Hot off the press, this letter from Adobe Creative Cloud and the future of the creative process is worth reading. Apart from flattering their customers, rather too profusely, Adobe are making Photoshop and other Creative Suite products subscription-only:

To our creative users,

At Adobe, we believe our customers are some of the most influential people in the world. You are storytellers. You capture and relate the human experience — be it through a Hollywood blockbuster, an interactive iPad app, or photos from your child’s school play…..
[Lots more if you enjoy that kind of thing! ]
Given this, the CC applications will be available only as part of Creative Cloud. We will continue to sell and support Adobe Creative Suite 6 applications, and will provide bug fixes and security updates as necessary. We do not, however, have any current plans to release new versions of our CS applications.

For the first year only, the pricing looks like it’s dropped – CS6 customers get the complete cloud for $19.99 per month, $29.99 if you have an earlier version, and $9.99 a month for Photoshop on its own. So if you look at it closely, the loyal customer deal amounts to paying roughly the same as you would have paid for an upgrade (assuming an 18-24 month cycle). After that first year, the discount expires and those prices appear to double. You can see obvious business logic for the change.

The revenue recognition smokescreen

It’s worth correcting one misconception about the switch – that it suddenly allows Adobe to release new features once they are ready – and the argument is that this wasn’t possible with perpetual licences because of Adobe’s revenue recognition policies. The trouble is, you don’t necessarily need to switch to a subscription model to release those constraints and comply with GAAP.

Well, it’s not totally untrue and it’s not deliberately misleading, you are hearing this from marketing or tech guys. While they might be expected to be aware of and comply with company accounting policy, you probably don’t expect them to possess the professional qualifications/experience to to appreciate the underlying principles or subtleties of GAAP. And before you ask, yes, that’s my shady background.

Certainly, releasing updates in the old 18-24 month cycle could cause accounting problems. But it would partly depend on the value of the revenues and costs associated with the new features – their “materiality” – and they would be evaluated in the context of a business with many income streams. Updates to a single product might not be material to the overall financial results, or you might be updating different products throughout the cycle and even out individual distortions. And while a listed company does not do this frivolously, if necessary another solution would be to change your accounting policies or adjust how they are applied.

For how Lightroom is affected, see Lightroom Journal Q&A. It will continue to be sold, as well as being in the subscription service.