Perhaps I'm just cheap (I prefer frugal), but I refuse to purchase anything with a recurring subscription. Don't even own a cellphone. That said, I had no problem buying Sublime Text 2 for $60 because it was a great product, and I was guaranteed updates until the next major version. If it was subscription, even at $5 a month, I'd have never made that purchase.

And, because of that, Sublime's developer will never make a living at it, and it will either be a labor of love or abandoned.

I'm with you, man, I'm cheap too. But that's the reality of todays software.

As long as Sublime can charge for upgrades in the future, it's not too large a problem. The problem is all the App Store software that can't and the user expectations of free upgrades that are being set by Apple (not familiar with other app stores to know if they are following the same path).

Right, but my thesis is that the upgrade-train model of software revenue is faltering. I think Sparrow is evidence of this (what you say about Sublime could apply as easily to Sparrow.)

I think it is a large problem, and we are seeing the manifestations of it now.

Time will tell, but I'm sure not gonna work on one-time charge software, nor would I recommend it to anyone. I'll work on free open source stuff, financed by work on whatever recurring models I can figure out.

Having purchased sublime text 2 I would definitely encourage the author of it to do this. The main competition text mate is a great example itself of this model being unsustainable in terms of having someone continue to develop the product full time in the long term.

Opposite problem. TextMate made Alan Odgaard so much money that he didn't need to work on it anymore[1].

Who wants to maintain an old code base when they could spend ten weeks trekking in New Zealand[2] and then hunker down for the Great Rewrite That Fixes All The Problems?

(Not that I blame Odgaard; in fact, as an ST2 user this is my greatest fear about that product--selling thousands and thousands of copies at $60 is an extremely viable level of revenue for a one-man shop.)

[1]: http://blog.macromates.com/2006/year-in-review/ [2]: http://blog.macromates.com/2006/20-will-require-leopard/

I had always suspected that TextMate was a huge financial success but never did the googling. Thanks a lot for posting this.

I wonder if PixelMator is on a similar trajectory after Apple has featured them in nearly every possible spot on the Mac App Store.

I disagree, I think it it more that the future effort vs reward didn't stack up as well. Because so many developers had already purchased and it was well known, a free version 2 wouldn't represent the same kind of financial gain the initial spike did, despite all the extra effort.

A paid version 2 though produces a similar windfall again, rather than diminishing returns.

> A paid version 2 though produces a similar windfall again, rather than diminishing returns.

Marginal utility. The first million is worth a lot more than the second.

I respect you, but anyone who refuses to get a cell phone because of the recurring fee is a bad barometer for what the market will bare.

I had this problem when I wanted to buy phpStorm. It costs 94.05 EUR (which I view as expensive for a personal license) with a one-year upgrade.

Why can't you give me fixes for the version I purchased and then sell the next major version ?

Years ago it was the same thing with Trillian IM. While I happily paid Reaper (a DAW) that gives me two major versions.

JetBrains does something similar. They give you access to all updates, including any major versions, for a year. (They put out a new major version approximately every 8 months, so depending on when you buy, you might end up with two major version upgrades for free.) Then you pay to maintain your subscription year after year, which you can think of as upgrade pricing.

Actually PhpStorm is a product of JetBrains ;)

Exactly :-) My point was that their business model is already very similar to what you described ("give me fixes for the version I purchased and then sell the next major version").

Ooooh my bad, I see your point now.

I disagreed with you in a previous thread, but I have another point to make.

I think the SaaS model applied to desktop software would run into some problems. I think people would react with hostility if their desktop software stopped working once they stopped paying a license fee, even though they may very well accept this model for browser-based apps.

I think the sparrow guys charged too little for their email client, personally. People will pay for beautiful and quality, productivity tools.

I think you are right for most pure-play desktop software, which is why desktop/mobile people should be looking for a service aspect to their apps: syncing between devices, backups, publishing, etc.

It's unfortunate, but the desktop model just doesn't pencil out in many places in todays world. That means that stuff will end up in the cloud and on the web, not because that's where it can be best implemented (I far prefer a good thick client over a good web app) but rather because that's where the economics force it. And users will end up being held ransom by a cloud service anyway.

It's a funny economics problem.

Unfortunately iOS/Mac users aren't really willing to pay subscription fees for syncing between devices (or cloud based backups).

iCloud/Dropbox has really set the expectation that syncing should be free.

It's not really an economics problem. It's unfortunate but an email client is a feature of a platform, it's not a service itself. You can become an email provider and make a kickass client the differentiator, but that won't happen with a 3 person team either.

How is it not an economics problem?

There is no solution. You're proposing to sell a package no one wants.

I think there are solutions (if you read my posts above, I propose that desktop developers find services within their software, such as publishing/hosting, syncing, etc.) but even if there weren't, it's still an economics problem.

The economics of the upgrade-train desktop model are bad and getting worse, and the market will supply less of that. I may be proposing something not inherently appealing to you, but I think increasingly that's where people smart enough to build great software will focus their efforts.

Isn't Microsoft using the SaaS model for desktop software like Office?

