Wed 16 August 2017
Otherwise upstanding software companies are moving toward rental models. This saddens and disturbs me. While perhaps lucrative in the short term, this business model deceives users about the nature of software and, long-term, imperils the future of quality products by throwing the incentives of maker and user into disalignment.
First, let’s cast a straw man aside: if what users are really paying for is the time-proportional maintenance cost of contracts (Netflix) or infrastructure (Dropbox), we don’t have a problem. If Dropbox or Netflix’s servers go away, their apps are immediately useless, and those servers are physical objects which fall apart at a rate proportionate to the passage of time. But bytes on a disk don’t need a continual infusion of money, and pretending otherwise is simply dishonest.
Now let’s examine some of common justifications for the rental model.
It’s easier for our users. They now get the app on all platforms “for free”. In reality, you had to develop the app separately for each platform, so it makes sense for the purchase price to correlate with the amount of your effort the customer is enjoying. Proportionality makes markets efficient. Not selling enough copies on the Amiga? The Amiga version goes away, and neither you nor the non-Amiga user has to pay for it anymore. This also leaves room for someone who can more efficiently maintain an Amiga version to enter the market. Further, I’d like to meet any user who thinks paying more for software is “easier”.
It takes money to keep developing features. Of course! And people have been paying for features—in proportion to their utility—for decades. However, you now seek guaranteed revenue regardless of whether you deliver value. Is it not fairer to offer something for sale and let users decide, version by version, whether it is worth their dollar?
We want to stay in business to keep offering good software for you. That is a fine goal, and I hope you succeed. However, your inability to save money toward future development is neither your users’ fault, nor can you ethically make it their problem. Why should the software business be immune from risk? It already enjoys zero marginal cost. Is it too much to expect you to invest your revenue wisely?
It takes money to keep up with fixes and OS updates. Users should rightly pay for those. We as software makers need to get over our guilt at charging for maintenance; it’s where most development effort goes, after all. If users feel they have a moral right to perpetual compatiblity updates, they need to be educated out of their naivete. No one expects their faucet manufacturer to come to their house to replace O-rings forever, and software’s more abstract nature changes nothing. But, again, this is something for users to decide case by case. If they wish to remain on an old OS with old software, that is their choice: the sheer passage of time while bytes on disk remain unchanged costs no money, and we should not hoodwink people into believing that it does.
A major impetus behind this reality-denying movement is the App Store model, in which users pay once and then enjoy free updates forever. It is short-term thinking. Clearly, in a finite world, depending solely on new user acquisition for funding is infeasible, as some would-be rentiers point out. However, the most market-efficient model is the one that has worked well for half a century:
- You make an update and offer it for sale.
- Existing users decide whether that update is worth their money, whether for new features or for fixes.
- Either it sells, and you make a profit, or it does not, and you have a clear signal from the market to change something.
The elegant coupling between money made and value delivered rewards good software and punishes bad.
But what should sellers do who are captive to an app store? The least-bad alternative is to occasionally make a clean break: publish Foo Version 2, and charge for it again. Be upfront with your users that this is your model so everyone can make informed decisions. On iOS, Apple now supports sharing storage across a single vendor’s apps, so migrating data to the new version can be transparent.
Telling is the success of agile upstarts like the makers of Affinity Photo. They are vacuuming up the users who scoff at perpetually renting incumbents like Photoshop, proclaiming “No subscription” right on their front page. I look forward to giving them my dollars, not just in this initial loss-leading phase but as they ultimately fall back to a charge-for-upgrades model. And if they instead choose to rent, I look forward to offering my dollars to the next company who is willing to honestly earn them.