Propellerhead Software
  #1  
Old 2012-07-03, 23:07
joeyluck's Avatar
joeyluck joeyluck is offline
 
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Monthly RE account - Rent REs - REnting =)

Not sure if this would even be for me, might just be a whack idea lol, but the idea crossed my mind, so thought I'd share =)

Since REs are non-transferrable and cannot be resold (which makes it tougher to feel like you truly "own" them anyways), maybe introduce something like a monthly account with Propellerhead? You would pay X amount/per month to use use X "class" of REs. This of course would give you access to any new REs introduced in that class as well.

Not 100% sure the structure (would this work like netflix? lol), but I think this would appease some folks here that feel they need to have everything (who have been quoting the grand totals in which to own all the REs) and it would get Propellerheads and developers some extra revenue...?

Yearly account? Stop paying—stop using those REs? Options to purchase REs?

Essentially, I suppose it would be like buying into a 'longer than 30-day' trial period...?

Thoughts?

Last edited by joeyluck; 2012-07-04 at 06:25.
  #2  
Old 2012-07-04, 00:25
hollownation's Avatar
hollownation hollownation is offline
 
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nice idea might make some of the more expensive ones more accessible for those of us who arent loaded or just be nice to have the option to rent for a month just to master a project for instance a band might only record once a year if that so I think would be unlikly to spend hundreds on a load of re's that there not going to get much use of past recording there ep but if they could rent you would be looking at extra money that woulndnt be coming in otherwise and with the trial period the system is all ready in place for timed use of re's I cant imagine this being hard to implement
  #3  
Old 2012-07-04, 00:42
SteveDiverse's Avatar
SteveDiverse SteveDiverse is offline
 
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Keep in mind that Props already designed and built the shop to work like it does and they have contracts with the companies developing rack extensions based on how it currently works.

That aside, a monthly subscription model of the 'group the devices into classes' where developers of devices in that class split the monthly rent means unknown rent, and means that every new device released means everyone with a device in that class now gets less money because they now get 1/(n+1) share instead of 1/n.

I would think that would make it less attractive to build new devices, and would cause a lot of developers to not make devices.

Although it might sound appealing to the end user, it doesn't sound economically feasible for the developers, or for props to host the shop -- unless, of course, the monthly fee were something like $100.
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  #4  
Old 2012-07-04, 02:02
joeyluck's Avatar
joeyluck joeyluck is offline
 
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Right. However, it would be in addition to sales (under the assumption it wouldn't take away from sales). But, it's an idea I was unsure of. Not sure what "class" would mean—just threw that out there. Was thinking broken down in price ranges or categories (not all REs and their developers would be included in the program). Again, might be appealing under the assumption it creates more revenue for developers.

Could just be that you purchase a subscription from individual developers (this of course would make more sense when there are many more REs). Or developers can pair together, or offer only certain REs for leasing.

Great point hollownation! Going off of what hollownation has said, it would be practical (and perhaps appealing to developers) to lease individual REs for additional 30 day periods. The framework is already there. 30 day trial for Rad Piano is up? Need some piano? Lease it for another month for $10!


Quote:
Originally Posted by SteveDiverse View Post
Keep in mind that Props already designed and built the shop to work like it does and they have contracts with the companies developing rack extensions based on how it currently works.

That aside, a monthly subscription model of the 'group the devices into classes' where developers of devices in that class split the monthly rent means unknown rent, and means that every new device released means everyone with a device in that class now gets less money because they now get 1/(n+1) share instead of 1/n.

I would think that would make it less attractive to build new devices, and would cause a lot of developers to not make devices.

