Musikmesse 2012: Propellerhead to share "exciting news"

[valhallasound]

I am not a developer, but 30% seems a lot

Let me see here, you get:

1. Store solution
2. Digital distribution
3. Storing (even of older versions, for ever)
4. Propellerhead fix cross-platform for you
5. Propellerhead maintain your code base for you
6. Propellerhead offer the copy protection

The dev only need to worry about 3 things:

1. DSP
2. GUI
3. Workflow

With paypal (if you use that option) you loose a percentage on every transaction. Then you got to add hosting, the actual store solution. Count in the time and effort for you to develop multiple OS versions on your own, and maintaining that code as well as to actually implement the copy protection (which will likely be hackable? Reason 6 protection has not been hacked so far, afaik).

With this in account, I seriously don't think that those 30% seem unfair tbh.

Here's a breakdown of the above costs for my current sales model. I'm going to use a hypothetical situation where I sell 1000 copies of the VST/RTAS/AU, versus 1000 copies of a Re plugin (as someone suggested earlier for a hypothetical Valhalla Re plugin). For the sake of argument, we will amortize the sales and costs over 1 year. The prices for both the VST/AU/RTAS and Re plugin will be $50.

1) Store solution: I use PayPal. On average, I incur costs of $2 per plugin, at a sales price of $50.

2) Digital distribution. I fulfill orders manually. It takes me about a minute to fill out the order form, and send it to the customer. As far as updates, sending out emails to 1000 customers is free, either through your own mail program, or through Mail Chimp (once you get more customers than 2000 or so, things get more expensive).

3) Storing of older versions: included in my web hosting costs. $30/month.

4) Cross-platform: I use Juce for my cross-platform code. Juce is TRULY cross-platform, in that it supports VST, AU and RTAS, on both Mac and Windows. I paid ~$1100 for the Juce licence in early 2010, but for the sake of this discussion, I will amortize the entire Juce license cost across the 1000 plugins.

5) Maintaining code base: What does this mean? Will Propellerheads actually retain and modify the source code of each plugin, from each developer? This would not be something that plugin developers would like. Do you have more details about this?

6) Copy protection: I'm going to cheat here, as I already have my own copy protection solution. It isn't perfect, but no copy protection solution is. As I mentioned earlier, any commercial plugin developer will already have a copy protection in place. Things like iLok (BOOOOO!!!!!) cost money, but most smaller developers roll their own copy protection when starting up their company. So the cost of developing this will have already been taken care of before starting work on new plugins.

So, a breakdown of the costs:

My own solution: $2/plugin for PayPal, + ($1100/1000 plugins) per plugin for Juce, plus ($30*12/1000 plugins) for web storage costs, + free email (I'm not including the costs for my home internet, as I'd have to pay that anyway). Total cost per plugin: $3.46.

Propellerheads App Store: 30% of $50 = $15.00.

The difference between the two models is that the Propellerhead App Store results in my making $11.54 LESS per plugin sold, for doing things that I already do with my own sales solution.

The vast majority of the costs for ANY plugin developer will be in the 3 categories you listed last: DSP, GUI, and workflow. With my current solution, I can use the same DSP and GUI code for VST, AU and RTAS (it looks like AAX will require some reworking). Meanwhile, the GUI code I use won't be usable in Re plugins, so this will involve a fair amount of extra work.

So, why do I care? To be honest, this isn't really about the money. I guess the thing that is upsetting me right now is that the announcement of Re plugins seems to have been accompanied by a VERY inaccurate assessment of the costs and issues currently faced by plugin developers. If Propellerheads had simply said "all purchases are in app, and we are charging 30%, in order to have access to a market that you didn't have access to before," fair enough. It's their product. What is bugging me are the straw man arguments about how this makes things easier and/or more profitable for existing* plugin developers. It doesn't. And if these arguments are being postulated by Propellerheads themselves, this seems misleading.

Sean Costello

* A new plugin developer, on the other hand, might find making Re plugins far easier than developing VST and AU, due to the copy protection and sales issues that need to be solved. However, the discussion has been focused on existing plugin developers, as opposed to unknown entities.

