgrade encourages product managers to ignore existing customers’ needs and try to go after new customers instead. With subscription, keeping a current user is just as valuable as adding a new one.
I also wonder if one could argue that a perpetual license sale is the cash grab. Imagine if subscription software had been the norm the last couple decades, and some new company came along, wanting to sell their wares for a bunch of money upfront and nothing thereafter. How would that look? “I’m not interesting in a relationship with you, I’m just interested in this sale.” We might reasonably question their dedication to the future of the product and its userbase.
[Andrew Kimery] “under SOX feature upgrades cannot be free”
Minor clarification here. The idea behind SOX is all about revenue recognition. You can’t book all the revenue on a transaction if you’re only providing a portion of the value. This goes back to the Enron scandal, and is intended to prevent companies from using accounting tricks to hide the liabilities on their balance sheets.
For perpetually-licensed software, that means that if you release new features after the sale is made, you should have deferred recognition of an appropriate portion of the revenues until the user gets all the value.
A company like Apple can do free feature releases on FCPX because they can afford to defer the piddly (in context) revenue from FCPX indefinitely. A software-only company would have a much, much harder time justifying that decision to investors.
Walter Soyka
Designer & Mad Scientist at Keen Live [link]
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
@keenlive | RenderBreak [blog] | Profile [LinkedIn] -
[Andrew Kimery] “The system you are lauding also spawned shows like Big Brother, Pop Idol (American Idol in the States), Paris Hilton’s British Best Friend, Trust Me – I’m a Beauty Therapist, Project Catwalk, etc.,. 😉
“These are all UK commercial TV shows
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[Steve Connor] “These are all UK commercial TV shows”
Ah, right, and the comment was just about the BBC. Thanks for pointing out my mistake.
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