The Brilliance of Adobe's Licensing Revolution (Feb. 2, '15)



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The Brilliance of Adobe's Licensing Revolution

Don't call Adobe's Richard Atkinson a license compliance officer or an anti-piracy guru. That's not what he does, he'll tell you.

Richard Atkinson

His title is aptly; Corporate Director of the Global Piracy Conversion Team, which is a clever way of saying his job is to understand why people use Adobe products without paying for them, then give these users incentives for becoming legitimate customers.

"I don't market what I do as antipiracy," Atkinson says. "I really have a negative reaction to that label because I think too much of the industry has focused on piracy and trying to defeat piracy instead of trying to respond to the behaviors of the customer base."

Adobe views piracy as basically unfulfilled demand. "Our failure to capture that demand is our problem as much as itís their problem," says Atkinson. "Piracy is an sign that you don't have business models positioned to capture all your potential customers."

Adobe is in the enviable position of having deep market share across a lot of markets, so one of their best bets for growth isn't attracting new customers, it's converting un-paying users, says Atkinson. This intersection of licensing and revenue elevates the company's antipiracy efforts into the realm of business strategy.

And this is exactly where Atkinson believes it should be. "First and foremost, piracy is a business issue; itís not a legal issue, itís not a technical issue, itís not a licensing issue."

Historically, most businesses looked at piracy losses as lost revenue that does not affect the bottom line. "If you worked in antipiracy your primary goal was to reduce the piracy rate," says Atkinson. "You'd move the piracy rate up or down independent of whether you effected the bottom line of the company. And so business leaders would ask why theyíre spending money on antipiracy when it doesnít effect revenue."

When licensing efforts are not connected to the bottom line, they are not relevant, Atkinson argues. "So when budget cuts come, licensing is going to be on that list because youíre not thought of as a strategic contributor. Youíre thought of as insurance."

So how do software vendors shift licensing compliance and antipiracy efforts into business strategy?

"Start to look at the reasons why you have piracy and understand the root causes of it. If you address piracy this way, you'll begin to change your business without necessarily having to do enforcement," says Atkinson.

For Adobe's unlicensed users the motivation behind piracy was the perceived high cost of the software. So today, with Adobe's Creative Cloud subscription-based license, users get Photoshop for $9.95 a month instead of putting down $900 or more at a time. "Thatís a huge difference in perceived cost and it lowers the barrier to entry," says Atkinson. "We have lots of anecdotal stories that people have posted online saying: 'I used to pirate it, but now that itís only $9.95, I might as will just subscribe and be legitimate.'"

Adobe doesn't like to talk about how their groundbreaking move to a subscription model for all their creative products has affected piracy rates (although if you attend Atkinson's closed-session at the Compliance Manager Summit he has promised to give more details). Why not? Because the subscription model has nothing to do with combating piracy, says Atkinson. "It's about providing customers with a better user experience and serving the unfulfilled demand."†

Adobe's subscription-based go-to-market strategy is to give users the product they want at a perceived lower price and added value. The subscription rates for Adobe products are low. Plus the Creative Cloud offers continuous updates, storage options and multi-product integrations all designed to boost the value proposition.†

"Microsoft is moving in the same direction with their Office365 products and strategies," says Atkinson. "Some of their strategies and our strategies are very similar. For example, theyíre opening up the number and kinds of devices you can put Office365 on, and offering some perks to the subscription model."

The point is to push the perceived licensing border further out to where most customers no longer feel constrained by licensing boundaries, says Atkinson. "If you can move the licensing barrier out, then all these issues around piracy start to decline. If you start to relax your licensing just a little bit, then you begin to make and see big changes."

Yet you have to relax in the right controlled ways, Atkinson cautions. "Youíre always walking a fine line between how much piracy you just enabled and how many customers just became happier. As an industry, I think weíve struggled with that line but were starting to find ways to be more sophisticated in how we manage this dilemma."

The subscription license model is based on cloud connectivity, of course, which provides software vendors with a much better sense of whatís going on in the installed base, notes Atkinson. "As I start to have more connectivity, I can know how many copies of programs are out there. It helps me have a much better business understanding of the proportion of the community that paid me and the proportion that paid someone else and didnít pay me. And thatís insightful and fundamental to business strategy."

So with all its benefits, is the subscription model the future of software licensing?

"Generally yes," says Atkinson. "Itís really about culturally whether people want to own stuff or whether they donít care. People used to collect DVDs and VHS tapes but now they watch Netflix or WatchEver, so the cultural desire to collect and own is starting to decline. As long as you know you have access to it whenever you want it, owning is less important, and it's the same thing with software."

Join us at the Compliance Manager Summit, March 12-13, in San Francisco to hear Adobe's Richard Atkinson and others discusses the latest challenges and opportunities in software compliance programs.

To view the Summit's full agenda and to register to attend, visit IBSMASummit.com.


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