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 Post subject: Why 'free updates for life' is bad for the customer...
PostPosted: Wed Feb 22, 2006 4:17 pm 
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People sometimes forget that this is a business. Inexperienced shareware authors seem to forget this sometimes too, and offer life-time free upgrades. Business-wise this makes no sense and, in the long run, they are shooting themselves (and indirectly their customers) in the foot. This is why and what usually happens:

A successful business has to rely not only on new customers but also on repeated buys from their existing customer base in order to remain viable. This is because while a new business's customer base may expand rapidly in the beginning, at some point this expansion will eventually stop or dwindle to a fraction of what it once was when the novelty wears off or the market becomes saturated.

As long as a shareware author can derive his livelihood from what he does, he will keep at it. But once cash flow trickles to a fraction of what it once was - and it will with a life-time of free upgrades policy - and the shareware author begins struggling just to put food on his table, he will finally realize that all he managed to do was to put himself into a corner. He will then do one of three things:

1) Get a real job and abandon the project altogether.

2) Rename his current project, declare the old one dead, add a few new features, and sell it off as if it was a brand new application (so users of his old project have to pay again).

3) Start a new, completely different, project.

In the first case, everybody loses. Your 'lifetime' free upgrade license is now useless simply because the product is dead and no more upgrades will be issued.

While the second case seems a bit far fetched, I've seen it happen quite often. Not willing to discuss the ethics of such a move (the alternative is worse), I can safely say that your 'lifetime' of free upgrades license is also useless in this case.

The third case is just a delay of the inevitable, because, unless the shareware author changes his business model, the same thing will happen again further down the line. Plus, his focus will now be on the new application - the one that is bringing him the real money - instead of the old one. Updates will now dwindle to a trickle of what they once were. The product is not dead but it is in 'limbo'.

Note that I've been talking about 'professional' shareware authors (those who manage to make a living out of what they do), I'm not even referring to those who do it simply because they like it, or because it gives them pocket money. Their story is a lot simpler: one day (sooner than you think) they will lose interest and, unless someone is there for them to pass the torch, their project is dead too.

I hope you now understand better the real value of 'life time of free upgrades'. What do you prefer? A product that offers you free upgrades for life but is only around for a couple of years, or one where you have to pay from time to time to support development - and only when and if you think the new features are worth it! - but which will keep you happy for many years to come (Winstep has been around since 1998, by the way) ? That's a question only you can answer.

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Jorge Coelho
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http://www.winstep.net - Winstep Software Technologies


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PostPosted: Mon Feb 27, 2006 12:06 pm 
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I can think of two skinnable applications that offer lifetime licenses. One appears to be quite dead and the other is actively updated. I have no doubt though that the actively developed one will one day slow down or stop. I know the developer of this one has another source of income however and this is a passionate hobby.

I agree that the lifetime license system makes it near impossible for the developer to make any income from the software and therefore be in a position for development to continue.

I think it would be interesting if developers could offer lifetime licenses and then charge for things like new additions (like new modules or skin packs in the case of WinStep). I don't know if that would work, but it might be another alternative for those afraid of the annual license method that Stardock uses for example.

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 Post subject:
PostPosted: Mon Feb 27, 2006 3:13 pm 
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Stardock subscription method is the way to go and you shouldn't be afraid of it. When a person hears the word 'subscription', their first reaction is to cringe and think they are renting the software rather than buying it. Nothing could be further from the truth:

When you purchase an application, subscription or not, the version you bought is yours FOR LIFE. It will not time out on you or suddenly stop working if you don't renew your subscription. It's like when you purchased Windows 98, for instance. It's yours to keep. That, however, does not mean that you are entitled to upgrade to Windows XP for free. When the time comes, you can choose either to upgrade (and pay for the privilege) or keep on using the Windows version you bought. If you accept this from Microsoft, why shouldn't you from shareware companies?

Now, the subscription method has, for the user, a HUGE advantage over this way of doing things. Keep with me:

Still using Microsoft's example, between Windows 2000 and XP, all you got for free were service packs and bug fixes. No real new features. In fact, Microsoft saved the real BIG changes for XP.

