Australia's backlash to Adobe CC proposed subscription increases

[David Budd]

With little in the way any of substantial improvements in performance, together with a fairly lack lustre number of updates since the subscription system  came in I was happy to stay with my perpetual licence version of Lightroom 6.

However, with the proposed increases now occurring in Australia and probably in time globally, any thought of upgrading to the CC version is no longer a choice.

Interestedly there are calls for the Australian Consumer & Competition Commission to look into Adobe's pricing given the somewhat dubious reasons behind these increases, which would not be the first time that this has occurred

https://procounter.com.au/2017/05/09/adobe-cc-prices-go/

[Mark D Segal]

I can change my mind depending on the facts, but for now I have a really hard time believing that whether in Australia, Canada or the USA, competition authorities would have any legal basis whatsoever to intervene on this; surely not in Canada. The market will determine whether the pricing policy makes commercial sense for them.

[rdonson]

In the U.S. if they increase the CC price we'll have to judge by how much they increase it.  The government is unlikely to even see it as an issue.  Every year taxes, utilities, rent, health insurance, etc. all go up although generally at a somewhat reasonable pace.  Of course, Social Security doesn't go up accordingly.  Oh yeah and our congress gives themselves pay raises because they're all really poor millionaires except for our billionaire president. 

For me, I really haven't found a good alternative to Lightroom unless I want to give up the digital asset management (Catalog) aspects of the product (I'm not). It is a bit annoying that Lr is still a 2015 version and every update includes new bugs in previously functioning features.  Their attention seems to be on mobile everything. 

[David Budd]

I can change my mind depending on the facts, but for now I have a really hard time believing that whether in Australia, Canada or the USA, competition authorities would have any legal basis whatsoever to intervene on this; surely not in Canada. The market will determine whether the pricing policy makes commercial sense for them.

In 2013 Adobe, along with Apple and Microsoft appeared before a federal government enquiry regarding pricing. It's not something they relish but in this case it did have an impact.

http://www.abc.net.au/news/2013-03-22/apple-microsoft-grilled-over-high-prices/4587900 

[Mark D Segal]

I read that article. It doesn't mention any legal powers of the government to reduce the prices they are charging. Is there anything in the Australian law that would allow this? Have there ever been successful prosecutions? This is an area in which I am really quite skeptical at least based on Canadian experience. Governments can "inquire" all they are allowed to - the key issue is whether they can really DO anything about it and have a history of successful intervention.

[hogloff]

I read that article. It doesn't mention any legal powers of the government to reduce the prices they are charging. Is there anything in the Australian law that would allow this? Have there ever been successful prosecutions? This is an area in which I am really quite skeptical at least based on Canadian experience. Governments can "inquire" all they are allowed to - the key issue is whether they can really DO anything about it and have a history of successful intervention.

And from a personal view, I don't want my government to meddle into these types of issues. The market will be the ultimate judge. If I don't like the price of something, I'll not buy it. Simple as that.

[Mark D Segal]

Well, actually, it isn't that simple. We have competition laws to help keep markets working competitively by preventing collusive pricing behaviour and other tactics intended to destroy competition. It's that in this particular case I don't think such laws are applicable.

[David Budd]

I read that article. It doesn't mention any legal powers of the government to reduce the prices they are charging. Is there anything in the Australian law that would allow this? Have there ever been successful prosecutions? This is an area in which I am really quite skeptical at least based on Canadian experience. Governments can "inquire" all they are allowed to - the key issue is whether they can really DO anything about it and have a history of successful intervention.

In this particular instance it was an enquiry only, without legal powers. The purpose is to make it known to the public that these multinational companies are being investigated which obviously creates bad PR for them.  In Adobe's case, they reduced some prices. Bearing in mind that in 2013 AUD was close to parity with the USD so when they are charging $2500 more for a digital product than in the US  the enquiry was even more relevant

[Mark D Segal]

In this particular instance it was an enquiry only, without legal powers. The purpose is to make it known to the public that these multinational companies are being investigated which obviously creates bad PR for them.  In Adobe's case, they reduced some prices. Bearing in mind that in 2013 AUD was close to parity with the USD so when they are charging $2500 more for a digital product than in the US  the enquiry was even more relevant

That's interesting. Did any explanation for such a large price difference emerge from this inquiry? What was learned from it?

[David Budd]

That's interesting. Did any explanation for such a large price difference emerge from this inquiry? What was learned from it?