Although it might sound appealing to the end user, it doesn't sound economically feasible for the developers, or for props to host the shop -- unless, of course, the monthly fee were something like $100.
  #5  
Old 2012-07-04, 03:19
joeyluck's Avatar
joeyluck joeyluck is offline
 
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Of course, this would have to be called REnting
  #6  
Old 2012-07-04, 04:38
SteveDiverse's Avatar
SteveDiverse SteveDiverse is offline
 
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Quote:
Originally Posted by joeyluck View Post
Right. However, it would be in addition to sales (under the assumption it wouldn't take away from sales).
Actually, I noticed that angle to your post after posting my response.

If you look at the rent-to-own business model in the US, 'stores' offer a product on a monthly payment where after a certain number of months of making payments on time (often 24), you own the product.

It's basically a payment plan with interest, but it's quoted as rent, so there's no requirement to disclose the interest rate - and the 'renter' can return the item at any time with no more payments due --- but might have to pay an additional amount for damage, or undue wear and tear.

(in the case of software, damage and wear and tear are not relevant, which would simplify the model)

As an example, a recent rent-to-own deal where I live offered a flat screen TV for rent for $99 per month for 24 months. After 24 months of on time payments ($2376 total), you own the TV. Price of the same TV at Walmart when this was offered was $1138.

The total payments on the rent-to-own was double the current cost of purchase.

Applying this model to, say, Radical Piano, you'd double the $99 price to $198, then divide by 24, to get a monthly rent-to-own price on a 24 month payment plan of $8.25 a month.

If you cancel, you lose all credit for your payments. If you come back and rent (the TV) again, you start over.
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HP Pavillion DV7T-3300 Laptop | i7 Q720 @ 1.6 GHz | 4GB RAM | Win7 Pro 64-bit
m-audio Axiom Pro 61 keyboard controller || iPad2 | RetouchControl DUO | TouchOSC | LoopBe30 MIDI
m-audio Mobile Pre USB (original) audio interface | ASIO4ALL || RØDE NT-3 mic
Reason 6.5.3 || Pulsar | Saturation Knob | Rough Rider | TSAR-1 | Uhbik-A | Re-Tron | Polar | Echobode | Uhbik Q | Uhbik F | Morfin XF | Uhbik S | Uhbik D | Uhbik G | CV Suite Line Processor | wbl5515 | Uhbik P | RE-2A | Radical Piano

Last edited by SteveDiverse; 2012-07-04 at 04:40.
  #7  
Old 2012-07-04, 05:25
joeyluck's Avatar
joeyluck joeyluck is offline
 
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I like it. Of course, the cost of 'renting-to-actually-own' might scare some folks, but the structure makes sense. The benefit of it here would be to have the ability to juggle rack extensions and pay for them when you need them.

The other benefit, would be this—say you've already tried a RE and the 30 days has expired and then your friend sends you a track with that RE in it. Now, you aren't ready, able, or willing to buy it, but you want to hear it in your buddy's song. Boom—Rent the RE for an additional month =)

Also, say your Rad Piano demo is up and you are still debating buying it, but now you can't try it—you can rent it for another month to help decide...and then purchase it (with the rent of course not going towards the purchase price).


Quote:
Originally Posted by SteveDiverse View Post
Actually, I noticed that angle to your post after posting my response.

If you look at the rent-to-own business model in the US, 'stores' offer a product on a monthly payment where after a certain number of months of making payments on time (often 24), you own the product.

It's basically a payment plan with interest, but it's quoted as rent, so there's no requirement to disclose the interest rate - and the 'renter' can return the item at any time with no more payments due --- but might have to pay an additional amount for damage, or undue wear and tear.

(in the case of software, damage and wear and tear are not relevant, which would simplify the model)

As an example, a recent rent-to-own deal where I live offered a flat screen TV for rent for $99 per month for 24 months. After 24 months of on time payments ($2376 total), you own the TV. Price of the same TV at Walmart when this was offered was $1138.

The total payments on the rent-to-own was double the current cost of purchase.

Applying this model to, say, Radical Piano, you'd double the $99 price to $198, then divide by 24, to get a monthly rent-to-own price on a 24 month payment plan of $8.25 a month.

