Thoughts on Software Subscriptions

There is a trend these days that has software companies moving to a subscription model rather than staying with the traditional license and update fee model. I understand how the companies that produce applications would prefer the subscription model because it provides a more stable and predictable cash flow. With the traditional update model there are can be a significant amount of time between paid updates that can lead to some lean times. Their business income comes in bursts, which does make it difficult to forecast.

I'm a libertarian-leaning, capitalism-admiring, government oversight-appreciating individual with socialist-tendencies. I believe that the social safety net does a great deal of good, that there are areas where government could certainly be smaller, and that capitalism is an excellent economic engine. Since corporations are solely beholden to shareholders to maximize profit it's up to government regulations and oversight to keep them in line, and ideally providing an even playing field for capitalism to operate.

The software industry has always appealed to me in part because it's largely an arena where the playing field is even and the one who builds the better mousetrap is the most successful in the marketplace. It's an excellent example of how capitalism generally works well and fosters innovation.

This brings me to the big problems I have with "renting" software:

#1 Subscriptions take away (or at least severely soften) the market forces that drive innovation. The market no longer speaks in terms of upgrade adoption rates that directly affect the bottom line. If you're paying a monthly subscription it's going to take you quite a while to decide that you're paying more than what it's worth for the software that you're using. If you decide that this is the case you're stuck because...

#2 If you do decide to stop paying monthly you will no longer have access to that software, regardless of how much you've paid or how long you've been paying for it. This is a serious disincentive to jump ship that again works contrary to capitalism and market forces.

I prefer to make the choice to pay for an update when that update provides a substantial benefit to me commensurate with the cost. That may mean that I will skip a major version (as I have tended to do with Adobe products) but in the end I typically do fork over money thus voting with my wallet.

The update model isn't perfect and there are companies such as Smith Micro, Roxio, and Intuit that charge very nearly full price for updates to VMWare Fusion, Toast, and Quicken but that still provides me with the option simply choose not to pay for an update for the time being while giving me time to look elsewhere for alternatives.

There are situations where an application matures and does everything that it needs to do, and this is fine. If an application is still useful I have no hesitation paying for an update from time to time that keeps the application up-to-date on the current operating system. How long do you suppose you could pay for abandonware before you actually realized that it was abandoned?

When my long-time invoicing software Billings went to a subscription model I found another option. For the time being I'm still using Adobe CS5 and TextExpander but when they stop working on some future version of my operating system you can count on the fact that I will look for alternatives rather than signing up for a subscription.

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