A Geek With Guns

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The Dying Concept of Ownership

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Apple is once again pushing developers to utilize a subscription model rather than a one-time purchase model for their software:

For a while now, Apple has been encouraging app developers to consider subscriptions as a key revenue source, and the company is introducing some new options for developers that it hopes will make the option more attractive. In the past few days, Apple has informed developers that they will now be able to target current and recent subscribers with promotional rates on subscriptions. That means subscribers will be able to offer discounts to try to get you back if you lapse, or they might try to entice you to stay if you’re considering leaving.

Apple’s push isn’t unique. More and more markets are trying to transition to a subscription model. Car dealerships often push leasing over purchasing. Music and video are moving from selling songs and albums to stream subscriptions. Home ownership is being usurped by renting.

To put it bluntly, ownership is dying. It shouldn’t surprise anybody though. Subscription models are far more profitable. Consider a software package. For the sake of argument, let’s say that there is a software package that you use and that it originally cost $60 for each major version upgrade and that it averages a major upgrade release once per year. Suddenly the developer decided to transition to a subscription model. Now you will pay $5 per month. At first you don’t notice any difference since you’re still paying $60 per year. However, under the old model you paid once and had that software in perpetuity. If the developer released a new major version that didn’t have any new features that interested you, you could just skip it and continue to use the old version. Under a subscription model, even if you stick with an old version, you will lose access if you stop paying your subscription.

The other issue with subscription models is that, contrary to claims made by subscription advocates, they can discourage developers from adding new features. If, for example, a developer releases a piece of software that customers absolutely need to get their job done, they will enjoy a continuous stream of revenue even if they fail to release improvements. Under a one-time purchase model, the only way that the developer could make more money is to release a new version that’s good enough to convince customers to buy it.

But, in the end, subscription models offer more profit for less work so I predict that they will continue to overtake one-time purchase models. I’m not looking forward to such a future but it is what it is.

Written by Christopher Burg

February 28th, 2019 at 10:00 am

Posted in News You Need to Know

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