Last Friday three large corporations, Microsoft, Apple and Adobe, were pulled in front of the Australian Parliamentary Inquiry into IT Pricing to justify their vastly inflated prices in the Australian markets for their goods, most notably their digital only ones that seem to have a higher price tag, simply because they can.
Why these three corporations? Well because they had either refused or had been evasive in supplying submissions to the Inquiry previously and were being compelled, under threat of fines or possible jail time, to appear and provide justification of their pricing schemes.
It’s worth noting that the Inquiry is merely after answers, it is not a trial nor were the corporations being accused of any illegal activity. Its s simple task was to get at the heart of the pricing disparity issues for Australian consumers and possibly make recommendations later that might help narrow that gap. The three corporations summoned however treated the entire affair as if they were directly under attack.
I won’t be covering responses from all of them or the various arguments used as these have been covered in-depth elsewhere, instead I’ll be looking at the word that the Adobe representative waved about as a get out of jail free card: CLOUD.
CLOUD, CLOUD, CLOUD
The Adobe representative, managing director of ANZ Paul Robson, seemed to think the best way to get out of every single question asked of him was to pimp Adobe’s Creative Cloud system. Or as I tweeted at the time:
"CLOUD CLOUD CLOUD! Umm. Boss I shouted the magic word at them lots but they keep asking me hard questions!" #fairit4oz
— Dawnstar Australis (@dawnstarau) March 22, 2013
The big argument was the Australian pricing for the Adobe Creative Cloud was on par with the US pricing and therefore Australian consumers should be happy. End of story. Please stop asking difficult questions.
To be fair yes the Adobe Creative Cloud pricing is indeed on par with the US pricing (although interestingly it only became so just weeks before they were pulled in front of the inquiry) but the problem is the Creative Cloud is not the fabulous one size fits all solution Adobe sells it as.
The All New Shiny
So what the hell is the Adobe Creative Cloud service anyway? Well basically put it’s a subscription service which allows you to use either one or all of the suite of Adobe products for a per month fee. The service fee includes free upgrades to each product as it comes along, with some storage as well. On the surface it sounds awesome and for some Adobe users it is, particularly those that use either all or a large chunk of the suite of Adobe products.
The problem is there are many, myself included, that use just one or two Adobe products and once you start running the numbers on the cloud offerings and pricing you quickly realise it’s not such a good deal after all and that in the future there could be some serious problems.
Small Costs Add Up
The example I’m going to work with is Adobe Lightroom which (in my opinion) is by far the leading photo sorting and manipulation program available. I’ve tested many competitors, both commercial and open source, and nothing comes close to how good Lightroom does its job. It’s very much worth the money even we in Australia do pay a premium for the privilege. But that’s where it ends. As an amateur photographer Lightroom does everything I need, I don’t require the absolute power of Photoshop or any of the other suite of programs supplied by Adobe. I know for a fact I’m not the only one in this boat.
So how does accessing Lightroom via Creative Cloud stack up against purchasing the box set (or digital download) outright? Well not very well as we’ll see.
First the pricing. Adobe likes to throw the figure of “Only $49.95 a month!” about. This is technically true. These screenshots were taken from the current Creative Cloud AU pricing page:
[notice]Note there is a stream for a single application purchase via the Creative Cloud for $20/month. For some unknown reason however Adobe Lightroom is not currently among the “select applications” available via this subscription and therefore not relevant to the comparisons we will be making.[/notice]
First off the $49.95 a month isn’t exactly right. It requires a 12 month lock in which immediately means you’re looking at a $600 yearly spend. What happens if you decide you might want to opt out at any time? Well the price jumps just a tad:
For an equivalent 12 month period you’re looking at $900 spend but at least you can cancel at anytime. There is nothing intrinsically wrong with this pricing structure as it helps Adobe recover costs from those unwilling to subscribe long-term to their service.
So Where’s The Problem?
The problem lies in the fact I just want one application. Adobe make a great argument that yes for a mere $50/month I could get every application at my fingertips, all the time. Problem with that however is I’m extremely unlikely to ever use them and I am generally against throwing my money at services I’m never going to use.
