Is Abletons Business Model Broken?
Posted: Wed Jan 20, 2010 8:26 pm
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.
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.
There is so much you don't know its just pointless.
