Adobe's 9% Flash tax

http://blog.alexmaccaw.com/the-9-adobe-flash-tax

by maccman • 14 years ago

59 70 14 years ago

blog.alexmaccaw.com

chromic• 14 years ago

Perfect, another nail in flash's coffin.

crazygringo2• 14 years ago

> In this case, even if you created the SWF yourself (using tools like haxe), you'd still have to pay the tax.

Can that actually be legally enforced? I assume this tax would be part of the TOS for using an authoring tool. A consumer has to agree to the TOS for using/downloading the Flash client. But if I want to put up an SWF file I built without Adobe tools... who can legally stop me?

Unless there's some kind of encryption key for generating signed Flash files necessary for the functionality, and circumventing them would run afoul of the DMCA...

rdw3• 14 years ago

I think it's pretty clear that they will use some sort of signing process to validate swfs, and in some respects it'll be pretty similar to DRM.

In the original announcement, they say, "When the premium features licensing terms go into effect, unlicensed content will continue to run but will no longer have access to the premium features tier". Which implies that somewhere in the player they're planning to have a if(date() < August 12, 2012 || signed()) bit of logic.

MatthewPhillips2• 14 years ago

Welcome to the new world of proprietary software. If you're running on someone else's APIs, and there is an incentive to charge you for it, they probably will.

When you buy your computer/phone/tablet you are not purchasing hardware and software to use as you please, you are purchasing access to a "platform" that can reach into your computer and make decisions based on not-your self interest.

smacktoward• 14 years ago

NEW world of proprietary software?

Proprietary software has been around for a long time, young Padawan. And for all that time, using it has meant knowing that the platform owner could step in at any time and ream^H^H^H^H"monetize" you.

nthitz• 14 years ago

> Are Flash game companies going to have to reveal all their internal revenue details, and is Adobe going to regulate this somehow?

This. Seems near impossible to keep track of all those different devs, monetizing in so many different ways.

justindocanto4• 14 years ago

I wonder if devs who offer their games for free, but have in-app purchases could get around all this? =)

mceachen• 14 years ago

I'm trying to imagine the discussion that happened at Adobe that resolved this decision, and it's got to have been either:

a) We are self-aware enough to acknowledge that the end of flash being relevant is nigh, so let's monetize this thing while we can

b) We think flash is a growing platform, and we're in a position of strength (like Apple's App Store), so the percent of revenue is something people will hate but tolerate

(Due to MBAs' infrequent use of the word 'nigh', b) is more likely)

marshray• 14 years ago

I'm guessing it's like "Zynga's making $1.4B a year on the back of our technology, dammit, and we're giving it to them for free! We must do something about this problem of uncaptured revenue."

corysama• 14 years ago

It's a little more like "Alchemy+Stage3D" can be used to create another Apple App Store on the desktop, but they're giving away the tools to use it for free. Without some means of get some revenue from it, the cost of maintaining this for everyone else is a pure loss for Adobe.

MLMcMillion• 14 years ago

Adobe is killing Flash even quicker than I had hoped.

Please, Adobe, keep this shit up.

lallysingh• 14 years ago

They're giving the stick, here are some carrots!

http://www.chromeexperiments.com/

http://aleksandarrodic.com/p/jellyfish/

http://www.script-tutorials.com/fresh-10-html5-canvas-webgl-...

http://www.html5code.com/gallery/javascript-3d-model-viewer/

crazygringo2• 14 years ago

Still, the $50K limit and 3D/memory-specific technology seems like there is only a handful of companies that will ever fulfill these conditions... and Adobe surely has a list of exactly who they are. So this is a very targeted policy that will never apply to 99.99% of us.

