Native Instruments Enters Insolvency Highlights Industry Wide Issues

German music tech firm Native Instruments has entered preliminary insolvency. This means it cannot afford to pay its debts. Native Instruments is a core part of the digital music technology ecosystem for many musicians. It creates Traktor for DJ’s, Maschine for beat makers, and Kontakt for sound design and instrument plugins. A large portion of my music creation tools are created by Native Instruments or run through Native Access, an online authentication tool. Whether the company can be saved or bought out remains to be seen, but the collapse of yet another company buying up smaller companies and then crumbling itself because of greedy over-expansion is deeply frustrating.

It also highlights the way consumers are once again at risk of being shafted.

You do not own your own software

Whenever you buy a plugin or a new digital instrument, it is now standard to require a key code authentication online. If a company goes under, turns its servers off, or just decides to discontinue support for something you have paid for, your software could be bricked. I’ve spent a lot of money on these products, plugins, and even an NI keyboard. If I lose access to my products through no fault of my own, why would I continue to buy anything when the transaction is rigged against me, the consumer? The meme “if buying isn’t owning, then piracy isn’t stealing” was born out of these unfair terms, and we see this situation in video games regularly.

The absolute bare minimum I would expect is to turn off DRM if the company goes under, so that I can download and keep my products locally. That way, it is up to my own competence to look after them.

The wider plugin and digital instrument ecosystem suffers

I’ve noticed an increase in smaller sound studios now creating their own authenticator and download tools, as they move away from Native Access. Perhaps they knew the writing was on the wall. The problem with this is that these companies are smaller and arguably more fragile in an already volatile market. We have been in a recession for a while now, whether the pretend AI money shovel games mask it or not. It feels like I’m at risk of having this happen multiple times over to me, losing all my paid products.

From a user experience perspective, it is also a complete mess for the end user. I have 16 different portals on my PC to access all the different VSTs I’ve purchased. It’s an entire section of my desktop. It feels so needless and clunky, and whenever a new product is released, most of these portals grind to a complete halt. If I am up against a tight deadline, this is needless pressure for me, and offloading of industry complexity to the user. None of the portals follow a similar design. Some try to have a snazzy user interface that glitches out or gets in the way. I don’t want 16 portals. I just want to use my products when I want to use them.

The number does not always have to go up

Native Instruments is the latest in a long line of companies that were bought by investors (Francisco Partners) and then driven into the dirt in the pursuit of never-ending growth. They had recently bought iZotope, Plugin Alliance and Brainworx, with iZotope being another brand that many musicians use daily. However, the gobbling up of companies has led to Native Instruments having a debt-to-earnings ratio of over 12x. In a world of financial consultants, it is shocking how poor their judgment is, and so long as they can dissolve and move on without consequence, they’ll continue to do it. Our governments should be doing more, but they are equally impoverished against the elites.

Just like venture capitalists ruining humanity in the pursuit of power, shareholders bleed companies dry. They treat the customer with disdain. Selling out to others is normally the beginning of the end. I suspect by around 2028, we’ll be saying the same thing about Spitfire Audio. I also have grave concerns about Propellerhead Reason, my DAW of choice. Both have had recent buyouts and mergers that are heavily AI-influenced. That is not a number go up problem, that’s a bubble go up nightmare.

We need better

Whether it’s better licence agreements, less intrusive digital rights management, better (and more humble) businesses, and better government stability that stops hacking our ability to live above the poverty line, we need better. We deserve better. I am pessimistic on all fronts, but let’s see what happens next.

For Native Instruments, I expect a larger company buyout. The underlying tech is too entrenched in musicians’ workflows to be useful. I have also seen reports that Native Instruments was profitable without all the buyouts. If that’s the case, a downscaled company may end up viable in the short to medium term. What a shame for everyone involved.

[UPDATE: The CEO of Native Instruments has posted a blog to state trade continues as normal for now.

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