I believe we are seeing the beginning of the transition to SaaS for desktop apps, even for big companies. You can see the example of Adobe and its creative cloud subscription model http://www.adobe.com/products/creativecloud.html

You can't charge a subscription price without providing subscription value. No one is going to buy a subscription to an email client. I do agree with your (and the article's) point, but that doesn't change how purchasing decisions are made. Either you provide marginal utility or you don't.

Adobe creative suite a Microsoft office are doing this and I doubt most would be buying for the tack on subscription based services they get.

We'll also see how successful they are. My guess is not very.

Right now they have customers who do stuff like buy CS Design licenses for every computer in their organization because a few people wanted it. If customers like that jump on SaaS options while normal folks do the math (hmm after eighteen months am I ahead or not?) it's a net loss.

Edit: after posting I realized my reading comprehension needed some work - I'd misread who was getting the net loss. That said, it remains to be seen if adding palatable SaaS pricing will help or hurt.

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These SaaS options aren't necessarily the net loss you describe.

I don't mean this to sound like an ad for Adobe's subscription model, but as someone who's used a lot of their products for over a decade, it's hands-down the best way for companies to get access.

In Adobe's case, per-app pricing is really there to set value for the Creative Suite bundles, which in turn set the value for subscriptions.

Let's say I need Photoshop. I have 3 primary options:

- Buy Photoshop CS6 for $700 right now. It's on a 2 year release cycle, and was recently updated, so that's a solid 2 years of guilt-free use until the next rev.

- Buy a CS bundle - eg Design & Web Premium for $1,900. Includes Photoshop Extended, Illustrator, InDesign, Acrobat, Flash, and Fireworks.

- Subscribe at $50/mo for 1 year ($75/mo w/ no commitment). Gets everything above, plus Premiere Pro, After Effects, et al.

If I buy the bundle, that's a $4150 value for a mere $1200 more than Photoshop by itself. This is why the bundles have always sold so well.

If I subscribe for 2 years, it's $500 more than Photoshop by itself, and $700 cheaper than buying a standard CS bundle. Also, I get the latest version of every Adobe tool for the duration, so if different people in the org have different needs I don't need to care.

Right, SaaS (from folks like Adobe) is actually downward pressure on software prices. If they switch to a pure SaaS model (which some companies have sporadically attempted to do) they simply bleed customers AND lose revenue from the ones they keep.

I think Adobe will make a killing on the new subscription pricing. I think the customers with volume licenses will most likely still buy them because a) it will still be cheaper to buy outright when you know you will need a license for hundreds of seats and also b) because IT departments will continue to hate dealing with Adobe's activation process, which a volume license makes much simpler.

Meanwhile all the small shops who could not afford to buy licenses just to equip the 3 freelancers for a month will suddenly be able to justify the small cost of a month's subscription. I almost expect them to roll it into each job's billings, whereas previously they would either use a hooky copy or suffer the pain of juggling licenses and old software.

There are a lot of small shops using hooky Adobe software.

Under the pay-for-upgrades model, software developers have an incentive to keep updating and upgrading their software. I want new features and the developer wants upgrade money, so our incentives are aligned.

Under the subscription model, don't you think the software you're subscribing for will end up like IE6, left to stagnate because there's no incentive to spend developer time on it?

Once everyone is charging a recurring fee, and competition drives those margins down to a "paying for maintenance" amount you have the same problem.

Both business models can work, and both business models can fail. I haven't seen any evidence that SaaS is immune to competitive pricing, which is the issue being described in the post.

Any reason some kind of Kickstarter-like service couldn't help with this? There are a couple interesting economic tricks going on in various Kickstarter projects that could be applied to this.

Developers publish feature lists for an upgrade cycle, users vote with their dollars, different features can be funded, etc etc? There are a couple of open source projects (like PostGIS) that have similar programs...

The quality of Sparrow is it's simplicity. Adding features to it would make it evolve in bloatware. See MS Word. They now reshuffle menues to justify upgrades. I guess in some next version, menues will be at the bottom of the window.

This is not a long term solution. The only viable solution was to reduce burn rate as close to zero as possible. This means producing a new software.

They even did tried that out, proposing an yearly payment subscription for the push notification, but that was not well received by customers. http://www.macgasm.net/2012/05/16/ask-and-tell-sparrows-subs...

Maybe a small disagreement: JetBrains does work on a form of subscription mode, right? About once a year I pay an upgrade fee for IntelliJ, RubyMine, and PyCharm. This is a recurring cost, but the advantages of have up to date IDEs far out weigh the "subscription cost." What is the difference between "I want to have" upgrades and subscriptions?

These are working tools. Their cost should be a fraction of the revenue generated with them. Sparrow is not a revenue generating app. It saved some time to the users. That's all.

Out of curiosity, is there a reason you bought RubyMine and PyCharm in addition to IntelliJ? The paid edition of IntelliJ includes access to the Ruby and Python plugins.

They are lighter weight that IntelliJ. I spend a lot of time writing code so the extra investment is reasonable.