Is this an accurate assessment?

samnm3• 14 years ago

Pretty much. My understanding is that it's specifically targeted at monetizing businesses that use tools like Unity or Unreal's UDK to build 3D flash games.

joezydeco2• 14 years ago

In other words, all the Facebook game developers.

descentintomael• 14 years ago

Since these are just a small handful of larger companies, doesn't that mean that they are screwing over their best, most loyal customers?

rdw3• 14 years ago

At GDC this year there was a lot of talk about using the planned Unity3D-to-Flash feature. At this point, the only advantage Flash has over Unity is that more people have the Flash plugin than the Unity plugin. I think a lot of game developers were planning on switching to Unity once the market penetration question was solved by exporting to Flash. Unity was poised to become the no-brainer choice for game development. A few years down the road, the deployed base of Unity-powered games would become large enough that the Flash part could be phased out, like ActiveX was (i.e. slowly and painfully but inexorably).

By adding this license fee, Adobe puts a serious damper on that.

(edit: people were planning on using Unity for plain old 2D games; the nature of the toolkit is that even exporting those to Flash would run afoul of the licensing requirement)

powertower• 14 years ago

It's very accurate.

Adobe is targeting operations that are 1) making allot of money of their platform and 2) could benefit from the new features.

And for exchange to access the new features that will make their games port easier, run faster, and allow for more play, they want a small fee back.

azakai3• 14 years ago

> Still, the $50K limit and 3D/memory-specific technology seems like there is only a handful of companies that will ever fulfill these conditions... and Adobe surely has a list of exactly who they are. So this is a very targeted policy that will never apply to 99.99% of us.

> Is this an accurate assessment?

No.

If you want to create a 3D game using Unity and deploy to Flash, for example, you will need to pay the 9%. That's a lot of people, Flash support for Unity was a much-requested feature. So that's a lot of people right there.

And this isn't just Unity users. Any fast 3D game will require the premium features.

benologist• 14 years ago

You can of course make a Unity game and publish for the Unity web player. There's plenty of precedent for it these days.

You might want to export to Flash if you're going the licensing/sponsorship route ala Armor Games, Kongregate etc but there's not a ton of demand for the 3d stuff anyway.

rprasad2• 14 years ago

Based on Adobe's announcements on this subject earlier in the week, the licensing requirement only applies to apps that use both the 3d and memory-optimization technologies. Using one or the other by itself won't require licensing. The practical effect on Unity-Flash games are that small 3d games should not be subject to the licensing requirement.

Caveat: Adobe has actually not issued specific rules or statements on when licensing is required, so until they do, any analysis is really just conjecture.

Edit: The facts on which I based my analysis have changed. Adobe has issued a FAQ, and Unity has confirmed that the Unity-Flash conversion uses both features. Consequently, the practical effect is that any game that succeeds in reaching the $50,000 revenue threshold will incur licensing fees of 9% on the revenue in excess of $50,000 (i.e., $0.09 for $50,001 total revenue, $4500 licensing fee for $100,000 total revenue).

Father• 14 years ago

You only need to pay the tax if you make use of BOTH ApplicationDomain.domainMemory and Stage3D.request3DContext in the same application. They can be used independently without having to get a licence.

Here's a question in general though, ExternalInterface.call allows you to execute javascript in the browser from flash. So if you'd use ExternalInterface.call to control WebGl you wouldn't need Stage3D.request3DContext for hardware acceleration and thus allows you to use ApplicationDomain.domainMemory at the same time without needing a licence?

cleaver• 14 years ago

The business model of monetizing a product that is on the way out is well established. At least that was my reaction to the announcement.

CA (Computer Associates) made this their primary product revenue stream by buying up old software (eg. Clipper, Ingres, etc.) that still had an installed base. They invested minimal amounts into product maintenance (make sure it works on the newest version of Windows) and rake in the licensing revenue from the remaining user base.

The only thing different is that Adobe is essentially doing it to themselves--monetizing their own long tail instead of selling to a long-tail specialist and moving on.

pasbesoin• 14 years ago

I gave Adobe a significant chunk of my money, a while back, to be "legitimate" and to keep up with "the industry" at that time.

I'm seriously regretting that decision. Legally, it was "the right" thing to do.

