Is Abletons Business Model Broken?

[Bizon]

The recent announcements from Ableton have puzzled me and I got to thinking about the business model that Ableton is currently operating under. This effects everyone as the future of the company is at stake, or at least it is in my eyes.

Here is how I see it:

Past:
In the past (pre, let’s say Ableton 8 ) they had a quite simple business model in that the software was not fully matured and required development. This development required frequent updates (annually) as there was much room to grow and many fixes to be implemented. This in turn brought revenue as the releases were quite substantial and users did not mind paying for the new features/fixes. Moreover, the user base was also growing substantially.

Present:
This is where it begins to get more interesting. I would say live is pretty much in its mature stage at this point. It could perhaps be argued that another release or even two may get it to this point but for argument sake say that one more release will make it a mature product since there is not many additional features that Ableton could add. More specifically, there is not many features that could be added to warrant a paid upgrade of $200 or so.

NAMM just passed us and I for one was expecting Ableton 9. Not because I wanted more things to play with but simply because it makes sense. Since Abelton has no other revenue stream, other than maybe some kind of deal they have worked out with Cycling 74 and Serato/Rane, this only made sense. The signs were all there, a full year since the last announcement, the deadline for the 20% off that coincided with NAMM (simple solution to avoiding complaints of purchases close to the announcement but not close enough for a free upgrade), lack of annual revenue influx, and finally lack of addressing user complaints. All this made sense but then, I believe for the first time they sat back and actually listened to the users and decided to mend some relationships by fixing the current version.

I believe the fixing of the current version was more of a publicity move than anything. We all have seen discussions regarding what features will be in a new version whether it was 6, 7, or 9, the thread is usually overwhelmed with “fix the current version before releasing a new one” comments. It has gotten pretty old and I believe they realized that people are growing tired of paying more money for stuff they may not need just to get something they should have received in the last purchase they made, a stable program. I believe that Ableton 9 is complete and was scheduled to be released at NAMM but they pulled the plug at last minute, with their announcement of “Quality” and decided to postpone it to a time where people are happy and know they are purchasing a stable system with whatever new bells and whistles they come up with.

So, this will obviously result in a pretty nice influx of cash as a lot of people should upgrade to this now shiny and stable Ableton 9. This should be a large user base as a lot of people have elected to stick with Ableton 7 or even Ableton 6 due to stability and even cash constraint issues. Which leads me to some further points. First, Ableton will also need to analyze their price point. Currently, they are by far the most expensive DAW on the market that is marketed to the average person. This cannot be sustained much longer as the upgrades will be getting smaller (less features) as the product approaches its mature stage, where is where Logic and alike are. Moreover, they cannot really argue that the product is much better than competition as that point is highly debatable. I guess the only real thing they have up on the competition is the uniqueness of the workflow.

Second, all other DAW’s are now part of larger companies that offer more products, Logic & Apple, Sonar & Roland, Steinberg & Yamaha, and so on. These companies do not require their DAW to be Producing huge cash flows to stay afloat. Instead, they use the sales of the software to generate further sales in Hardware. Ableton, does not have this and requires selling more copies of the program to generate cash flow, hence the annual release. This puts them in a tough spot where they must come up with interesting ways to make money, like parthnerships.

Future:
So what is in store for the future in Ableton world? No clue, but here are some ideas:

1) They will be bought out by someone. Once revenues begin to decrease and they are strapped for cash, someone will snatch them up. This in my mind is the most logical outcome.
2) They continue partnering with companies and negotiate some kind royalty or other fee. Not sure how many of these it would take to keep the company a going concern but probably many. This is a risky strategy as partnerships don’t necessary mean more customers but require a lot of upfront development.
3) Digress to other products. They could begin selling the instruments and perhaps begin developing packs for Ableton and others. However, since most of their instruments (AAS) and sounds (Big Fish, I believe) are not in house this possibility is also quite impossible.

Really, the only logical solution I see is sell the company off, but who the hell am I…

Disclaimer: All of the above is just my opinion based on a few facts, don’t go off on me if you don’t agree…just state an opinion as I did.

[LoopStationZebra]

I gotta read all that? Fuck.

Tell me this first. Is there anything in there that will help me score with chicks?

[Bizon]

I gotta read all that? Fuck.

Tell me this first. Is there anything in there that will help me score with chicks?

LOL

[McQ714]

I don't think they are as strapped for cash as one may think. Tell me this, how much do you think Ableton gets, for each copy of Live Lite that goes out with just about every midi controller product on the market. Akai, Korg, Novation, and M-Audio all have Live Lite versions in their software bundled with controllers. I don't think Ableton gives those away free, but I could be wrong. Anyone from HQ care to comment???

[Bizon]

I don't think they are as strapped for cash as one may think. Tell me this, how much do you think Ableton gets, for each copy of Live Lite that goes out with just about every midi controller product on the market. Akai, Korg, Novation, and M-Audio all have Live Lite versions in their software bundled with controllers. I don't think Ableton gives those away free, but I could be wrong. Anyone from HQ care to comment???

The point is not how much they have built up in reserves, I am simply pointing out that their business model is not sustainable. The reserves will dwindle very soon unless they do somethind IMO.

[tigr]

I guess there are still a lot of musicians who are *new* users...

[Pitch Black]

I think you neglect the fact that Live is the industry-standard live performance software. Yes there are a couple-of-dozen DAWs out there, but Live is the only one you see being used for performance everywhere. I don't see MainStage or Reason taking Live's place any time soon.

