iLok dongle

Companies live in fear spending their time looking for pirates. Write good software, price it reasonably and you will sell enough to make a profit.

The last niche of the software market that hasn’t grown up is the music business. The business practices are twenty years old.

Many companies in audio and recording require a dongle to use their software. Dongles disappeared from the face of the earth in the rest of the computer business around 1990. 

A dongle is usually a USB card that the program will check constantly to see if it’s installed on an authorized computer. The dongle stores the information on what software has been purchased.

iLok is the industry standard dongle. From full applications to effects plugins, iLok is required to run this software.

If you lose the iLok  or it malfunctions, the software becomes inoperable. While the program is running, it’s constantly checking to see if the iLok is in place which can slow down processing.

Steinberg’s Cubase recording software was notorious for interrupting operations. They now have a proprietary system that works better but users are still at the mercy of a USB after paying for the software.

Anything can be stolen, any lock picked. Other software companies have devised less intrusive systems to thwart piracy.

Microsoft has a complex but transparent system for registration of its software. It also polices licensing. There is no one fix for the problem.

In the real computer world, outside of the audio, dongles went away with Lotus 123.

Personally, I vote with my wallet and don’t buy software that uses a dongle. There are lots of choices and new developers are appearing all the time who recognize the need for open markets.

Melodyne pitch correction software stopped using dongles

Melodyne got off the dongle wagon with it’s voice pitch correction software. Melodyne uses an internet registration system so you need to be online to use it. That could be a problem if you’re remote on a laptop.

Dongles are like people selling 32 bit software with bit-bridge to function in a 64-bit world. They should be on Antiques Road Show.

Most of these companies rely on the low sales volume, high price business model in a world of abundant supply, low price and easy access. It doesn’t take an economist to see they are using an out-of-date business model. If they can maintain very low expenses, their boutique business will survive.

In software $10 million in annual sales is pre-bankruptcy. You’re dying but don’t know it yet.

That’s why Cakewalk and Steinberg sold out to Roland and Yamaha respectively. They weren’t big enough to survive.

$100 million in sales is a medium term break even point. How many of these companies are trying to grow to that level?

While these guys are circling the wagons with dongles to keep customers in the 80s, young punks are designing web iPhone/iPad apps. Those companies use small teams that can capture add customers faster these the old line companies are not even dreaming of.

“The old road is rapidly changing…” I was in client server software development and saw the web apps that were going to eat our lunch. It was scary – we took 5 years to bring a product to market and they did it in one. None of my competitors survived – they merged and lost the battle to companies who were small, smart and nimble…companies who gave stuff away in the beginning.

When I started recording audio, I couldn’t believe how bad the software and business practices were. The older companies are living in the past but new and more nimble competitors will eat their lunch.