Reply To: Native Instruments GmbH is in preliminary insolvency

[LinkedMusicians]

On fretman said

I’m still a heavy iZotope user, but their current upgrade pricing has caused me to stop buying. Not sure what I think about this…

I stopped buying Izotope after they discontinued my bundle and I had everything in another bundle — and more — and they refused to offer me upgrade pricing. I had advanced versions of regular plugins in the bundle and everything else, and they still told me that I didn’t qualify for the bundle. I really like Izotope products a lot, but their upgrade policies caused me to find alternatives (I feel the same way about Toontrack with their refusal to give upgrade pricing for Superior Drummer 2 users, but their drum plugin and ecosystem is so much better than anything else on the market, I eventually gave in). I’ve found Sonible to be better much better to deal with. I think Izotope, Plugin Alliance and Brainworx futures are all in question with this insolvency. Unquestionably, NI is going to be selling at least some of these brands off, and if they can’t find buyers, they’ll be retiring some of the product lines.

The level of competition and the dramatic changes in pricing (drops) in the market have made it a lot more difficult to make a decent profit. The greater accessibility (AKA price reductions) that we’ve seen take place in plugins and sample libraries are great news for music producers and combine that with the fast changes in technology in this industry — largely driven by AI — and the competitive environment has significantly changed in the last several years while NI was doing those acquisitions. They can’t count on the same margins they had when they started their buying spree.

I think this should also cause those who make assumptions about product longevity. I remember at Cakewalk Forum, when Waves announced they were going subscription only I predicted they would reverse course within two months (the post still exists). A certain Cakewalk Forum poster — who loved to serially troll me and has done it even when I’m not there — mocked me, stating that I had no idea what I was talking about (always with the insinuation that I’m arrogant for sharing my background).

It turned out that it only took days before Waves reversed course on their subscription-only strategy. Why was that so easy to predict that they would reverse course?

Because companies sometimes make really obvious strategy mistakes. I can tell you that being inside global brands, advising brands, and being the go to guy (non-finance) strategy person on acquiring companies, that often what looks like terrible strategy on the outside is indeed terrible strategy, but it often occurs because top management is isolated from reality and corporate leadership commonly falls into surrounding themselves with yes men/women. It’s very risky to be the person who stands up and says, “No, what everyone is telling you is wrong. We made a mistake and we need to take corrective action” or, “Acquiring this company really isn’t a great fit with our market, strengths and brand image.” Doing what is right strategically comes at the risk of derailing one’s career, and that’s why it’s rare. Bad strategy often happens as a result of a dysfunctional corporate culture.

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