A mature product can still increase it's user base by drawing new customers into the fold - especially when it is the "industry-standard". People want to use what works / what's known to work / what everyone else uses because it works. Live is a flexible enough tool to be used in so many different ways.

As long as Ableton keep their dominance in live performance, I would say their future is assured.

2c


(sorry Abes, I feel like I'm talking about Mum and Dad's sex life participating in this thread)

[McQ714]

Gerhard is a smart guy as are the rest of the Ableton team. i think we'll be seeing new products and features for years to come, but what i do hope is that they find a way not to lose their focus on what their product started off as. Live doesn't need to be the studio standard software.

[Bizon]

I think you neglect the fact that Live is the industry-standard live performance software. Yes there are a couple-of-dozen DAWs out there, but Live is the only one you see being used for performance everywhere. I don't see MainStage or Reason taking Live's place any time soon.

A mature product can still increase it's user base by drawing new customers into the fold - especially when it is the "industry-standard". People want to use what works / what's known to work / what everyone else uses because it works. Live is a flexible enough tool to be used in so many different ways.

As long as Ableton keep their dominance in live performance, I would say their future is assured.

2c


(sorry Abes, I feel like I'm talking about Mum and Dad's sex life participating in this thread)

I am not trying to be hard on Abelton or anything but I will play the Devil’s Advocate. They may be the leaders in live performance but definitely not the industry standard. I would say this is definitely still a growing market as most DJ’s still elect to use more physical media like CD’s.

I would be really interested to see the % of people that use Ableton as a performance tool. If the % is significant than you may be right. However, I believe more people purchase the software for production and general experimenting around with music. I agree that performance is an unoccupied niche market, I am just not sure there currently is big enough demand to warrant a strict focusing of their attention.

[McQ714]

^ that's where we come in... spread the word!!!

Live will hopefully be more stable than ever. the least we can do is let people know how awesome we think Live is.

[3dot...]

right now..
nothing comes close to what live has to offer...
and with the addition of Max.. and Serato..there's not much competition..
but..
NI is closing IN..
see:maschinev1
...I have very high hopes for Reaktor6.)
renoise is beginning to get more serious as well..
and I believe other companies are closing in on the whole Live performace deal..
I'm still an Ableton fanboi though.. and love Abletons' product
alls I know is .. competition is supposed to be good..

[ethios4]

I think it's hilarious that anyone would try and speculate about the inner workings of the Ableton business. There is so much you don't know its just pointless.

[towers of silence]

I think you neglect the fact that Live is the industry-standard live performance software. Yes there are a couple-of-dozen DAWs out there, but Live is the only one you see being used for performance everywhere. I don't see MainStage or Reason taking Live's place any time soon.

A mature product can still increase it's user base by drawing new customers into the fold - especially when it is the "industry-standard". People want to use what works / what's known to work / what everyone else uses because it works. Live is a flexible enough tool to be used in so many different ways.

As long as Ableton keep their dominance in live performance, I would say their future is assured.

2c


(sorry Abes, I feel like I'm talking about Mum and Dad's sex life participating in this thread)

I am not trying to be hard on Abelton or anything but I will play the Devil’s Advocate. They may be the leaders in live performance but definitely not the industry standard. I would say this is definitely still a growing market as most DJ’s still elect to use more physical media like CD’s.

I would be really interested to see the % of people that use Ableton as a performance tool. If the % is significant than you may be right. However, I believe more people purchase the software for production and general experimenting around with music. I agree that performance is an unoccupied niche market, I am just not sure there currently is big enough demand to warrant a strict focusing of their attention.

It is called "Live" for a reason...

You bring up some good points, but I disagree with a few of your theories. I don't think Ableton is pulling a stunt with their quality control press release from a while back. I doubt that Ableton 9 was ready to go and they just decided to sweep it under the rug for the time being. I base this on a few things- Bear in mind Ableton 8 didn't come out until 4/1/09, last year, and the previous version was released back in Nov of 07, so they certainly aren't rushing to get a new version out once a year, say nothing about 8 months later. Also, they had a huge year diversifying their product line and partnering with Cycling 74, AKAI and Novation to put out products intimately connected with Live, so there's plenty of revenue coming in there as well I'm sure.
Your point that some time in the future they may hit a wall is probably true, but in my opinion all indications are that they are going along at a good clip right now. That's just my take on it, though...

[acroberts]

Ableton is the first company that I've felt, ummmm, invested in as a consumer, if that makes sense - I've had the same thoughts about their long-term viability and plans.

But for now, though, I'm just gonna do my part and order Max for Live later this week

[Donnie]

Honestly, it doesnt really matter to me. Ableton is the best thing out for live performance and creativity, I will continue using it and/or upgrading until its purpose no longer suits me (just like anything else.)

Of course, in the last two years my studio has shifted from all those other softwares you mentioned to Ableton. Every new purchase is revolved around Ableton, every piece of gear is for use in Ableton. My entire workflow has changed, and I only see myself getting further entrenched. At the same time many others like me are considering making the switch, and until another company makes a comparable product in terms of workflow and live performance I only see that number growing.

In the end, we can only speculate where Ableton is going from here as a company. However, the real question is...where are the trends in music going? With that question in mind I feel that Ableton has a chance to attract many new customers despite further innovation, because right now it still IS innovation to many who have yet to use it