Adobe's Explosive Profit Boost Could Help It Give Creatives the Leg Up They've Been Begging For

Adobe's Explosive Profit Boost Could Help It Give Creatives the Leg Up They've Been Begging For

Adobe’s last quarter results are out, and they’re better than ever. Adobe’s Creative Cloud and media business rose 35 percent thanks to a 23 percent beat on subscriber expectations, while the company’s overall net income more than doubled from $88.1 million to a staggering $222 million. Adobe’s fourth-quarter earnings report shot its stock to all-time highs. On one hand, that’s good business. But what does this mean for creatives who have felt an increasingly rocky relationship with the software giant?

 

Background

As a seemingly increasingly large number of people have a problem with companies and businesses making profits, it may be hard for some to look at Adobe's recent success. Personally, I think it’s great for the American economy, jobs in Silicon Valley, etc. But there’s no doubt that a sour taste develops into one more pungent when a relationship feels so one-sided. Here, professionals are giving money to Adobe, yet at times, those same creatives can feel completely unheard.

Some Photoshop CC updates may be plagued with bugs, but at least the splash screen image is better than the one it replaced, is it not? I'll take what I can get...

Over the last year or two, Adobe hasn’t been able to shake the “new release, excitement, bad press, bug fixes” cycle that now, unfortunately, feels normal. Adobe Photoshop releases seem plagued by the most obvious of bugs, one has to seriously question the testing going on (or more likely not happening) before public release. The company’s recent update to Lightroom was met with intense backlash after introducing an oversimplified and completely flawed reworked Import dialog — a move from which Adobe couldn’t backpedal fast enough. Oh, and people hate the new healing brush, by the way. All of these ill-fated feature enhancements happen without continually requested performance enhancements to culling and other module functions for Lightroom and, quite simply, to more or less be left alone in Photoshop.

 

It’s Not All Bad — Not Even Close

Before the crowd gets too angry, it’s important to note several key facts. First, Adobe’s profits are not increasing so greatly because we’re paying more for the same product. After all, despite the backlash from the switch to subscription pricing, that very pricing seems incredibly reasonable. What used to cost $2,600 and required additional fees for subsequent upgrades can now be had for $50 per month, upgraded whenever there’s an upgrade to be had.

This box marked the contents of what was once considered the holy grail of creative software suites. Today, boxed software that you own outright has all but disappeared in the wake of online subscription licenses that have some drawbacks amidst many benefits.

Likewise, Photoshop used to cost $700, while Lightroom was $300 before it was dropped to $150 with the introduction of Lightroom 4 — the duo of which can be had for an incredibly affordable $10 per month. Those that think this is unfair aren’t doing the math.

Monthly payments have to go on for over four years or seven years, respectively, before reaching the total cost of what once was called Master Collection or Photoshop Creative Suite + Photoshop Lightroom. The disparity between the two examples only goes to show just how great of a value the continuing Photography Plan is. But let’s be realistic: the more serious of us were more likely to upgrade at a faster pace than that anyway. The only people that would not have upgraded so quickly are the hobbyists and amateurs that have, ironically, been incredibly responsive to the new pricing model.

 

Irony at Its Finest

Indeed, it’s these people who are pouring in the extra dough by adding themselves to Adobe’s subscription base, which now adds up to 833,000 — a 23-percent increase over the 678,200 analysts expected. Adobe attributes this directly to the increased interest of amateur and hobby-level creatives that now view its products (most likely its Photography Plan) as cheap and worth the nominal, contract-free cost of entry. Oh, how the wonders of little upfront cost amaze… Perhaps this is really just great (if somewhat obvious) business at its finest.

Of course, Adobe's suite of apps extends far beyond the image-making space. But it's in image-making that they're making more and more profit with added subscriptions sold to advanced amateur and hobbyist photographers.

It Gets Even Better

Not only are subscription models not that bad (assuming one actually uses the product and doesn’t sit on a rarely used subscription), but Adobe has also done a refreshingly good job of making its subscription a value-added one.

