[UPDATE: See below]
Technology is supposed to make our lives better. Shouldn’t we demand the same from business models? Sadly, it seems as if today’s bleeding edge innovations in business and retail are in — pricing. Yes, pricing. The chief goal, apparently, is to turn everything we buy or might ever buy into a subscription.
No, thanks.
While social media titans offer brands the allure of connecting with each of us — on a human level, of course — I confess I am not at all interested in a Facebook or Twitter relationship with whomever provides my toilet paper, vitamins, cloud storage, dog food, or even the books I read.
Yet, that’s how subscriptions are marketed — as a relationship. One designed to benefit us, the consumer, as much as the seller.
I have my doubts. After pulling together a few stolen moments to review my monthly spending, I discovered I had signed up — subscribed — for all manner of products.
- Oyster (books)
- Netflix (television)
- Pandora (music)
- New York Times (website)
- OneDrive (cloud storage)
- Anchovy oil (via Amazon, for the dogs)
- NHL Center Ice
- MLB At Bat
- Evernote
- Razor blades
- Zyflamend (via Amazon, a multi-vitamin I decided to try and which apparently I subscribed to so as to save a penny per softgel)
- Craft coffee
This does not include the makeup my wife subscribes to and somehow thinks I don’t know about. Nor does it include — as we are still “discussing” this — our basic monthly cable service, nor our monthly iPhone and Internet bills.
But, baby steps. Wherever I can, I am canceling all subscriptions, permanently.
Instead of making my life easier, making it so I never ever have to worry about running out of milk or daily vitamins, the subscription economy has become just another needless pressing burden. While analysts and market makers may cheer the subscription economy, I shall take my leave, despite the Sisyphean effort most retailers require to break these relationships.
Burning Their Money In Wastebaskets
Do you believe the sudden, expansive ramp-up in subscription everything is designed for your benefit? Really? Me, neither.
Are retailers so desperate to take more of what money we have they now must actively promote never ending subscriptions even for the most garden variety products?
I do most of my online shopping through Amazon. It seems like every item I search for anymore, the retail giant offers an enticement if I subscribe instead of just buying the product outright.
I am dubious of any savings or convenience.
Amazon states, non-ironically, “the more you subscribe the more you save.” They claim buyers can save 15% more when they “receive 5 or more subscriptions” per month.
15% savings? On top of Amazon’s already low prices? For a retailer notorious for reducing margins to zero, that’s a rather significant amount to be giving up.
I suspect they can offer this because you will soon discover you have agreed to purchase far more than you really need. Win for them, less so for you. Plus, if you are subscribing to Amazon — for anything — you can’t spend that dollar anywhere else. Share of wallet and all that.
To be fair, Amazon is one of the few retailers that actually makes it reasonably easy to quit. Try that with every other subscription service. Go on, I dare you. Just try. Start with the New York Times or Wall Street Journal. They will insist upon a phone call — in the year 2014! You know exactly why.
Canceling that subscription, which was supposed to benefit you, is made just hard enough, just time consuming enough to make it not worth your effort. You remain locked in. A dollar here, a dollar there, pretty soon it all adds up.
This is not what technology should do — ever. Technology should be liberating, empowering, not a time-suck and not a money pit.
The Best Minds of My Generation
Why must our greatest minds be employed by our greatest companies then tasked with nothing more than making it so we mere mortals can not ever glean the actual price for an actual product?
I suspect you are all familiar with the following scenarios:
I’d like to cancel my subscription.
But, sir, we can reduce the price by 25% if you extend your trial rate for 17 more weeks!
I want ESPN. How much does that cost?
If you subscribe to our Gold bundle, Mr. Hall, you get Bravo, A&E, ESPN and…
You promise me the best prices on the web. So why are you forcing me to join some Prime membership or demanding I buy this same item from you month after month, forever?
(Trick question. There is no human for you to ask this.)
You track me on the web. You track my movements on through my smartphone apps. How much is my data worth?
We can’t tell you that, sir.
But it’s my data!
No, sir. Not really.
I imagine the great minds of Silicon Valley will not stop at having my refrigerator text me that I am low on eggs. Rather, Big Tech will team up with Big Grocer and place me on a weekly egg subscription — one that is impossible to cancel but which no doubt promises 10 cents off, per egg, should I buy two boxes of Cheerios every month for the next year.
Time to disrupt these data disruptors. If we fail to take action soon, we could find ourselves trapped in a web of subscriptions from which there is no escape.
Trembling Before the Machinery
I cover the technology industry because it empowers people and makes the world more accessible. I analyze business trends because most of the innovation of the world, in my view, happens within the walls of for-profit enterprises.
