
Adobe's 9% Flash tax - maccman
http://blog.alexmaccaw.com/the-9-adobe-flash-tax
======
kevinpet
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.

~~~
monochromatic
> 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.

~~~
esrauch
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.

~~~
sedev
Or to give the US example, sales tax (and 'vice' taxes like cigarettes and
liquor) - because of the different spending habits of different groups,
they're effectively regressive taxes.

------
pasbesoin
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.

~~~
kenrikm
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
$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.

~~~
dwiel
This reminds me of people who aren't willing to drive across town to save $250
on a $15000 car purchase, but who make sure to buy their groceries when they
are on sale to save money ...

Just because you recently spent $15,000 doesn't mean the next $80 are worth
less.

~~~
ghshephard
False comparison - You buy a new car once every 5-7 years. You buy groceries
2-3 times a week.

~~~
AgentConundrum
It's not a false comparison, and luckily I don't have to explain it, because
this is covered in my personal favorite TED talk, "Dan Gilbert on our mistaken
expectations".[1] It's a bit long for a TED talk, running for about half an
hour, but I'd recommend at least reading the transcript if you can't watch the
video.

The relevant portion comes after Gilbert sets up a situation not unlike the
one being discussed here. People won't shlep across town to save $100 on a
$31k car, but they will to save $100 on a $200 stereo. He explains the
cognitive mistake as follows:

> _This kind of thinking drives economists crazy, and it should. Because this
> 100 dollars that you save -- hello! -- doesn't know where it came from. It
> doesn't know what you saved it on. When you go to buy groceries with it, it
> doesn't go, I'm the money saved on the car stereo, or, I'm the dumb money
> saved on the car. It's money. And if a drive across town is worth 100 bucks,
> it's worth 100 bucks no matter what you're saving it on._

[1]
[https://www.ted.com/talks/dan_gilbert_researches_happiness.h...](https://www.ted.com/talks/dan_gilbert_researches_happiness.html)

~~~
ghshephard
The reason people go to so much effort to save money on smaller purchases, is
they make them so much more frequently. You make a $31k purchase once a
decade, so saving $100 on that purchase is way down on the list of priorities
- location is much more important if you are visiting the dealership for the
next 10 years. Time and gas alone to go an extra 5 miles will add up to
hundreds of dollars.

If i can save $100 every two-three months, with no downstream liability as a
result (like the cost of taking my car the extra distance to the dealership)
then I've profited $4000 over 10 years.

------
mceachen
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
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
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.

------
crazygringo
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?

~~~
azakai
> 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.

~~~
rprasad
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).

~~~
rdw
Adobe has released a FAQ:
[http://www.adobe.com/devnet/flashplayer/articles/premium-
fea...](http://www.adobe.com/devnet/flashplayer/articles/premium-features-
licensing-faq.html)

Unity's export to Flash does currently require both 3D and memory-optimization
technologies. Any Unity-Flash game that has a chance of netting $50k falls
under the requirement, from what I currently understand. This basically covers
any non-hobbyists. Unity could solve this problem by making their Flash
exporter not use "domain memory", but that might be technically infeasible.

One interesting question is, if my company makes 5 games, each of which makes
$49k, is that legit? Could I get away with taking down any game right before
it nets the magic number and putting up a "new" game which is only slightly
different? I'm guessing the answer is "no", but edge cases sound like a
nightmare.

~~~
rprasad
Thanks. I was going off of what was known yesterday; didn't know about the FAQ
or that Unity had confirmed its conversion process used both of the targeted
techniques.

------
crazygringo
> 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...

~~~
MatthewPhillips
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
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.

------
driverdan
> this violates the fundmental openness of the SWF format

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

~~~
pixelbath
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
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.

------
cleaver
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.

------
ChuckMcM
_"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&...](http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1332878400000&chddm=1154686&chls=IntervalBasedLine&q=NASDAQ:ADBE&ntsp=0)

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

~~~
loire280
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.

~~~
ChuckMcM
"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.

------
MLMcMillion
Adobe is killing Flash even quicker than I had hoped.

Please, Adobe, keep this shit up.

~~~
lallysingh
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.script-tutorials.com/fresh-10-html5-canvas-webgl-
examples/)

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

------
duaneb
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.

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

------
chromic
Perfect, another nail in flash's coffin.

------
nthitz
> 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.

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

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

~~~
vinayan3
Exactly. Apple takes a 30% tax and one says anything?

~~~
billycravens
Google charges the same 30%: [http://support.google.com/googleplay/android-
developer/bin/a...](http://support.google.com/googleplay/android-
developer/bin/answer.py?hl=en&answer=112622)

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.

~~~
JoeAltmaier
None of that justifies a 'cover charge' - lots of folks make hardware,
everybody has their store. They only 'provide' the store because they won't
let anyone else.

The guys that do it, do it because they can.

------
justindocanto
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?

~~~
samnm
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.

~~~
justindocanto
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.

~~~
samnm
I'm a bit late to this comment but there's just one thing I want to say. I
agree with everything you for the most part but Adobe is in effect charging
for the distribution of their platform. For example if you built a game with
Unity you could either publish on Unity's browser plugin or pay 9% to publish
using Flash Player. What you're paying for in that instance is the fact that
any user will most likely already have flash player installed and ready to go.

------
wmil
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.

------
stcredzero
_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.

------
j45
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?

