July 6th, 2010
Why I’m Smarter than Adobe
Hey folks, I’m back! Did you miss me? Of course you did.
I don’t understand software companies. Strike that; I don’t understand one software company in particular, Adobe.
Check out this online poll from 2008, it suggests that 60% of Adobe Photoshop users pirate the program. Sixty percent!
Now, that number probably isn’t entirely shocking. Let’s be honest, most of you are likely running at least a couple pirated applications on your PC. Perhaps some of you run stolen software exclusively; a stubborn “Fuck you!” to the whole of Silicon Valley.
Adobe is aware of this rampant piracy rate, I assume; few companies get as huge as they are without intimately knowing their market. It puzzles me why they haven’t reacted to it.
I know, I know, Adobe has indeed employed many anti-piracy tactics, and to their credit stealing Photoshop isn’t as easy as it used to be. Not that I have tried…you know…to steal it. My official position is that I own a perfectly legal copy of Adobe Photoshop and certainly have not been using it free of charge for the last 15 years. There, lawsuit averted!
What I mean is Adobe hasn’t reacted to piracy from a marketing perspective, as their software is still ridiculously expensive. Purchasing a legal copy of Adobe Photoshop CS5 will set you back a painful $800CDN. May the Flying Spaghetti Monster help you if you also require Illustrator.
Here’s the thing, Adobe; when 60% of the market is not willing to pay you eight-hundred dollars your product is too expensive!
Honestly, I don’t know what is so difficult to understand about this. I’m just some dick with a useless college diploma and a lame blog, yet I feel like I understand economics better than Adobe does.
Look, if only four out of ten potential buyers are purchasing Photoshop at $800 you make $3200. But if you drop the price to something more reasonable, say $400, and sell copies to all ten you make $4000! Pulling out the ole’ brain calculator that is a gain of positive hundreds of dollars.
Yes, there will always be piracy. Adobe will never see the day ten out of ten users are legal. However, I would argue making Photoshop more economically accessible creates new repeat customers eager to slap another $200 down for an upgrade to CS6. How could growing your market be a bad thing?
Photoshop has become an artistic tool as ubiquitous as the paint brush; albeit an elaborate paint brush made of ivory with bristles hand picked from a unicorn’s ball sack. My point being, even a nice set of paint brushes won’t set your credit card on fire.
The problem is that, sure, 6/10 people don’t want to pay 800 for CS5. But I doubt that 10/10 would pay 400 for it. In fact, those 6 pirates likely wouldn’t even pay 100 for it (debatable.) What Adobe has realized is that they do a a legitimate market (i.e. professionals) that will pay whatever they need for their software. So Adobe did this equation:
“Revenue we want to realize” = “price we will charge” X “professionals.”
The variability of all other consumers’ “purchase vs pirate” is mostly just a bonus for Adobe, because Adobe already made what they want. The reason they don’t complain (or spend money to thwart piracy) is because they are smart. It would simply be spending money (or increasing losses) in vain. From a business point of view they are smart. They continue to offer a tool that professionals need, and they profit.
I can’t say I disagree on any particular point. There would certainly have to be a cost/benefit analysis on Adobe’s part to find out if a reduction in price would lead to greater profit.
Personally, I would certainly buy Photoshop if I could justify the price. In fact, I would buy the entire design collection were it half the cost it is now. I don’t think I’m alone in that at all.
Steam is a good example of a profitable model that offers inexpensive software. My roommate is heavily into Steam and says he spends more money on Steam purchases than on PS3 games simply because they’re cheap and easy to access.
When demand is high, costs normally fall. Blu-rays have become much more affordable in the last year. I would usually think twice before buying a Blu-ray at $40. Now that they’re down to $25 or less I’m much more likely to make that purchase.
The argument could also be made that there is a tier of users Adobe could be catering to, the middle income/fresh out of college designer who may not require the full breadth of features available in each product. Perhaps there is a market for a Photoshop Lite, something more powerful than Elements, but not as full featured as the flagship program.
I’m just spit-balling here.