Subscriptions, Lotteries, What's Next?

Yes, photography is becoming a cess pool of tactics designed to make your hobby/profession less enjoyable.

First up, we had the notion of "not owning something" pop up its nasty head with Adobe's strong move to subscriptions for Creative Cloud. At the extreme definition consider your monthly tithe to Adobe a toll for each time you use Lightroom, Photoshop, or the other CC products. Use Lightroom Classic four times a month? That'll be US$2.50 a use, please. 

Adobe's success has prompted others to go the same route, but their bridge tollroad software probably costs more per use if you were to cost it out that way. At the most recent photography trade show I went to, I counted the number of software subscriptions being hawked: over a dozen. 

That number continues to go up. For instance, Photo Mechanic just started asking for 50% more a month than Adobe. This for a limited function product that needs a complete overhaul in UI, and whose updating has mostly been (throughout its history) solely bug fixes, security fixes, and new camera model handling. Worse still, you can get a perpetual license, but that's equivalent to paying for two years worth of subscription but getting only one year worth of updates and support. I've started designing a "better" ingest program, which I hope to get a developer to create (preferably without subscription ;~).

The net impact of software moving to subscription is that Adobe will win. Partly because the photography plan from them is still just US$10 a month, an affordable price for a hobbyist or professional photographer, partly because Adobe has proven that they'll aggressively update their products with new features and performance that slowly stifles competitive products (particularly plug-ins).

Adobe is the Netflix of software: they've established the bigger, best, and most iterative competitor in Subscriptions, and all the other players now have to do something to catch up or be rendered irrelevant. I don't see the others doing that successfully at the moment. Over time, you're going to subscribe to fewer and fewer software packages because that's the only way you can control the costs of your hobby/profession. I, for instance, am carefully looking over my software expenses this year, and starting to prune out products I use infrequently or which produce little added value. I'm pretty sure you will be, too, if you aren't already.

Next up we have Lotteries. 

The hardware companies seem to think this is the solution to them making too few product to meet demand, or to make a few extra dollars off a simple engraving. The amusing irony is that by going to a lottery system—both Fujifilm and Ricoh are current practitioners for some products—this means that the hardware-producing company takes in less money than it could ;~). Moreover, they think that they're establishing a fair system where everyone has the same chance of winning, but in practice that has not turned out to be the case. 

If you're going to make an extreme limited edition product—example: the Fujifilm X100VI Limited Edition—then the proper way to do it would be to auction that small quantity of product off. If you don't want to be accused of profiteering, donate the excess profit to a photographic charity. The arbitraging scalpers that tried to scoop up all those X100VIs probably wouldn't have bothered, because if they auction off at US$3000, how do you make money off that? It's the idea that they can pick up the limited edition for US$2000 and sell it on eBay for US$3000+ that's driving all the scalpers to try to scoop up the camera before the rest of us. Take that incentive away and they go away. 

But we've had quasi lotteries for some time. Nikon NPS Priority Purchase is probably the most publicly known version, but there are others that are hidden from view. If you don't belong to the right "club" you'll be at the tail end of a line for seats that are currently all filled. 

It's funny. One of things we studied at length in my MBA program at the Kelley School (IU) was supply and demand. Oh the formulas, the charts, the "capitalism solves all problems" thinking. As it turns out, most of what is taught in MBA programs doesn't work in the real world very well, if at all. Lotteries always cater to irrational behavior by humans. So the formulas and spreadsheets you carefully calculate simply don't work. Lotteries certainly don't maximize value at the hardware producing company, which you'd think those companies would want to do. But the bottom line is that no camera company is taking risks any more; they don't produce to demand, at all. Well, okay, Canon has overproduced to demand, and going to pay for that in lower gross profit margin, but Canon's also about the only camera maker still on the "obtain maximum market share" plan.

But we're not done yet with things that make photography less enjoyable.

How about Feature Add-ons? 

Sony tried this with PlayMemories apps (and more). That lasted 12 years as Sony tried to figure out how to charge for features. Now those features are gone ;~). To be replaced by things like "Buy a Grid." So it appears that Sony still wants to sell you feature add-ons, they just aren't going to do so under a sub-brand name. Are firmware updates far behind?

Finally, we have Three Product Monte, the shell game being dealt by a lot of software companies. Features previously in one product that are iterated are removed and put in another product so as to trigger a different upgrade charge. Skylum used to be the primary user of this tactic, but now I see it across at least three other companies. The baseline here is "don't let the customer get all your capabilities in one product." By forcing you to buy multiple products, revenue increases. Or so the companies think; many professionals balk at such tactics because it keeps changing their workflow, and workflow time is money. 

A relative to Three Product Monte is discontinuing a product completely, and putting its ability in a different, new product, for which you have to pay full price for. Again, pros will balk at this because the workflow change, but apparently enough hobbyists buy into this strategy that it works for sucking a few more dollars from them.

All the above things are all indicators of a market that's not really growing. Certainly a market that's not growing enough to support all the players in it. Which means we'll see consolidation and more nicheafication in the not too distant future. For example, since the Z9 and a couple of particular lenses appeared, I can't think of anything else I would want to buy. And Adobe software, once mastered, is probably all I really need. Getting my attention and dollars to buy something new is going to take one of the above moves (or a new move), and even then I'll be somewhat reluctant. 

Someone is going to put the above all together, though, and I can't wait for the complaints about that. Consider a camera that comes with a Feature/Update subscription that is only attainable via lottery. Better still, it plays Three Product Monte with the base feature/performance set, meaning that there will be something in the offering that makes you want to upgrade, but then you'll be caught in the Subscription game, probably to get back features you gave up when you upgraded! 

Don't laugh, the auto makers have been trying to figure this game out, and I'm pretty sure they'll figure it out (I could help them with that, as I've identified two ways they could get there, but I'm not about to foist those ideas on society for free; I don't want "getting Thomed" to be a slang phrase in the future across industries). If they do, other manufacturing based industries will follow, including cameras.

I'll also point out one tactic that currently isn't really used in the photo market other than some Web sites: embedded advertising. What would your reaction be if your camera started putting up messages like "works best with Nextorage cards"? Don't laugh, it's coming, though maybe not soon. Currently we have the anti-embedding opposite happening, though: Canon full frame RF cameras don't support third party RF autofocus lenses. Canon seems to think that "system" means "only things with the Canon name on them." 

Finally, another thing that's happening now: email update overload. 

In direct marketing, a concept called conversion rate is important. What happens is this: on your first few direct email promotions, you have a strong conversion rate (e.g. send out 1000 emails and get 100 orders). So you send out more emails. But the conversion rate drops, so you send out more. 

What a lot of companies are now doing is exhausting their cow. As in cash cow being milked too much. I'm pretty sure you can name the top three photo software companies that have fallen to this practice. Since the conversion rates drop over persistent mailings, this induces the "minor update for a low price" syndrome in response. Which provokes more emails, which reduces conversion, which...well, it's a vicious cycle once you get into it. Add in offering rumor sites a piece of the action for promoting your latest and greatest, and the din of the marketing noise just gets overwhelming for very little benefit.

You really want a customer for life if you're running a business. Most of the things noted above are abusing that customer, which makes them less likely to stick around until your company dies off. 

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