January 15, 2011

Wanted: The World's Software Library, by Subscription

Retail software prices are often eyebrow-raisingly high, and for the most part, inflexible. Every couple years, it's not uncommon for our family to shell out $150 to $500 for the latest Microsoft Office Suite. The full Adobe Creative Suite will set you back almost $2,000, and upgrades are $600. The home edition of Mathematica is about $300. Apple Final Cut Studio will cost you $1,000 and Logic Studio another $500. These prices are no doubt in line with professionals who require the software to live, but for more casual users, who might interact with the software infrequently, paying full retail price seems exorbitant. This sets up a market imbalance, similar to that of the world of music pre-Napster, where the consumer at times can seem justified for obtaining the software freely using another method.

I've previously stated that the vast majority of consumers are solid law-abiding citizens who are happy to pay for quality, assuming price is in line with the assumed value of the goods. When inequality enters the system, be it for full music albums, individual movie theater tickets, software, or even pay per view TV events, technology often comes into play to circumvent the traditional restraints.

Adobe CS Sticker Shock

The disruption of the music industry by Napster's steal what you can model, followed by iTunes' efforts to reign things back again at an affordable price point, has recently evolved further with the subscription-based all you can eat method, one not pioneered by Spotify, but popularized by it, despite years of Rhapsody and Napster (part two), and newer competitors like Rdio offering similar structures. Software, running in parallel, can similarly be downloaded for free on peer to peer networks, and can even be downloaded directly with options like the Mac App Store and Google's Chrome Web Store, but missing is the solution for the casual buyer who just wants to rent the software, occasionally accessing it, without needing to shell out for the boxed retail option, dedicating gigabytes of hard drive space for the privilege, being sure to keep one's serial numbers stored under lock and key.

A new business model, following the Music as a Subscription service, emerges with Software as a Subscription, more commonly referred to as SAAS (Software as a Service). SAAS applications can be enterprise-focused like Salesforce.com, or consumer focused, like Google Docs and Gmail, most of whom see all the activity taking place on the Web via a Web service. But what about the more traditional software titles from Adobe, Microsoft and others? What about an iTunes-like, Spotify-like service where the consumer could pay about $25 to $50 a month and tap into all the popular software titles in the world, reading and writing remotely, but saving locally?

One assumes the major reason this generic software subscription model has not emerged is because the traditional retail software giants can still get buyers at the hundreds of dollars apiece, and they would be less interested in spreading a customer's $500 to $600 across 12 months with other providers. So long as they are raking in the revenue, disrupting their own business isn't appealing.

For consumers with high-speed Web access and relatively powerful CPUs and GPUs, the infrastructure for creating such a software subscription service is there. Toss a few thousand titles on Amazon or iTunes and you can see that with smart cataloging, the ability to use any title in the world would be at your fingertips. Then too would come the next stage of the rollout - including video games and premium offerings with tiered pricings and tiered privileges.

Despite the music industry and other's concerns, Spotify's success is not in the ability for some folks to gain free access with ads, but in the popular and accelerating option for paid accounts, eager to shell out real cash for access to an immense music library. I may scoff at the idea of upgrading my Adobe Creative Suite again for a few hundred bucks, only using it sporadically, but I'd pay a good amount per month, like I do for cable TV, electricity and other plumbing, to gain access to the world's software library. Web-based SAAS for single instance applications is not enough. It's early days. A company that can get all the copyright holders to work together and find a solution to customers would be extremely compelling.