[fedexnman]

Sounds like an APPle tax to me , pun intended .

[liquidsound]

In fact for a VST developer the only real advantage is the momentum of extra seles based on some users going back to Reason with more commitment and for the "Reason Only" users which would never buy a VST in the first place. Other than that, is business as usual.

[Chuck E. Jesus]

based on my own experience with quite a few Reason users over the years, I conclude that some of them are the kind of hipster lifestyle people who buy into Reason as a gadget as much as they buy into certain kind of fashion and adopt a postmodernistic leftist-ideological framework.

Reason is trying to take all mah guns!

[Trancit]

6) Copy protection: I'm going to cheat here, as I already have my own copy protection solution. It isn't perfect, but no copy protection solution is. As I mentioned earlier, any commercial plugin developer will already have a copy protection in place. Things like iLok (BOOOOO!!!!!) cost money, but most smaller developers roll their own copy protection when starting up their company. So the cost of developing this will have already been taken care of before starting work on new plugins.

But here you are more than just cheating...:

The codemeter dongle system, which is used by Magix and Propellerheads is the only copy protection, which wasn't cracked ever!!!!!!!!!!!!!!!!!

Your copy protection is cracked about ten minutes after the latest release is online!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

This means for you as a developer: The props have told on the press release, they could have raised their sales for more than 250%... this is in first place the result of the copy protection...

Make you calculation again with 1000 sold VST copies against 2500 sold RE plug copies!!!!!!!!!!!!!!!!!!!!!

The thing is: In the VST market you have to fight against hundreds of competitors making the same type of plugin like you...maybe (not maybe...of course) the are more customers available but many of them are done too...

Jumping in the early stages onto the props bandwagon gives you access to a whole bunch of very hungry new customers, willing to payt a lot for new devices, with much less competition .........

I make a little guess: this situation will raise your sale about another 500% in the first year or a bit more.....

As an extended developer, delivering a good product, you will earn a lot in the first 1-2 years with the props new format...

Sorry, but your comment is very much to narrowminded for a buisiness man...

[Crackbaby]

Sean, thanks for giving your point of view.

How i wonder how RE will shuffle the deck in the DAW business. Will someone make a *clone* of Reason but with maybe a better layout and customisation?

I don't think it would hurt if there was a standard for plugins measurements. It would be easier for DAWs to have racks.

[sellyoursoul]

Sean, thanks for the informative post, and thanks again for your candidness. We need more of that from the business end of things.

I don't think it would hurt if there was a standard for plugins measurements. It would be easier for DAWs to have racks.

I agree. It would be great if each host set up some sort of testing standards for plugin developers. And I do like the rack gui over a separate window per plugin.

[xh3rv]

What is bugging me are the straw man arguments about how this makes things easier and/or more profitable for existing* plugin developers. It doesn't. And if these arguments are being postulated by Propellerheads themselves, this seems misleading.

Another argument in the Propellerhead's media video is subsidizing cheap Reason Essentials - doesn't help developers directly at all, but just another thing. Like your point here, I think the way it's framed is ... not completely transparent.

As you say you're coming more from a broadly skeptical point rather than just on the bottom line. I think that angle would just be, is time spent porting to RE generating more income than time on other stuff. I'm all for RE if this is the case, whether or not I use it. I know some people have been suggesting developers might get distracted with RE, but I don't think that's fair at all to developers. The tech sounds to me like kind of the point of developing in the first place, doing things that are worth paying for. Most of you guys seem like the types that are more interested in the 'doing' part which makes me doubt there will be much controversy about customers feeling screwed over.

[Flandersh]

Funny how piracy is used as a market strategy. It minds me a little bit of commercial anti-virus companies that use their virus as the marketing strategy.

[n8tron]

valhallasound,

I find your discussion on this subject very intriguing coming from an independent developers standpoint. Thank you for your time and opinions!

It is interesting seeing the App store model from a developers perspective as opposed to a users perspective. Certainly there are upsides and downsides for both parties. I personally think the model is in favor of the consumer. They get (arguably) better stability, as the app has to be approved by the host company. They get a marketplace that is easy to browse and find what you need, rather than doing research on 3rd party websites scattered around the internet. Updates are easier for them for the same reason. They also seem to get a better deal, as it seems app stores are generally cheaper, and we'll see if RE follows suit...

