East End Tech: Is Pay-As-You-Play the New Software Paradigm?

It’s really expensive too. I bought my copy years ago, and I remember thinking I would need to make a lot of holiday cards and CD covers to justify the $500 price tag. That’s how long ago I bought it.

The problem is about to get worse. Way worse. Adobe recently announced that it’s going to stop “selling” Photoshop altogether. Instead, we consumers are going to rent future versions of Photoshop, at a starting cost of $30 a month. If you rent for an entire year, they “drop” the price to $240. Oh, and there’s no guarantee they won’t raise fees in the future.

This announcement produced three stages of grief for me: fury, fascination and fear. The fury part is pretty obvious; $240 a year is an outrageous price to pay for any piece of consumer software, let alone one as quirky and puzzling as Photoshop. I don’t know about you, but I get way more value out of my $7.99 monthly charge for Netflix. We’ll get back to this in a second.

The fascination comes from something I’ve marveled at for years: the free software update. Microsoft pretty much started this practice with Windows updates. We paid handsomely for new versions, but there were so many bugs, fixes and patches that Microsoft had no choice but to provide periodic updates in the interim. Apple perfected the practice with iOS and smartphones. What was once a Byzantine, time-consuming process has become so streamlined and routine that we hardly even notice the latest iPhone updates. The lesson, as always: where Microsoft stumbles, Apple succeeds.

But what about Adobe? The evil genius of Photoshop’s new pricing is that Adobe has taken one of the best things about technology—seamless updates—and started charging customers for something we never had to pay for in the past. Apple paved the road and got us all hot and bothered to own the coolest toys, and now Adobe is telling us we can’t have them anymore.

Incidentally, they use the same psychology on inmates in maximum security prisons: give them a privilege, and then take it away from them.

Now for the fear: the slippery slope. Is Adobe’s move going to usher in a new era of software “rental?” It makes a lot of sense on the revenue side, where wildly popular sites from Facebook to Tumblr and even YouTube have done great jobs of building mass audiences, but don’t have the earnings to show for it.

Take Facebook as an example. Facebook is so popular and ubiquitous that it’s almost become a utility or an operating system. Mark Zuckerberg has adamantly stated time and again that as long as he’s the Chief Hoodie Officer, Facebook will always be free. But at what point does he look at Sheryl Sandberg and say: “Holy crap. We could charge 10 cents a month to our 805 bazillion users and become the most profitable internet company of all time, overnight.”

OK, maybe it’s Sheryl who looks at Zuck and raises the issue. But when you run a public company, you’re under a fiduciary obligation to consider every option to make money for your shareholders. So would it really surprise you to live in a world where Facebook remains technically “free,” but with a limited feature set that only gets you so far in re-connecting with ex-girlfriends from college? And would you really stop using Facebook if you suddenly had to pay for those juicy new features? I doubt it.

The underlying point is clear: most of the web’s big success stories still haven’t figured out how to be profitable under an ad-supported business model. The microscopic fractions of pennies from display ads and pre-rolls barely add up, if they add up at all. And if Adobe can get away with charging $240 a year—a year!—for a mediocre, limited-purpose product, then who’s to say what a TV show on YouTube or a better Facebook experience is worth?

Now there’s a full color image to think about.