Around the same time of the enquiry Adobe CEO, Shantanu Narayen was in Australia and was asked that very question as you will see from this video.
https://www.youtube.com/watch?v=78yigV0GYGQ&t=29s 

I don't think we learned anymore from it than what we already knew...that companies will charge what the market place will pay, until they are pressured to justify it.

[hogloff]

Around the same time of the enquiry Adobe CEO, Shantanu Narayen was in Australia and was asked that very question as you will see from this video.
https://www.youtube.com/watch?v=78yigV0GYGQ&t=29s 

I don't think we learned anymore from it than what we already knew...that companies will charge what the market place will pay, until they are pressured to justify it.

Why do they need to justify it? Why not just let the market justify the price. The EOS-M was released at $800...no one bought it and the price was dropped to around $300.

[rdonson]

The market is not always a free market.  Check out drug prices in the U.S. if you think markets are the answer to everything.

[Mark D Segal]

The market is not always a free market.  Check out drug prices in the U.S. if you think markets are the answer to everything.

This is correct. It's why we have laws against the abuse of monopoly power; but unfortunately, the enforcement of those laws is extremely difficult and usually ineffective. That's why the CEO of Adobe could get away with the kind of shamefully evasive non-answers he was giving about differential pricing in that video David linked.

[Alan Goldhammer]

I only have the perpetual license version of LR and PS CS6.  I've just not seen a major need in terms of what I do to go the CC route.  I have purchased Affinity Photo and it is a very good product at a nice price point.  For my uses it does everything PS does and will also work directly from LR (though you do need to convert to TIFF before exporting).  I've not seen any product that rivals LR but that is not Adobe's fault.  There is nothing out there to prevent a competitor from entering the market.  Will the Affinity group see an opportunity here?  Anyone seeking to come up with a competitive product would have to figure out a way to permit users to import a LR catalogue into the new program.  Whether such engineering would infringe on an Adobe patent is not clear to me. 

I agree with Mark Segal that there is no compelling reason for an antitrust investigation.

[dreed]

And companies like Adobe wonder why they have a problem with software piracy.

Before online distribution of software, you could blame local price differences on the greediness of local import agents that often had exclusive deals, effectively locking out competition and allowing the pockets of useless middlemen to be lined. Now that those useless middlemen are gone, Adobe are lining their own pockets because there is no competition. With online download and registration, there is no longer any way for them to justify price differential for regions beyond tax collection.

Whilst Adobe doesn't have a monopoly on the products, if you look at the use of such applications across the market then they do have the defacto monopoly.

The only market force that can impact Adobe here is software piracy.

[rdonson]

And companies like Adobe wonder why they have a problem with software piracy.

Before online distribution of software, you could blame local price differences on the greediness of local import agents that often had exclusive deals, effectively locking out competition and allowing the pockets of useless middlemen to be lined. Now that those useless middlemen are gone, Adobe are lining their own pockets because there is no competition. With online download and registration, there is no longer any way for them to justify price differential for regions beyond tax collection.

Whilst Adobe doesn't have a monopoly on the products, if you look at the use of such applications across the market then they do have the defacto monopoly.

The only market force that can impact Adobe here is software piracy.

I'm not an economist but I would think that international exchange rates might be more of a factor now than the old factors you mention.

[Mark D Segal]

I'm not an economist but I would think that international exchange rates might be more of a factor now than the old factors you mention.

You need to multiply the US price by about 1.35 to get the equivalent AUD price, absent any other factors. Any yet greater price difference for downloaded software that isn't explained by differential local taxes needs to be explained.

[BobShaw]

There is now a 10% GST or tax on imports of overseas services, so that and the falling AUD provide some explanation. The reality is of course that yes, they are increasing prices because they can, you are sort of locked between a rock and a hard place. I don't even use Lightroom, but my Photoshop CS5 no longer works with Sierra, so I am sort of caught.

The ACCC is supposed to act on collusion on pricing between say BP and Shell on the price of petrol or Woolworths and Coles on the price of food. However they have completely failed on this. They are also supposed to prevent a company with a monopoly preventing competitors. They blocked Telstra from putting in a free nation wide optical fibre to the home network in 1996. So 20 years later we have a crap Internet service over copper. In short, the ACCC has been a complete waste of public money and generally detrimental to the country.

Here one company is providing its own product. If it was cure for cancer then there would be a case, but if it is just an image editing programme then you have a choice to use another. I doubt that there is much they can or would do.

It is a great example of how a company would rope people into a "honeymoon" deal and then increase prices. Banks do this all the time.