But consumers also get less choice and less flexibility. It's a trade off but it's honestly one I'm in favor of.

Now I can see how this model can be a blessing to some developers and a curse to others. You don't get to do whatever you want. You have to work within standards, and you get charged a premium to have access to this marketplace. But these marketplaces are niche and if you are successful and are fine working within these standards then I can see how it could work very well.

Also, I don't know the ins and outs of the Rack Extension SDK or what Propellerheads offer developers for their 30% cut, but it seems like there are non-monetary pros to an app store as well. Namely your time. You mentioned in your break down the costs of your site, paypal fees, etc. But when you mentioned having to manually do invoices, how does that factor into the benefits? How about support, or bug fixes? If you have to deal with these things less it might be worthwhile. Both for you time and your pocketbook.

For example, you stated a minute or 2 for manual invoices... or 1-2 thousand minutes a year for the 1000 plugins sold model. I don't know what sort of dollar value you would put on your time, but that could possibly knock off a percentage point or 2 per plugin. Would support or bug fixing be less in an app store? I don't know... but if it is, and because of the closed environment it seems likely, again that is time saved. I'm not trying to persuade you, these are just my observations and I figured if you were in this discussion as a developer you might have some input on these possible benefits. You obviously have a system in place that works for you, so I can see how changing that could be a pain. But not having to worry about a lot of other business related issues could be worth the extra $.

I am both in favor and not in favor of app stores. I think there is room for both. And I like both for different reasons but I do think they can offer a more stable environment for the customer and I do think it will work for Propellerheads because of their already closed system. I'm also excited as a Reason user, among other DAWs, for this development. I don't own your plugins (yet anyway) but I've heard a lot of great things. Thanks again for your time here.

[christianmusicmaker]

How i wonder how RE will shuffle the deck in the DAW business.

Host Devs are likely to push existing Proprietary formats harder. Especially if Re does well.

Will someone make a *clone* of Reason but with maybe a better layout and customisation?

Maybe a take of some sort is very likely.

I would even say I am 99% certain within a year to 18 months, something similar to Props new shop + Re concept and / or Reason (or similar functionality to Reason) will show up. Re has caused a major stir and could be a very big success if ( big if) it gets the dev and customer support it so badly needs. But I just don't think Reason IMHO UI wise is a strong enough carrot (yet).

However...

Reason Essentials is cheap enough to get the ball rolling as perhaps a second host for many. That could be a slow but pretty steady cash flow for Props. If devs focus on the plugs Essentials is missing compared to the full version of Reason (initially) then with enough choice customers could get Reason Essentials and say 5 or 6 missing plugs and go from there. That could be cheaper and more desirable than getting the full Reason 6 package.

Reason in a strange way goes full circle back to being a highly desirable "Virtual studio" that you Rewire into your main host. This time "Rewire Reason Essentials while it hosts your favourite 3rd Party's Re's" would work a lot better for VST owners.

This time however the market is highly competitive and the hosts that Reason competes with (AUDIO and MIDI) are stacked up to the hills with their own Synths and FX. More than most people will likely ever need.

Reason Essentials + Re Plugs enter a vastly diffferent world compared to the one Reason 1.0 came into. But all the pieces are in place for Re to do very well indeed. But IMO Reason Essentials (at low cost) is the Ace in the pack + Re.

Possible way forward for the Props...

a. Re Plugs need to be sold cheaper than VST's IMO

b. They need to be sold as unique products not ports (where possible going forward)

c. Props need to market Reason more as a Virtual studio Rack for your existing host (again) as they used to and less as a full on Audio MIDI host (even if it is). More VST users are likely to at least try Reason Essentials + a nice subset of Re plugs, than switch to Reason outright. If all the above is followed I think Re could do very well indeed and will rival VST possibly within not too long a time frame.

Steinberg will have to do something more with VST because Re has the potential to become a very big player. Most VST users will use RE via Rewire IMO. That number could be pretty big. So VST and Re should co -exist nicely enough. But if Props allow for Re plugs to be used outside of Reason in future...then dev support for Re especially with the ease of set up (copy protection, distribution) could easily rival current levels of VST support. Interesting times.