If you cancel, you lose all credit for your payments. If you come back and rent (the TV) again, you start over.

Last edited by joeyluck; 2012-07-04 at 05:30.
  #8  
Old 2012-07-04, 14:43
hollownation's Avatar
hollownation hollownation is offline
 
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this idea is sounding better an better
  #9  
Old 2012-07-04, 18:08
SteveDiverse's Avatar
SteveDiverse SteveDiverse is offline
 
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Just to clarify my position...

I come from a software development background so I understand how much it costs to create software - and how much it costs to run servers (like this website and the RE shop) to make/keep a site available 24x7x365.

First, you have to purchase equipment for development, and equipment for testing. It's not just desktop computers, it's also servers to store and protect your code base and all of the revisions.

You also need your production environment.

It all costs money - up front to purchase it, then ongoing to keep it running. Periodically, you have additional "up front" costs when you have to upgrade.

This all not to mention the risks - that the product won't work, that it will take longer than expected to develop it, that it won't sell as much as planned... and for taking risk, there is a value - a due profit.

All of these costs have to be spread out across each license sold to not only recover the up front money, but also the money for the ongoing expenses (staff, utilities, marketing) and money for profit (some of which is reinvested in the up front cost of the next project).

One of the developers - I think it was for Rough Rider - blogged that to make RR as an RE, he had to hire two high-end graphic and DSP developers @ $100 per hour and it took them a month.

If you do some math on that, it comes out to about $35,000 in cost to develop the RE.

It sells for $29 (call it $30 to make the math simple). Props get 1/3, which leaves the developer with $20 per unit.

That device has to sell 1,750 units just to recover development cost and break even. this level of sales could potentially happen within 4 months of release (1 month of trials followed by 3 months of sales, a bulk of them in the first month after the trial period ends).

If you look at the rent-to-own model in my previous post, this unit would rent at $2.50 per month - pros gets 1/3 which gives the devloper $1.75 per month. It would take 20,000 rental-months to recover development cost. (rental-month defined as <number of people renting> * <nummber of months rented>)

It means if those same 1,750 people rented instead of bought, it would take 12 months to recover the cost.

----------

Personally, I'm happy with the shop's pricing model. RE's are pricing higher than I had hoped, but I get the cost, and so the pricing makes sense.

It's impossible to predict what's better - lower prices * more sales -- or higher prices * less sales - to generate the most revenue.

It's also early in the game. I'm sure Props have a business model around the shop where they look at the number of developers that sign-on, the number (and type) of devices that get built, the number of trials per device and device type, the ratio of trials to purchases (the percentage of trials that lead to purchase)...

After a few months - no less than 6 if I have to guess - they can look at the metrics - and see how well the model is doing - and make adjustments (or not) as necessary.
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HP Pavillion DV7T-3300 Laptop | i7 Q720 @ 1.6 GHz | 4GB RAM | Win7 Pro 64-bit
m-audio Axiom Pro 61 keyboard controller || iPad2 | RetouchControl DUO | TouchOSC | LoopBe30 MIDI
m-audio Mobile Pre USB (original) audio interface | ASIO4ALL || RØDE NT-3 mic
Reason 6.5.3 || Pulsar | Saturation Knob | Rough Rider | TSAR-1 | Uhbik-A | Re-Tron | Polar | Echobode | Uhbik Q | Uhbik F | Morfin XF | Uhbik S | Uhbik D | Uhbik G | CV Suite Line Processor | wbl5515 | Uhbik P | RE-2A | Radical Piano

Last edited by SteveDiverse; 2012-07-04 at 18:15.
  #10  
Old 2012-07-04, 18:20
BetraX's Avatar
BetraX BetraX is offline
 
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Not a fan of the idea at all, hire purchase or subscription based. This is another thing I think props got right. The prices are reasonable. Note, not cheap, but seriously not overpriced!
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