Adobe’s “Creative Monopoly”

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Why Adobe Wants You in the Cloud, Today.
Adobe’s move to a subscription only model for their market dominating Creative Suite software products (now Creative Cloud) has caused quite a bit of anger by long time Adobe customers. This article will address this major change, discuss some of the possible reasons for Adobe’s ending of perpetual licensing, and raise some serious concerns about the impact this move will have on the millions of content creators who rely on Adobe’s products.

Although they would never admit to it, Adobe has got to be quite disappointed with their subscription numbers. Adobe has claimed the demand for the cloud is incredibly high. They’re ending perpetual licensing because people flocking to the cloud. Their hard sell at NAB belies that assertion, as do the data – at least to the extent that data is available. Although Adobe doesn’t publish exactly on how many people subscribe to Creative Cloud vs. own perpetual licenses, looking through their financial reports is a bit enlightening.

Let’s start with 2007’s numbers: In 2007, the year Adobe released CS3, Adobe had revenue of $3.2 billion. 60% of that ($1.9 billion) was from their Creative line of products. There’s no data on how much of that revenue was from upgrades vs. full licenses, but CS3 was a big ugrade and probably accounted for a majority of the revenue. For the sake of simplicity, let’s assume that the average price per license (averaging all upgrade, full, academic, volume) was $1000. That would amount to approximately 1,900,000 licenses. Keep in mind that many people updated CS suites every other cycle, so the number of licenses could have been far greater. Now look at FY2012, where Adobe had $3.343 billion in sales (creative and other – they didn’t break it down further) and $673 million in all subscriptions, of which $153 million was in Creative Cloud subscriptions. These are small subscription numbers against product sales.

A Mature Product

Adobe’s products are at the heart of the creation process for most of the incredible timelapse we feature hear on this site. Creative Suite 6 is a very stable and mature product which millions of people use each day to create a vast array of incredible work. Quite frankly, CS6 is probably the last version of Creative Suite most people will need for the next 5 years. That’s a major problem for Adobe, which needs to find a way to get the millions of customers they already have to upgrade as often as possible. Historically Adobe has done this by innovating and evolving the product just enough between versions to drive the upgrade cycle. read more...