So let’s do a comparison. Let us assume we only want Adobe Lightroom, how much would it cost us to get over a 5 year period via the Creative Cloud vs box/digital download outright purchase? We are going to assume that costs stay the same over the period of time.
Best case scenario we are looking at 5 years at the $49.95 per month rate which brings us to a total of $2997 AU ($49.95 multiplied by 60 months)
Worst case scenario we foolishly opt for the month to month pricing for 5 years which brings us to a total of $4497 AU ($74.95 multiplied by 60 months)
And hypothetical best case, Lightroom becomes available on the single application subscription which brings us to a total of $1199.40 AU ($19.99 multiplied by 60 months).
Box/Digital Download Outright Purchase
Since this is not quite an apples vs oranges comparison for the box set we are going to assume an initial outright purchase of the software, followed by one upgrade a year for each of the five years (which is usually inline with the Adobe release schedule).
An interesting side note that during the inquiry the Adobe representative did reveal what many have suspected in that the pricing for the digital download version of the boxed software is priced the same mainly to keep resellers of the boxed software happy.
At current pricing the full version of Adobe Lightroom 4 is $187 AU. To upgrade is $108. We’ll assume the upgrade cost stays the same each release (which is normally roughly the case) leaving us with a total cost of $727 AU ($187 initial cost, plus $108 multiplied by 5 years)
That’s a full $472.40 AU cheaper than even our best hypothetical Creative Cloud scenario or for a direct comparison $2270 AU cheaper than the current real best case Creative Cloud scenario. That’s not an unsubstantial sum for an amateur photographer. That’s a new lens, maybe even a camera body upgrade in savings right there.
The Cloud Is Coming
The biggest potential issue is however I doubt that the boxed/digital downloads will be around in five years time. Adobe is already crowing over how successful the Creative Cloud is and it will be only a matter of when, not if, the Creative Cloud becomes the only method to access Adobe software. On that day many of us may be entirely screwed as there are several issues:
What happens when you stop paying your subscription? Well the application stops working. You don’t lose your files as they are all handled by your local machine but you will be held to ransom if you ever want to access the proprietary Adobe file formats again. You’ll need to fork over the subscription again.
Spent countless man hours creating that Photoshop file? Making all those tags and keywords in Lightroom to effectively sort your collection of photos? Well all that will be useless unless you keep paying. Each month. Every month. Forever.
During the inquiry the Adobe representative made repeated reference to the fact that Creative Cloud pricing for teachers and students in Australia is substantially cheaper, even than the US educational offering. Again that’s entirely true but it’s not out of altruism. Like every other corporate entity that provides cheap educational pricing the purpose is to lock them in while they’re young and the Creative Cloud gives an added level of lock in. Want to keep using those tools you spent years learning after you graduate? Well you better fork over the full price. Each month. Every month. Forever.
Finally the Creative Cloud is geared towards market that have bandwidth to spare and, alas, the average Australian household or even business is still lagging well behind the rest of the world in bandwidth, particularly in terms of upload speed. This doesn’t have a huge impact on Creative Cloud which operates mostly on your computer but there are times when it becomes a real pain.
The Final Cloud Down
At the end of the day the Creative Cloud will be the new way forward and it does hold promise of making several things easier for the end user, automatic upgrades being one of them. As it currently stands however it is far from the one size fits all solution that Adobe sells it as and I personally hope a different approach will be taken for those consumers in the middle ground that do not need or want to pay for an entire suite of software they will never use for the privilege of using the one application they love and respect the company for.
Update – 2013-05-07
As predicted when I wrote this post it was only a matter of when, not if, creative cloud would become the only method of purchase. That day is today. Adobe has announced that the Creative Suite will be rebranded the Creative Cloud and will only be available by subscription from here on in.
It’s not total doom and gloom however, this FAQ indicates that, for now at least, Adobe Lightroom will remain available as a separate boxed product which possibly shows Adobe is aware there is a market for those that only use one of their products. I don’t think for a second the Australian pricing for the boxed version will get any fairer but at least for now you won’t have to strap yourself to the Creative Cloud just to get Lightroom.
Oh and Lightroom is still not available on the single app purchasing subscription model via the Creative Cloud. I wonder why this is?