But personally, I feel I paid the people that are screwing me -- as one person recently commented about the content industry, he was ceasing to pay those people so that they could use the money to force their evermore draconian policies (of self-interest) on him and society.

Furthermore, due to Adobe's clear mistakes, I needed support from Adobe Support. And despite all the money they had received from me, the experience was absolutely horrible. Eventually, I was the one explaining (repeatedly) to their support technicians what they needed to do. It finally came down to luck of the draw and reaching an associate who was actually willing to demonstrate a little initiative.

All this boils down to personal anecdote, but for me that is: Adobe goes to extremes to seem/be undeserving of the license fees they demand.

kenrikm2• 14 years ago

Agreed: Personal Anecdote

I made a $15,000 software purchase a few years ago (A bunch of copies of CS5 Master) and the same day I called for support because it was not running well on our brand new machines. I was told "Sorry sir you have to pay $79 to talk to a technician because you use a server (Level two Escalation)" Me: I just purchased $15,000 of software and I have to pay to talk to someone who may or may not be able to solve my issue? Them: "That's correct" Me: "Please let me speak to a manager" Them: "I can't do that sir"

Sorry Adobe, but at a minimum buy me dinner before you... I'm sure you can finish the rest.

pavel_lishin• 14 years ago

$79 is half of a percent of what you just spent on that software. While I agree that charging you is disappointing in principle, it's odd to fume over a penny when you just spent $150.

kevinpet• 14 years ago

If you want to call something a "regressive tax", please make sure that doesn't mean the exact opposite of what you're describing. A flat licensing fee would be regressive. A huge upfront cost would be prohibitive for small developers, but no problem for large companies.

On top of that, it only comes into effect after $50k revenue. If Flash reduces your development costs (not making that argument one way or another), then this is a great deal for small developers and will only be pushing away the large developers who can afford to invest in other technologies.

Is this a good idea? I don't know. I'm guessing this is the same type of licensing that a game engine would offer, but it does sound very expensive.

talmand• 14 years ago

UDK is $99 upfront with 0% royalty until $50,000. After 50k the royalty rate is 25%. But they have other options depending on what you need the engine for.

Unless I'm reading the license totally wrong.

Of course, Flash is not UDK so it's not a fair comparison. Plus, if you use UDK within Flash your royalty rate will be 34% split between Epic and Adobe.

monochromatic• 14 years ago

> A flat licensing fee would be regressive.

No. It would be flat. A regressive tax would charge the small companies more than the big companies.

microtherion• 14 years ago

A regressive tax charges small companies a higher PERCENTAGE of income than large companies, which is exactly what a flat fee would do.

esrauch• 14 years ago

Flat tax generally means a flat percentage not a flat fee. Regressive tax is where the rate (percentage) goes down as you scale up. A tax that is a fixed total amount (not a fixed total percentage) is regressive because the same amount is a lower percentage of a higher income. You can still charge the rich total more than the poor and have it be regressive; eg a regressive tax where you charge 10k income at 10% and 1k income at 20% you still charging the rich a larger amount.

JoeAltmaier2• 14 years ago

So a walled garden is good if its one company, and bad if its another? Be fair.

vinayan3• 14 years ago

Exactly. Apple takes a 30% tax and one says anything?

freditup• 14 years ago

And don't forget about the Android marketplace too. But Adobe is the devil and Apple and Google are gods obviously, so that does explain it.

billycravens2• 14 years ago

Google charges the same 30%: http://support.google.com/googleplay/android-developer/bin/a...

However, this isn't an apt comparison to what Adobe's doing. Apple, Google, Amazon, etc provide the infrastructure, hosting, payment processing, and the integration into the device. Adobe is providing none of this, yet is still claiming a piece of the action.

joeblau• 14 years ago

I don't think it's about charging a percentage, I think it's about charging for something that was free.