Its free mobile apps are huge for the on-the-go creative. While splitting various functions over several Photoshop-related apps might seem odd, it’s in fact a very smart way to spread out resources across the capabilities of a mobile device that, over the inclusion of all of the company’s apps, lets you do more and more with each update. Cloud service and storage integration are largely beneficial for those with projects involving multiple creatives and/or systems. And Stock services are more than just a shoot-off business when they’re integrated as well as they are across the suite of apps on all platforms. There’s no doubt that Adobe has been working hard to earn our money.

 

Then Why the Bad Aftertaste?

Adobe’s been hard at work. Okay. No one’s denying that. But at the end of the day, as important as these new, relatively inexperienced customers are to Adobe’s profit increase, we professionals have been, and will continue to provide, Adobe’s profit sustenance; we’re the true bread and butter. And at the end of the day, it’s hard to swallow not feeling valued.

The bugs we experience in software releases are very real, and very time-consuming. Our apps won’t always update automatically the way they’re supposed to, and the one time they do update, we want to run back as fast as possible to the way things were.

Adobe Lightroom releases continually offer vague promises of “improved performance,” but real-world tests have little to show for those promises. And the culling and import processes are — quite frankly — atrocious in pace.

At the root, improvements are anything but, and our requests go seemingly unheard.

 

There’s a Solution

Of course there’s a solution. But its implementation rests solely on what Adobe decides or does not decide to do. On one hand, their hands are tied by the limits of technology. But we know better — at least a little. We know that if you dedicate enough resources to any endeavor — if you really do care enough — you can make “it” happen.

To this point, although some might say Adobe has no competition, there’s simply no telling what the future will bring. And no company that attracts as much talent as Adobe does will forget that. They know time is always limited unless you’re willing to and able to continuously adapt. And, just like any entity, they want to survive as long as they can — forever if history will let them.

PhaseOne’s Capture One software just saw an update with Version 9, which is great, but which is still so different from Lightroom that it will be difficult to see any kind of en-masse migration without a major overhaul. Maybe the impending sweetness of reaching that Version 10 milestone will be enough to bring some new workspace option. But frankly, I’m shocked there still isn’t a button to switch C1’s entire workflow to be more similar to that of Lightroom.

Meanwhile, Serif hit the ground running with Affinity Photo this year while another competitor, MacPhun, increased the size of its portfolio of Mac apps. And however much Apple might seem to be shunning Final Cut Pro, that, too, is still a very capable piece of software alongside the bane of every college film student’s existence: Avid.

Surely, tides will always change. But with Adobe gaining momentum, even ever-hopeful me will admit that any true change will take serious time. A real change will have to come directly from Adobe. And all we can do in the meantime is ask, plead, beg, and maybe even write a little more.

It’s time to end the tumultuous relationship we have with Adobe. But we can’t do it. For reasons well known — as with some bad relationship we can somehow never manage to leave — this is something Adobe will have to do for us out of the sheer goodness of their hearts. I simply hope that extra cash will fill their hearts with some of that much-needed goodness.

Log in or register to post comments

13 Comments

Jason Ranalli's picture

Cool writeup and I generally agree albeit with a few clarifications:

1) I don't begrudge Adobe for making high profits at all...it's their job to make money. I don't think they should be made to feel guilty because others around the industry haven't had similar windfall profits or success.

2) I may eat my words but I seriously doubt that the amount or severity of defects coming out of iterative CC releases will subside. Not seeing anything in particular with regards to changes made in their regression testing, etc makes one think that you won't see more of the same.

In fact, it is quite possible that they will see these profits more or less as a confirmation that they are doing everything right and that there is no need for change.

william mitchell's picture

I have not used CC (creative crud) and I do not think I will. Customer support out sourced outside the USA is an insult. Two data breaches and features that change/vanish only to come back after everyone complains. Pay $ 10 per month for PS & LR and be an alpha tester? No thank you. I will use PS CS 5 and LR 4 for as long as I can. Adobe does not respect the long time customers, I have been using Photoshop for 20 years and now feel rejected by Adobe. The marketing & finance people have taken over Adobe, great for Wall Street but for the creative community not so much. Do the CEO and CFO, Board of Directors even use the CC ? I bet not. If Affinity and MacPhun ever make Windows versions that would be great for windows users.
Adobe has gotten sloppy little if any internal testing, "new" features of little real world use. Saying that support of Metal in mac versions will happen then backtracking. Light Room was great when new and the team was made up of photographers, but who is running the team now?