In the shareware world, when a company is offering minor upgrades for free and only charges for major upgrades (Winstep's old business model), in order to justify a major upgrade most companies will sit on top of the real big changes/new features until they can round up enough of them to justify a major upgrade. In practice this means that your free minor version releases will not contain much more than bug fixes and minor enhancements. The really juicy stuff is saved up for later.

Why is it like this? Because otherwise the difference between the last free minor upgrade and the major version release would be so relativelly minor that few users would feel compelled to upgrade. The price the user pays is that the introduction of really cool features X and Y is deliberately delayed by a few months or longer, so that those features can be part of a major version release which you will have to pay for anyway. I'm aware this might shatter the ilusions some of you have on how the shareware business operates, but the fact is that this *is* a business. And, business wise, what I described above makes sense.

Now, my problem is that I never liked to hold back on implementing new features. The result, for instance, is that nearly 5 years have elapsed since the first WorkShelf release and we are still at version 1.x. Five years of free upgrades with lots of really cool new features being added all the time. Same thing happened with NextSTART, it took 3 years for it to go from version 2.0 to 3.0. It's a bad business decision that is sustainable as long as you have a large continuous flow of new users, but which will bite you back once the market becomes saturated (and it always does).

Now lets compare this mess with the advantages of a subscription-based business model (and, again, keep in mind that the subscription is ONLY for the updates. You get to keep what you paid for and all the free updates you might get until your subscription period runs out):

Advantages for the user:

a) Really cool features X and Y are now added all the time, as soon as they are thought of/requested. This is because the shareware company no longer has to worry about saving them for a major upgrade.

b) You know and see your money being put to good use, plus you know you are keeping the company from going belly up, thus ensuring many years of continuous improvement on your favorite applications. You also know that, if you don't like the direction things are going, you always have the choice NOT to renew your subscription. You get to keep everything you got until that moment.

c) You know the company MUST keep a constant flow of updates, otherwise users will not renew their subscriptions. In other words, you keep the shareware company on their toes, to your advantage.

Advantages for the Shareware company:

a) You no longer have to hold back on implementing cool new features. You can add them as you think of them. Constant developement is not only encouraged as it becomes a necessity.

b) Your company is now supported not only by the flow of new users as well as by your current user base. As long as you keep your current user base happy, you know your company won't suddenly go belly up because your market has become saturated and you can no longer afford to put food on the table.

From my point of view, the subscription model for updates is a win-win situation. :D

Even the major anti-virus companies, like Symantec and McAffee are going for it: you purchase their AV applications and you get a one year period of free virus database updates. After that you can renew your yearly subscription in order to keep your Virus database current. This not only supports the company (what good is a dead AV company with a stale virus database?) as it keeps them on their toes regarding new viruses that suddenly pop up on the wild.

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Jorge Coelho
Winstep Xtreme - Xtreme Power!
http://www.winstep.net - Winstep Software Technologies


Last edited by winstep on Wed Jun 25, 2008 7:10 pm, edited 1 time in total.

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 Post subject:
PostPosted: Mon Feb 27, 2006 11:43 pm 
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Your list of advantages for user and developer is the best summary I have seen yet on the subject by anyone. It does make perfect sense and I hadn't considered some of the aspects you wrote about.

If I like the software I will support it any way the developer chooses to offer it. I purchased WinStep and would pay for the next version (especially if it has the PNG support you've teased us with) if you decided to go that way. But after reading your summary above, I think subscriptions do work best for everyone.

I was not against the subscription method BTW as I just renewed my subscription with Stardock ? and my system doesn't even allow for the cool WindowBlinds 5 features! :)

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 Post subject:
PostPosted: Tue Feb 28, 2006 3:48 am 
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You have a private message. :D

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Jorge Coelho
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 Post subject: upgrades or subscription
PostPosted: Thu Mar 02, 2006 8:07 pm 
Frankly, I don't care which way you go. What I don't want as an end user is to

1) have the support stop for an older version if I am happy with that. I bought it, I paid for it, and I am happy camper. With an older computer, the new whistles don't always work.

