JetBrains softens on subscription model, still unsure of its success
“Whether the industry will come to accept this model as a standard, I don’t know,” says JetBrains Developer Advocacy Team Lead Hadi Hariri of the new subscription model. While many rough edges of the new model have been smoothed out, it remains uncertain if the price is right.
After news of JetBrains’ subscription model broke, feedback from the community against the proposal has been deafening to say the least. The JetBrains Toolbox was announced to be available from November 2, 2015 and with it, a collection of desktop tools on a yearly or monthly subscription basis. This includes their popular IDE, IntelliJ IDEA.
After the fallout, JetBrains have relaxed their plans somewhat, while still pushing the subscription service ahead. An update to the plan has been issued and users can expect the following from November:
- We are moving forward with subscriptions with important adjustments.
- You will receive a perpetual fallback license once you pay for a year up front or 12 consecutive months.
- You will receive up to 40% discount for continuous subscription.
- You will be able to use the software without an Internet connection.
- Current customers with active or recently expired upgrade subscription get first two years of subscription for the price of one.
- We still recommend you take 10 minutes to read it all for the complete details.
Many developers will find themselves asking “is the old business model really no longer relevant?”. Technical Evangelist for JetBrains Hadi Hariri confirmed this to be the case. “The [old] revenue model does not align with the actual efforts,” Hariri told us.
JAXenter: The IDE scene hasn’t seen a community uproar like this in quite some time – did JetBrains expect this kind of reaction to a radically different subscription model?
Hadi Hariri, JetBrains: We expected some objections to the idea, but not to the extent that we received. As mentioned in the blog post, we ran extensive private surveys with a variety of customers and it definitely didn’t shed the same results as it did with the public announcement.
What do you make of Milinkovich’s claim that IntelliJ IDEA users are “exposed to the whims of [JetBrains’] profit margins”?
I’m really not in a position to comment on what other people want to make of the situation, but I can tell you that this was not about increasing profit margins. We spend significant effort on both getting new market share as well as maintaining existing customers. The current model of a high entry cost and then lower upgrade rates would not be sustainable once the number of new customers starts to decrease, and given we are in a somewhat finite pool, this will eventually happen. In addition, given how we distribute our efforts, focused equally on new and existing customers, the revenue model doesn’t align with it.
That is why we needed to find a more sustainable model in the long run that allows us to continue to support all our customers. The new subscription model has lower entry costs, and as you renew yearly, the annual costs become lower, with a 2nd year 20% discount and from the 3rd year onwards receiving 40% discount. For existing customers, we’re now giving basically one-year free subscription on switching to the new model during the transition phase.
Do you think the community will grow to accept this model, especially if rivals like Eclipse, NetBeans and even Komodo say they will not be following suit?
I don’t know if Komodo or other commercial tool vendors that provide downloadable software will switch, we’re certainly not the first though. Eclipse and NetBeans have a different model however. They are free and OSS, and their development efforts are voluntary and often backed by sponsors, donations or corporations that have their revenue model elsewhere. At JetBrains we don’t have an alternative revenue stream, VC money or any type of investors. All our income and growth has been organic and generated from the sales of our tools. If we want to continue to provide a great service to all those users that have put their trust in our hands for over 15 years, we need to find a sustainable business model, now at a time of growth where we can afford it.
Whether the industry will come to accept this model as a standard, I don’t know. Many people directly equate subscription to only services that are hosted, and it’s a natural thing to do, as hosting a service has running costs. However, one does have to question what percentage of the subscription fees that we pay actually goes towards the hosting costs versus other costs, which is common to all type of software. At the end of the day, software is software, whether you download it or use it online, it needs to continue to be supported and innovated on, especially in our field where every day something new appears on the scene.
Is there any possibility that the announced ability to use IntelliJ IDEA without internet and the perpetual fallback licence will be reconsidered by JetBrains in future?
As far as I know, there are no plans. This is the final decision in regards to our move to subscriptions and the changes have been made to address some of the concerns our users had. We believe that the way forward is a subscription model.