When GOOG and AAPL first launched their stores, it they were clear in saying they were going to take 30% (hosting/banking/whatever they justified). If you had a successful product with Adobe that was running for over a year using their "premium" libraries, you just lost 9%.

billycravens2• 14 years ago

Operating a device app store with all the bandwidth and infrastructure that's involved is an entirely different creature than adding features to an API.

duaneb• 14 years ago

How likely is it that they will be able to collect the money, legally? After all, using programs like haXe, people can bypass all adobe software used in the creation of the software. Can Adobe monetize the use of said software by taxing the original creators? It doesn't seem to make a lot of sense, unless they implement some DRM wrapped around the "premium" apis.

MatthewPhillips2• 14 years ago

How the binary is created is irrelevant, it's going to run on the Flash VM. Adobe can easily block unsigned code.

j45• 14 years ago

Is this a flash tax for all of flash? Or 1 or 2 features that will only be used to an extreme by large companies?

Is the title of this post fud filled interpretation, or are there some facts?

stcredzero• 14 years ago

I think it's pretty peculiar that Adobe would announce such a regressive tax

1) I've been in a company with a large established user base on a development environment. This is a very tempting option for such companies. (Look at the comment elsewhere referencing CA.)

2) Such a tax is not regressive. The $50k minimum is actually very friendly to the little guys.

driverdan• 14 years ago

> this violates the fundmental openness of the SWF format

Since when has the SWF format had "fundamental openness"? It's the exact opposite.

pixelbath• 14 years ago

Considering the spec is open and anybody can make a SWF from any program, or use any program to parse and execute a SWF...isn't that the definition of "openness"?

It's Adobe's tools that aren't free or open.

revscat• 14 years ago

The spec itself, though, is wholly controlled by Adobe. If someone else wanted to go in and make changes to the spec they could not do so. Compare this with HTML, which is definitely an open spec, and you can see the difference. It's like saying .NET is open: it's not, even though Mono exists.

286c8cb04bda• 14 years ago

> Since when has the SWF format had "fundamental openness"?

Since approximately the 1st of May, 2008[1]. Adobe publishes a specification of the file format[2], currently at version 10[3]. N.B. The Wikipedia entry suggests[4] that the specification does not exhaustively cover the capabilities of the format.

[1] http://www.adobe.com/aboutadobe/pressroom/pressreleases/2008...

[2] http://www.adobe.com/devnet/swf.html

[3] http://wwwimages.adobe.com/www.adobe.com/content/dam/Adobe/e...

[4] https://en.wikipedia.org/wiki/SWF#Licensing

wmil• 14 years ago

I think there's also a secondary explanation.

There is a huge potential for security exploits in 3d code. Drivers are optimized for performance and glitches will likely allow malicious code.

Forcing developers who use these features to sign their code gives Adobe a way to police exploits.

In fact, look at how soon the cut off date is. A researcher has probably sent them a proof of concept exploit. Adobe's solution is to disable the feature for most developers.

justindocanto4• 14 years ago

So i would have to pay more if I become more successful? Even if the new revenue had nothing to do with the api im licensing? I see no fairness in this whatsoever.

If my game makes 60k one year, then 300k the next year because I poured money into marketing, development, new content, better experience, etc.... why should adobe get more money? Especially if none of the new growth had anything to do with the licensing. This is so insane... Why would anyone agree to this?

samnm3• 14 years ago

It's not too far from the 30% that Apple charges for App Store distribution... You are paying for the use of Adobe's Flash Player.

justindocanto4• 14 years ago

Two totally different things.

Apple has a giant marketplace thats allows people to find your app by search or discovery, they distribute it, they host it, they manage the servers for the store, they keep it secure, they host the feedback, they have a massive customer base that they offer your app to in an easy to use marketplace, etc. etc.

adobe is just unlocking a portion of an language/api essentially. Ive never heard of a premium upgrade taking a portion of your revenue. ive only ever seen a fixed rate to have access to better features. That's just insane. I would never pay this & I pay 25% of my revenue for a marketplace for my scripts & themes

9% for unlocking an api? that's insane/offensive/hilarious & i would never participate in such a thing. it feels like a bully taking part of my lunch money no matter how much my mom gave me.