The idea of paying annually for this, when nothing changes? When I have already paid and the only thing I am going to need is a new license when my kids wipe the computer, destroy the hard coy & break the backup CD?

2) have the software only work for a few years and then force me to buy it again. I am likely instead to go looking for another software.

But I am perfectly willing to pay for an upgrade on a regular basis. Or a complete new version such as you are creating right now, seems reasonable. I don't have an issue with that. Other than Windoze and its package (forced because of compatibility with my job) my entire household runs on paid shareware.

But it is a job and a business.

Go for what you need to do,

-Holly
Heidelberg Germany


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 Post subject:
PostPosted: Thu Mar 02, 2006 8:55 pm 
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Quote:
1) have the support stop for an older version if I am happy with that. I bought it, I paid for it, and I am happy camper. With an older computer, the new whistles don't always work.

If what you mean by support in this case is help sorting things out and explaing how they work, then it will always be there for older versions. If you mean updates of older versions, then the answer must be no. Of course, if you find a really nasty bug in an older version you're running, I always keep older source code archived somewhere. If it is really important, I'm always willing to compile a special bug-fix version for you - but you should understand that this would be a very special case.

You're right when you say that with an older computer new whistles don't always work - in fact, if you are running Win95, forget about PNG files - not because I want it that way, but simply because the OS doesn't support them. If you are running Win9x, then forget about the new per-pixel alpha transparency - again, because it is only supported by Windows 2000 and above.

However, if there is one thing I'm always VERY careful about, is in maintaining backwards compatibility. This means that I ensure any current or future WorkShelf and NextSTART versions will still run on Win95 and NT4 - the only thing that will happen is that, on those systems, some of the more advanced features will be disabled.

This said, I antecipate that most, if not all, of the new themes will feature per pixel alpha transparency. Those themes - NOT the software - will not run on Win9x/NT4 systems. I'm providing a mechanism in which the theme author can provide PNG files *and* BMP or JPG versions of the same (without the alpha transparency). If the later files are available on a system that does not support per pixel alpha transparency, NextSTART and WorkShelf will use them instead.

What I cannot do, however, is force skinners to make those bitmaps for the sake of backwards compatibility.

Anyway, although I am focusing mostly on eye candy now, there is a torrent of improvements comming that have nothing to do with per pixel alpha transparency or PNG files - most of them should also work on older systems.

Quote:
The idea of paying annually for this, when nothing changes? When I have already paid and the only thing I am going to need is a new license when my kids wipe the computer, destroy the hard coy & break the backup CD?


Not one person who has come to me because they've lost their keys (even older NextSTART 2.x users) has stayed without those keys or were forced to upgrade. Of course, this doesn't invalidate that it is ALWAYS a good idea to keep a backup of your keys - you never know what might happen.

As for paying when nothing changes, nothing can be further from the truth! In fact, the new subscription method will ensure that updates MUST have quality and be released often! Why would the user renew his yearly subscription otherwise? Plus, it can't be a 'end-of-the-year' effort because subscriptions will naturally spread out over the space of 365 days - your subscription may be ending, but Joe User's subscription will still be good for another 6 months.

Quote:
2) have the software only work for a few years and then force me to buy it again. I am likely instead to go looking for another software.

Hmmm... That is software RENTAL, which, in my opinion, will NEVER work - people like to know they actually have something to show for the money they spent. In this case, the subscription is for updates ONLY. Whatever you got until your subscription expired (if you let it expire), is yours to keep.

Quote:
But I am perfectly willing to pay for an upgrade on a regular basis. Or a complete new version such as you are creating right now, seems reasonable. I don't have an issue with that. Other than Windoze and its package (forced because of compatibility with my job) my entire household runs on paid shareware.

There you go! :D

Thanks for the comments!

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http://www.winstep.net - Winstep Software Technologies


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 Post subject: Renting vs. Upgrading
PostPosted: Mon Nov 05, 2007 6:20 am 
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I've been buying shareware since way before the Internet existed, and I've only once bought a lifetime software upgrade - and it lasted 13 years before the company got bought out and lost their entire customer base. But that's the exception, rather than the rule.

