Torching the license machine

Begin with how the money actually arrived. In 2011, Adobe sold Creative Suite the way furniture is sold: a large payment, ownership of a version, and then silence until the next version shipped. A full Suite ran over a thousand dollars, a major release came every eighteen to twenty four months, and revenue arrived in waves that crested with each launch and thinned between them.

It was a very good machine. Fiscal 2010 brought in 3.8 billion dollars, and in the second week of November 2011 management reaffirmed a fourth quarter target that put fiscal 2011 on its way to roughly 4.2 billion. Product licenses made up about four of every five revenue dollars. Photoshop was not so much a product as a verb.

But look closer at what the machine demanded. Every upgrade cycle was a fresh sales campaign to people who already owned something that worked; skip-a-version behavior was rational and common. The four figure entry price kept students, freelancers, and most of the developing world either outside or pirating. And the flagship distribution technology of the previous decade, Flash, was visibly dying at the hands of the mobile platforms that same month.

Elsewhere in software, a different collection model was spreading: pay monthly, always current, no version to own at all. Applied here it would mean trading a thousand dollar sale today for fifty dollar payments that only add up if the customer stays. Sit in the chief executive's chair in early November 2011, with an analyst meeting on the calendar, and decide what to do with the most profitable creative software franchise in the world.