ChuckMcM2• 14 years ago

"I think it's pretty peculiar that Adobe would announce such a regressive tax,... even if you created the SWF yourself (using tools like haxe), you'd still have to pay the tax."

I disagree it is 'pretty peculiar', I think it is 'pretty obvious' why Adobe has done this. After years of growth and dividends and success, they have gone through a decade of sideways motions where they are resorting various and sundry cost cutting moves to keep their stock afloat. They have 'good enough' disease.

That is the disease where computers and their products which run on those computers have become 'good enough' and their customer base isn't rolling over every 12months to pony up an upgrade fee. One of the interesting ways to see this effect is to look for sales of technical books about older versions of a particular software. When they are still selling well it is because those folks are using the 'old' version rather than upgrade.

Given the pricing model Adobe doesn't have a good way to capture that market. They have aggressively been trying to shut down re-sale of older versions on Ebay and elsewhere but the courts have handed them a couple of set backs too because their licenses do actually allow it.

So they have a product, Flash, which they have already said is 'dead' [2] in that its future is maintenance only, and so they perhaps figure, what the heck, lets get some money out of it before it goes.

[1] http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

[2] http://money.cnn.com/2011/11/10/technology/adobe_flash/index...

j_baker• 14 years ago

It's worth pointing out that Adobe has only declared mobile Flash dead. They have yet to say anything to that effect for desktop Flash. That's not to say they aren't thinking it of course.

loire280• 14 years ago

While what you say is true, I disagree with you in tone.

Adobe makes money from Flash by selling licenses to the tools. During the long period of platform growth, developer community growth and turnover helped maintain profits through new license sales. Now that the Flash community is shrinking, that revenue is not sufficient to maintain the profits that will motivate Adobe to fund continuing development of the platform. This is a business, after all, not a nonprofit like the Apache Foundation.

Meanwhile, you have companies like Zynga making profits from software built on the Flash platform disproportionate to the number of Flash licenses they purchase. Zynga owes much of its success to the high market penetration of the Flash player, which makes its social games extremely accessible to its non-technical core users.

It's reasonable to place much of the blame for Flash's decline on Adobe for failing to maintain the quality of the Flash Player and for underestimating the shift to mobile/tablets. In light of those failures and what must be rapidly falling Flash tool sales, Adobe has made a decision to change the revenue model for Flash so that they can continue to profit from the platform.

ChuckMcM2• 14 years ago

"It's reasonable to place much of the blame for Flash's decline on Adobe for failing to maintain the quality of the Flash Player and for underestimating the shift to mobile/tablets. In light of those failures and what must be rapidly falling Flash tool sales, Adobe has made a decision to change the revenue model for Flash so that they can continue to profit from the platform."

100% agreement. Going from a infrastructure support model to a rent seeking model. This will hasten the abandonment of their platform as historically rent seeking has been antithetical to supportable business models in users of the technology at hand, especially if there is no FRAND agreement in place for the technology.

donteflon• 14 years ago

Adobe's last decade was far from bad, it was actually pretty great[1], and they did it under fire from both Apple and Microsoft. Not only that, Microsoft Expression Studio and Silverlight went nowhere, Apple's Apperture and Final Cut are taking a beating in the marketplace from Lightroom and Premiere, Macromedia was acquired, and Quark lost its de facto DTP monopoly unable to compete with an application Adobe wrote from scratch (it's now at around 25% of the market and still diving).

Also, Adobe didn't declare Flash dead, they just discontinued the development of the mobile browser plugin (which no one was actually targeting). Flash on mobile devices is alive and well and running on Air better than ever, on both the iOS[2] and Android[3].

[1] http://en.wikipedia.org/wiki/Adobe_Systems#Revenue [2] http://blogs.adobe.com/flashplatform/2011/09/flash-based-mac... [3] http://blogs.aerys.in/jeanmarc-leroux/2012/02/02/air-3-2-sta...

Adobe's 9% Flash tax

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