Subscription Software... Services vs Products

I’ve been a FeedDemon user since it was in beta and immediately purchased a license once Nick Bradbury enabled online sales. I’ve since been a happy customer and would pay for any major upgrade down the road.

Unfortunately, Nick’s company was recently acquired by NewsGator, which makes an Outlook AddIn RSS reader by the same name. I looked at NewsGator originally (before jumping on the FeedDemon beta), but decided the Outlook integration wasn’t for me. Last year, NewsGator made some of its Outlook- ased customers unhappy by going to a subscription model… and I was glad I hadn’t gone that route. 

What was previously a standalone product that worked well now had all sorts of ancillary “stuff” decorating it… they have a web edition, something called “smart feeds”, something else called “industry intelligence feeds”, some “premium” content, syncing capability, NewsGator Online, NewsGator Mobile, NewsGator Etch-A-Sketch, etc. If you’re using all that stuff, there’s no question that paying for a service that centralizes and synchronizes your RSS experience has immense value.

But what if you just want the plain-old, standalone Outlook AddIn? Can’t have it. It’s combined with these extra options into a few Consumer-or-Business bundles — only available via recurring subscription. Hmm… Glad I’m using FeedDemon, I thought at the time.

Until today, when I see that FeedDemon’s going pretty much the same route. So now the NewsGator VC team has a new plan for more renewable revenue. Oh boy.

Going forward, I have to pay an annual fee [2] to use a product that requires no on-going commitment or service from the vendor. And if I don’t pay the fee, it stops working. But, they say, I’ll get updates for a year. Sure… but there’s no commitment that I’ll see new features added within 12 months. Or that the new features added will be compelling to me. Still, I’m forced to pay the subscription if I want to keep using the basic functionality I need.

So why do I have an issue with this subscription model? Because my basic needs don’t require any on-going service from the vendor. I’ve purchased a license to use an application. It doesn’t cost the vendor anything to support my use of that application, whether I use it once a month or spend my entire day in it. There are no servers to maintain. There is no staff choosing the latest and greatest data for me.

With a few exceptions [1], services and content should be sold as subscriptionsthey provide on-going value.

Standalone applications, on the other hand, are pretty much the same on day 365 as they were on day 1. As such, they should be sold as version specific, one-time-fee, licenses.

If NewsGator released a new FeedDemon 2.0, and if it had some decent features I’d use, I’d pay an upgrade cost. But once I’ve made  that purchase, supporting me as a customer doesn’t cost NewsGator a dime. If I’m not using the web edition, synchronization, custom feeds, etc, all of which would require someone to support server-based services, why am I now going to be paying for those on an on-going basis?

Given that the RSS reader space is overflowing with options, more are on the way, and many of those options are either free or open source, why would a vendor make getting at their popular commercial product less flexible?

My suggestion to Nick, Greg, and the NewsGator crew is to make the licensing as simple as possible.

  • If the widget(s) you’re purchasing from us can be used standalone
    without any of our service offerings, it’s licensed as a product. If we
    put out a new version and you like it, you pay an upgrade cost.

  • If the widget(s) you’re purchasing from us require any sort of
    on-going service, you’re going to pay a recurring subscription fee.
    Stop paying the fee and you no longer get the service. Email feeds,
    synchronization, premium content, and so on.

Look at the popular services around us… using the Netflix (content) service has on-going costs (shipping, server-based account management, etc), so I pay a recurring fee to them. Listening to satellite radio (content) requires an on-going signal and infrastructure maintenance, so I pay a recurring fee to XM Radio. Playing online games requires an on-going connection (service) and is heavily server-based, so I pay a recurring fee to Xbox Live

Look at the standalone products around us… We bought our cars  and don’t pay Honda or GM an on- oing fee. The cars do today what they did when we bought them. I bought my computer and don’t pay Dell an on-going fee. It does today what it did when I bought it. I bought Microsoft Office and don’t pay Redmond an on-going fee. It does today what it did when I bought it.

Why would I want to start renting a standalone software application now? 

Now the caveat:

One of the “benefits” announced with NewsGator’s acquisition of FeedDemon was that licensed eedDemon customers will get access to NewsGator’s “Business Standard” services for two years. I do think that’s fair and I’m happy to give this stuff a try. I’ve even created a NewsGator Consumer Standard (free, web-only, like Bloglines) in advance to check it out (I think the UI for reading is clunkier than Bloglines, but it’s passable). 

When the time comes that using FeedDemon costs me extra money, I’ll have to look long and hard at how I’m consuming and using RSS feeds. Maybe at that point, I’ll have fallen in love with the service- based capabilities… in which case, I’ll gladly pay the annual service fee. If not, someone else will get my business.

Going this route is a big risk for Nick and for the NewsGator crew. Nick, in particular, has some exposure here… he’s the popular developer of several popular applications. His user base has, in a period of two months, been told that they WILL be moving toward the NewsGator system and they WILL be moving toward a recurring fee structure. 

NewsGator is betting that the existing FeedDemon customer base will fall in love with the server-based capabilities. On the other hand, any existing FeedDemon customer who just wants the basic client app that he/she has today will get a service bill at some point. On that day, RSS Bandit, Bloglines, and other eaders are going to start to look pretty attractive.

UPDATE: Per Jack’s comment, it looks like they’re doing the right thing by existing FeedDemon customers. According to Nick’s blog entry today, the FeedDemon application won’t stop working once the subscription expires. The service-oriented features (synchronization, in particular) will likely stop, but that’s to be expected. I still think it’d be nice for customers who don’t need the service options at all to be able to buy a one-time, version-specific license for either FeedDemon or the NewsGator Outlook edition. Still, this is a huge step in the right direction for existing customers and a great example of a vendor listening, and quickly responding, to their customers. Well done.

[1] The exceptions I can think of are products that are likely to require heavy ongoing maintenance or support. High- omplexity and/or mission critical applications. For example, we pay for several licenses to the .NET Subscription Service from Developer Express. We do this for two reasons… first, it’s high-complexity and mission-critical for us. Second, I know right up front that I’ll be making regular use of the vendor’s support staff. Build a feature-rich grid control from scratch and there are bound to be glitches and bugs. Those bugs hurt us and hurt our customers, so I’m
happy to pay for support that lets us complain and get a fix or workaround quickly. I’m also happy to use that support when we have questions about how to use these controls to their fullest. Further, if we don’t renew our subscription, we lose upgrades and support — but NOT the products we originally licensed. I love their stuff and it’s worth every penny.