Lee Ramsden's picture

everyone to their own opinion,
if we all thought the same be a boring place,
interesting you thought something is Creative Crud, when have not used it.
If you do not need it and are happy with a nearly 6 year old product thats great and saves you money. :)

david shepherd's picture

I agree with Lee here. It may be in your best interest to continue to support Adobe old business model, and that is fine. But Adobe is far superior now with the subscription model in almost every aspect and the product is cheaper for everyone. I would say that your opinion of adobe is a bit harsh considering how much they actually contribute to our world now at the incredible value. The barrier to entry is far lower now than ever without a $1000 commitment from the start.

Sean Shimmel's picture

Not me. I agree with William.

I have the mix of Photoshop CS5, Lightroom 5 and CC 2015 (on a test-it-out basis).

So far I'm not especially intrigued with the utter newness of the offerings within the Creative Cloud. Both for my photography and my illustration, I'm easily enjoying the software and savings of "old school" ownership.

I think Lightroom is great! I bought the box set of Lightroom 4 because, even though I shot only film, I saw the benefits of cataloging the photographs. I've also used LR4 to adjust my film photographs. I haven't upgraded to LR6, but the photography CC looks like a bargain. I wouldn't buy Photoshop in a box.

david shepherd's picture

As a print industry professional, I would say that the argument here is valid, but not the perspective that I have on Adobe. I do think that Adobe is listening to customers, but not in the same manner/method that we are familiar with. I think the tracking and reporting data is the lead source of information in which adobe respond to. I am certain that Adobe is listening to their primary customer and income base; The print and digital vendors. You also have to look at the fact that companies that use the Adobe platform have to buy seats for each user on a subscription basis also. That can be from 1-1000 people and thousands of corporations across the globe has Adobe CC. The creative is not the base customer that has kept Adobe in business for so long and it seems that many are oblivious to where the content will live. Adobe is not only communicating with vendors and producers, they are driving new markets and abilities. Adobe CC is only a part of their business structure and some of the profits have come from individuals subscribing to the service.

That said, with the many different printers, marketing firms, content outlets, Point of Sale outlets and so on, Adobe has communicated with these sectors of their market to increase and drive what can be actually produced. Adobe has to keep pace and not exceed what can be outputted to print or digital points of consumption. Photoshop is not the most important software in their portfolio, the PDF is. No matter who makes what, the PDF is so ubiquitous that it can be printed, delivered for digital consumption, shared, and more. The monetization of the PDF drives profits and almost every piece of Adobe software creates PDFs.

If Adobe had to depend on the "photographer" to drive business, they would have failed at Lightroom 1. There is not any competition for Adobe now and there will not be any in the near and distant future. For another company to successfully cut into adobe's market share, they have to start cutting into Vendor House like a Commercial Print house. When the printers and vendors switch to another software solution, then Adobe will see serious trouble.

Unfortunately, the prices in this article only relate to US-based subscribers. For the rest of us, it's much more expensive. In the end, it was much cheaper for me to just buy the Lightroom 6 update. If I could get the CC subscription for only 10 bucks a month, I would sign up right away.

Adam Ottke's picture

How much is it where you are? I know taxes in a lot of areas of Europe, etc., tend to keep prices high for a lot of products from the U.S., etc. (especially anything tech-related). But that's a good point... Higher prices in other countries could easily make it less "worth it."

william mitchell's picture

Just to be clear I started with LR with the 1st public beta and have used LR ever since. As to the subscription model it would be ok if the product lived up to the promise. I have a friend who uses CC and he says PS CC crashes 5 times a day. Was PS CS 6 more stable then PS CC ? Other people have posted about non USA pricing and there is no education discounts any more and that is valid points of criticism. Who does the current management of Adobe really care about any customers creative or corporate or Wall Street.?

Steven Fogarty's picture

Who culls with Lightroom? That's what Photomechanic is for.

Adam Ottke's picture

Ha! That IS what photomechanic is for. But that's the problem? Shouldn't Lightroom be able to do it? Seriously...

Adobe still has offices in California? They have a huge building in Utah. That would also explain the source of so many issues, if they write code there. We have cheap labor, not good labor.