Adobe Licensing and the Cloud – Cloud Subscriptions Take Center Stage

By Michelle Estes, Miro Consulting

Progress is impossible without change.

– George Bernard Shaw

An energetic mix of delight and anxiety has greeted the major update to Adobe® Creative Cloud announced last May at Adobe MAX, The Creative Conference. The delight centered around several new “CC” desktop applications, enhanced cross-device collaboration and publishing capabilities, and a series of promotional pricing offers under their Value Incentive Plan (VIP), Adobe’s monthly subscription plan (one-year minimum) for Creative Cloud. VIP Creative Cloud users also seem to like the fact that automatic program updates and support are included, and that licensing compliance is much easier.

The anxiety for some is based on the concurrent announcement that while Adobe Creative Suite® will continue to be supported and available for traditional licensing, it is not clear what Adobe has planned for future releases of Creative Suite or other CS products. Future updates and enhancements would appear to be targeting Creative Cloud, which is only available via subscription. The worry, especially among individuals and small enterprises, is that this signals a transition by Adobe to an all-cloud/all-subscription model that may ultimately cost more. 

Relax! Adobe Listens

Adobe customers who are overly worried about these changes should take a deep breath and relax. For one thing, all change in business is experimental – if it doesn’t work, it usually doesn’t last. And there is precedent at Adobe: Remember recently when Adobe announced a time limitation for discount upgrades to new versions, after which customers would have to pay full freight? Customers rebelled and Adobe abandoned the time limitation. This suggests that Adobe responds to its customers.

Besides, if the advantages of subscriptions for Creative Cloud don’t grab you, bear in mind that, for now, customers with more traditional perpetual licensing for CS and above can maintain those agreements indefinitely. Perpetual licenses can be used for the useful life of the software, and tools such as Adobe Acrobat, Captivate and non-core creative applications can still be purchased, with maintenance. And Adobe has clearly stated that even new customers may elect to purchase CS6 under one of three traditional licensing plans:

  • Transaction License Program (TLP): This is a perpetual license with a one license minimum requirement. This plan targets smaller organizations with its single pricing level. There are no upgrades for this program except for Academic and Government customers who can opt for upgrades for eligible products. A company with a more “stable” environment that doesn’t need to upgrade the product annually or semi-annually would be an ideal candidate for the transactional licensing.
  • Contractual License Program (CLP): This is a perpetual license with a 10,000 license point minimum requirement. Customers can purchase and download all CS desktop products (hardcopies will soon be phased out), but support costs extra. CLP is a two-year agreement, and customers must meet Adobe’s minimum point system requirement (10,000 point) based on products used. CLP is suitable for, mid-size and large organizations.
  • Enterprise Agreement (EA): This is a relatively new, three-year perpetual license option for Adobe, clearly modeled after the Microsoft licensing structure. Organizations must purchase at least 100 licenses plus support and maintenance for Acrobat Standard, Acrobat Pro or Adobe Presenter – the only programs available under EA. Pricing is locked in for three years, and after the first year there is a mandatory true-up. This option is ideal for organizations that use numerous forms and documents, such as a law firms.
Many Silver Linings in the Cloud

The Value Incentive Plan – or VIP – is Adobe’s subscription-based licensing program for Adobe Creative Cloud. Adobe’s VIP has no minimum license purchase requirement. Your organization can subscribe to as few or as many Adobe subscription licenses as it needs. Once enrolled, you get a VIP number and access to the administrative control manager in the Adobe portal, where you keep track of licensing and manage your accounts. You can download and start using the subscription immediately, but you have to pay within 30 days or the product stops working. This plan helps to ensure that you remain in a defensible license position.

Indeed, this is why other companies are evolving from perpetual licensing to subscription-based cloud services. For instance, Microsoft is currently pushing its Office 365 subscription features on both business and home users, with an option to pay monthly or annually.

Adobe is upping the ante a bit by only offering Creative Cloud via subscription. The lure is an array of sexy next-generation versions of Adobe Photoshop® CC, InDesign® CC, Illustrator® CC, Dreamweaver® CC, and Premiere® Pro CC. With this Creative Cloud update, creative files can also be stored, synced and shared on Mac OS, Windows iOS and Android. Moreover, Behance – a global leader for connecting the online creative community – is integrated into Creative Cloud, making it easy for customers to showcase their work, get feedback and gain exposure.

What about Cost?

A further enticement to enroll in VIP is a bewildering array of promotional pricing. Similar to many cable promotions, nobody really knows what the final pricing is going to be – probably including Adobe!

Additional promotional pricing is available for some customers, including CS6 users. A team version of Creative Cloud includes everything individual members receive plus 100GB of storage and centralized deployment and administration capabilities. Creative Cloud for teams is priced at $69.99 per month per seat, but there has been a lot of variation to that pricing due to discounts and deals. For example, existing customers with a volume license of CS3 or later get their first year of Creative Cloud for teams at the discounted rate of $39.99 per month per seat if they sign up before the end of August 2013.

Focus on Value

In some cases, the Adobe monthly subscription model may cost more. For instance, at $35 per month, the total annual subscription for Photoshop is $420 for the first year. After two years, the subscription users will have paid $840; and after three years, $1,260. Current licensed users will have paid $699 for a regular license purchase. Add in a typical upgrade cost of $199, and the licensing is still less expensive over three years at $898.

However, that’s just price. Factor in the overall value of the new Creative Cloud described above, and the VIP subscription model may be worthwhile. For instance, Adobe’s Creative Cloud for Teams may be especially value-laden for:

  • Multinational firms collaborating with the same software versions worldwide.
  • Document heavy companies, small, large or multinational.
  • Any enterprise dependent on photographs, graphics, schematics, etc.
  • Entertainment and media companies, large and small.
  • Organizations with large volumes and multiple locations.
No Rush

Subscription-based cloud software models may well be a trend of future software licensing, but individuals and organizations uncomfortable with this change at Adobe need not switch to VIP subscriptions immediately. Adobe is keeping the traditional licensing option open –– for now. However, beware the old Chinese proverb:

Be not afraid of going slowly. Be only afraid of standing still.