[SonicDimension]

Re: "leftist". All right, maybe not the best phrasing there, but based on my own experience with quite a few Reason users over the years, I conclude that some of them are the kind of hipster lifestyle people who buy into Reason as a gadget as much as they buy into certain kind of fashion and adopt a postmodernistic leftist-ideological framework. To me it just doesn't seem very obvious that such a Reason user - who on the one hand complains about paying something like $99 for an upgrade - would, on the other hand, refrain from complaining about paying an equal amount (or more) for selected RE plugs.

It's not like Reason is Pro Tools. It's was originally marketed as a poor man's studio - infinite racks and synths for every bedroom producer. That will change now. This is Reason - the rich man's edition. You get a fatter rack with a fatter wallet. It's as simple as that.

Yeah, like those damn hipster socialists in Stockholm who developed Reason!

[sellyoursoul]

Christianmusicmaker, you're only leaving out one thing. Rewire is a hassle. If Propellerhead is to see success on the ideas that you mention, they will have to address at minimum, the usability of Rewire, and possibly even the some of Rewire's functionality, such as one way audio. If you ask me, they would be better off to make Reason, or Reason Essentials available as a vst plugin. The majority of users who use Reason/Rewire are likely using Reason as a rack of sound devices any way. Making Reason available as a vst plugin would allow for multiple instances, two way audio, and vst presets that avoid the current hassle of opening two separate projects, one for the host/one for Reason.

[christianmusicmaker]

Christianmusicmaker, you're only leaving out one thing. Rewire is a hassle. If Propellerhead is to see success on the ideas that you mention, they will have to address at minimum, the usability of Rewire, and possibly even the some of Rewire's functionality, such as one way audio. If you ask me, they would be better off to make Reason, or Reason Essentials available as a vst plugin. The majority of users who use Reason/Rewire are likely using Reason as a rack of sound devices any way. Making Reason available as a vst plugin would allow for multiple instances, two way audio, and vst presets that avoid the current hassle of opening two separate projects, one for the host/one for Reason.

Rewire has never been something of interest to me. Too much hassle. It's not that difficult to use really but Reason as a VST / VSTi would be fantastic. If nothing else Props have a massive amount of brainstorming going for Re and Reason. I think even they are surprised by the amount of really good ideas put forward. I think Reason 7 will have at least a few of the suggestions put forward on this thread. Maybe as has been said before Props can now focus on the core host with 3rd party devs left to focus on FX and such.

While Reason as a VST might not be one of them (I could be wrong) something that gives it the same functionality at the very least could be on the way. It would not surprise me.

[christianmusicmaker]

They get (arguably) better stability, as the app has to be approved by the host company. They get a marketplace that is easy to browse and find what you need, rather than doing research on 3rd party websites scattered around the internet. Updates are easier for them for the same reason.

Not much has been said about those aspects of Props take on plugin development and sales but as time goes on they could be huge factors for potential buyers.

They also seem to get a better deal, as it seems app stores are generally cheaper, and we'll see if RE follows suit...

It might not be too enticing a thought for every dev which I can understand but maybe the potential volume of sales will make it more than worth the risk. There seems to be some pretty big numbers for app sales (elsewhere) but can it work for Reason and Re? If it does then it could have a massive impact on the way plugins are sold even with other formats in future. Even if Steinberg or Cakewalk got in with their own store Props are first to this new market and will have a big share of 'app sales' of this nature going forward.


Steinberg are probably hoping Props do not allow Re's to be used outside of Reason. That is a button they hope Props do not press. But Props might not need to and could leave things as is driving customers to their own Reason Eco system instead continually. But if Re does not really take off opening it up to any Host in future would give Props a potentially massive rival to VST. Devs might be happier supporting that in future.

It would be interesting to see if someone else can do an even better job than Propellerheads. While not perfect, their idea seems pretty good as is. You can guarantee the competition are keeping a very close eye on this brave new world the Props are trying to create. I certainly applaud the Props for at least trying something of this scale