But to be honest, I was always uncomfortable with the idea, and I guess unless I pay 10 times the base cost, I don't think any developer will benefit from that kind of offer, and I couldn't agree more with what's been said. Bullseye!

But on the subject of 12-month (or other fixed-term licencing agreements): I couldn't disagree more.

A subscription is legally nothing more than a lease agreement, and in normal use, it consists of far less than a lease can provide, in terms of legally binding the buyer and seller's rights and obligations.

What happens if (Allah forbid!) the developer should stop developing the application or service? It's happened! Or - even worse - what if the developer doesn't feel the need to upgrade or extend the product? That's happened nine times to me in the past 17 years, and in each instance, even though the subscription agreement stipulated that the subscription would cover any upgrade, it didn't stipulate that the subscription should be continued at the vendor's option if there was no upgrades or version releases. In 7 out of those 9 cases, I was informed that if I wished to continue to use the product, I had to buy a new subscription. That's not a lease, in any legal definition. That's repurchasing the same product over and over again. It's legal, sure - but it's not fair or reasonalbe. (And one of those leases was US$450!)

So, although we might want to gild the lease-lily, a subscription offers nothing more than a legal lease agreement, and in most cases, offers far less.

Don't get me wrong - I'll defend the rights of any developer to assert Intellectual Property rights over the life of the product - and to ask a fair price for their product. I've written quite a bit of fairly complex software, and I can almost begin to imagine the amount of work (blood sweat and tears) involved in getting something as cool and sophisticated as WinStep out the door - and the effort to continue to build and improve the product as well!

But unless the developer is willing to provide updates regularly, AND to fix any problems in the current product under the terms of the lease, OR to provide a reasonably-priced extension to the lease if no upgrades or bugfixes have been provided, then I'm out of the market. Nine times bitten, twice shy.

There have been a few unscrupulous developers who have "released" patches to leased applications, simply to cover their arses so they could say they'd abided by the terms of the lease. I'm not naming names here, I'm just pointing out that this kind of behaviour does happen, and with some of the biggest names on the block. Trust me, I got stung badly.

A lease shouldn't cost the same as an equivalent product's outright price. If I want to lease a house, I'm not going to pay $100k every year when I could buy a house outright for the same price. (Pardon the dollar figures, I'm just using that as illustration. I couldn't afford a hole in the ground for $100k!!) So if a software vendor offers a product that is essentially similar in function or feature to other products out there that can be purchased outright, how on earth can they justify the same cost for a lease as the other products offer to own?

By this token, Object Desktop (just as an example) should cost around US$19 per annum, instead of $49, because there are other tools out there that provide similar or identical functionality, and they cost the same to buy outright as to lease OD for 12 months! Mind you, charging the full equivalent price isn't silly at all- if people are willing to pay it ;)

I can't begin to describe how many products I've bought subscriptions for, only to lay mouldering in my archive folders, because the new versions either don't work, or have too many bugs, or are not supported on my OS or hardware - and the developers all refuse to support the older version (despite it working perfectly), or because they claim they can't afford to support it (which is the biggest load of BS I've ever come across).

Maybe offering a base "purchase" price, and much,much lower annual upgrade leases would be one way to go. That would make more sense than demanding the same (or greater) initial purchase price every 12 months. And it would go some way to compensate the developers for additional work, AND keep the user base happy because they don't have to pay full price every year for the product. At first glance, it's a win-win.

There are also "frequent user" reward schemes coming out now. If a user buys a product, they get a token of some agreed value for that developer's products; and for each subsequent purchase, additional tokens (of varying value) are accrued. Then, in 12 month's time, or when a new version is released, the user gets a significant discount based on the number of tokens they've collected. And if the user chooses not to use their tokens, they might save them up later for a completely free upgrade to a later version. So there are some really interesting alternatives to same-price multiple-year repurchase leases.

There has to be be a good way for developers to receive fair price for a product, and to retain customers, and to be able to profitably continue to improve and develop the products while creating new markets, but for me as a consumer, leasing isn't one of those ways, I'm afraid.

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 Post subject:
PostPosted: Tue Nov 06, 2007 6:07 pm 
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Quote:
What happens if (Allah forbid!) the developer should stop developing the application or service? It's happened! Or - even worse - what if the developer doesn't feel the need to upgrade or extend the product?


You seem to have gotten the impression that what you have would cease to function after the 12 month period! This is not the case at all! That would be akin to 'renting' software, which I am dead against!

If the developer stops developing the application, you simply stop renewing your subscription. :D Nothing bad will happen to the version you already have, and it will keep on working forever...

Quote:
In 7 out of those 9 cases, I was informed that if I wished to continue to use the product, I had to buy a new subscription. That's not a lease, in any legal definition. That's repurchasing the same product over and over again.


Agreed, and personally I would never get into that kind of agreement myself, much less impose it on other people. God forbid!

What happens with Winstep Xtreme is rather more simple:

1 - You try the current version and decide you like the features it already has enough to fork $39.90 for it.

2 - For the next 12 months, all upgrades come to you at zero cost.

3 - After the initial 12 months, you are still NOT obliged to renew the subscription. You can even try any new upgrades released after the 12 months covered by your initial purchase and roll back to the previous version you had (the last upgrade you installed free of charge that was released within your first 12 months) if you don't think the changes are worth the subscription price ($19.95).

4 - Once you find a release that makes you decide new changes are worth the subscription renewal price ($19.95, which is a fraction of the $39.95 purchase price) THEN you can renew your upgrade subscription. This, in turn, will give you another 12 months of free upgrades and so on.

So, as you can see, no user has a gun pointing at their heads to force them to upgrade - quite the opposite, in fact. They're the ones who decide WHEN to and IF they wish to renew their upgrade subscription.

Quote:
By this token, Object Desktop (just as an example) should cost around US$19 per annum, instead of $49, because there are other tools out there that provide similar or identical functionality, and they cost the same to buy outright as to lease OD for 12 months! Mind you, charging the full equivalent price isn't silly at all- if people are willing to pay it


Exactly! From a business perspective, it makes ALL the sense to charge as much as you think the user will be willing to pay. It's all a question of 'perceived' value.

Quote:
the developers all refuse to support the older version (despite it working perfectly), or because they claim they can't afford to support it (which is the biggest load of BS I've ever come across).


This is one of the reasons I always tried to make Winstep applications as backwards compatible as possible. In theory, Winstep Xtreme should still run under Win95, although some of the newer features will be disabled there. I still try new releases on an old WinME machine I have here to make sure they work.

On the other hand, you can't expect developers to issue patches for very old versions of the software - if only for the simple reason that it would make version tracking next to impossible!

Quote:
Maybe offering a base "purchase" price, and much,much lower annual upgrade leases would be one way to go. That would make more sense than demanding the same (or greater) initial purchase price every 12 months. And it would go some way to compensate the developers for additional work, AND keep the user base happy because they don't have to pay full price every year for the product. At first glance, it's a win-win.


And this is exactly what Winstep does! :D

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Jorge Coelho
Winstep Xtreme - Xtreme Power!
http://www.winstep.net - Winstep Software Technologies


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 Post subject:
PostPosted: Wed Nov 07, 2007 2:15 am 
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Jorge, you make a good argument!

In my case, I actually have a number of applications that are intact and viable, but they refuse to work because the "lease" has expired. Tamosoft is shocking in this regard - I paid US$400 for a product that worked for 12 months, then when I tried to renew the subscription, they insisted that I had to purchase their new version (which didn't offer me anything more than the old one, and a lot more bugs besides, and was 10% more expensive!) to keep their software working. I don't work in the networking/security area any more, but their name sticks in my mind as an example of a really excellent, sophisticated and useful product - with a big, rough, thick butt-reamer of a pricing model.

Object Desktop is another example - I bought licences for a number of their products, but - even though their old software does still work on this system - they informed me that I have to purchase their new version (which both they and I know doesn't work on this system). And if I want their new version to keep working, I have to buy next year's version, even if I don't upgrade.

So I'm very glad to hear that Winstep/NextStart is using an enlightened and friendly licencing model. That means you'll keep me as a customer.


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