But if you, the retailer, are incentivized to offer me something — anything — other than what I want right now and for which I am willing to pay, right now, then I immediately lose trust in you.
Life is much too short for double-talk, bundles and One-A-Day subscriptions.
Regrettably, my howls are likely to fall upon deaf ears. Nearly 15 million companies in the US and Europe are implementing the subscription model. FastCompany recently profiled Zuora, which has received a “whopping” $128 million in venture capital. Zuora’s mission? To “help us shift from owners to subscribers.”
Us?
Zuora needs all that money not just to scale, but to execute.
“(Subscription’s) a task more complex than you might think. How exactly should you price your product? How do you build a payment infrastructure to allow for price changes? How do you process payments internationally? How do you manage the legal issues that surround storing credit cards?”
Honestly, I am not even remotely impressed by the computational complexity and Big Data algorithms crafted by those leading the subscription charge.
Reminder: 45 years ago, before the majority of the people on this planet were alive, America sent three men to the moon. Two of them walked about. All three were returned safely to Earth.
That’s impressive.
I do not wish to be unfair to Zuora. That they have massive backing from multiple VCs in Silicon Valley suggests their skill set is to be lauded. That said, I simply do not believe their “nine keys to subscription success” are for my benefit or yours.
The Incomprehensible Prison
I am fully aware that far greater minds than mine will spend far more time than I ever can crafting clever appeals with the sole intent of enticing me to subscribe. To anything. I may succumb, despite my declaration.
I need your help.
Recently, after a Paypal executive went on a rather bizarre Twitter rant, I created the notion of a “Twitter buddy.” A Twitter buddy is the person who rips the phone from your hands the moment you begin tweeting inappropriately.
We also should have a subscription buddy.
If I ever decide to subscribe to a new service, subscribe to some product, grab my credit card and throw it in the shredder. That’s what a true friend would do. That’s a relationship worth keeping.
[UPDATE 27 May 2014: Zuora posted a response to this column on their website. It’s a strong rebuttal and I recommend you read it. — Brian]
Amen, and amen. Thank you for this. I still owe you a beer. Or bottled water, or whatever your drink of choice. I feel the same for autopay bills. (Ironically, of course, I do subscribe to Techpinions insider, but I figure I’ve freeloaded on your guys for so long, you earned it. I haven’t tried to cancel. Do I get a call from Ben or Tim if I do? Or do I get a “call” from Guido?)
Joe
Thanks!
To me this subscription intent you write about is more about lock-in than the lock-in people characterize Apple’s business model. At least with Apple, such as with iTunes purchases, their lock-in is still on demand. Their’s is more about convenience when you are ready. Everyone else wants you to spend that money regularly whether you need to or not.
Re: Insiders, this is definitely a value proposition of the product and not just trying to make regular purchases brainless. As for saving money I remember as a kid watching a car commercial and they were talking about how much you save if you “buy now”. I told my Dad and he says “I can save more than that by not buying the car.”
Joe
Sums up why I don’t subscribe to the Insider goo. I’m sure it’s worth it, but I don’t subscribe to things. I’d rather see content providers integrate ads in a smart way, stuff like The Deck is nice, good ads, not in my face. Advertising can provide value when it is done right.
Thanks for the point. What is commonly missed in that point is that for advertising to be a sustainable revenue stream a site like ours would need to be 10 times the size we are currently in daily traffic. The only way I could get us to grow that much is to chase page views which means we would stray from the high quality bar of our content. As well as publish anywhere from 5-10 posts a day, since Google likes that. Taking the high road with our content means our content is targeted to people who appreciate it. The goal of insiders is to take that content to new depths as the analysis and insight I share there is highly differentiated from what you see publicly.
My firm Creative Strategies does very high level and very expensive analysis for all the major industry players. Insiders is designed to be a “lite” version of that content. Some of the data, charts, and more I share I would never share publicly if we didn’t have insiders due to how hard it is to generate and track that industry data.
While I understand Brian’s point, the missing factor is that we all pay for what we value. I subscribe to a number of things like ESPN insider for my fantasy stuff, or cooking content, etc., all things that have meaningful value.
My hope is that there are enough people out there who value the deeper information and give and desire to be empowered with that information for a job function, investment, etc. Insider content is designed to give someone an edge when thinking about these things and get insight not publicly available anywhere (cause its not). While we still offer sponsorships the subscription model will dwarf it in terms of revenue and allow us to continue to do what we do and maintain a high quality bar.
“for advertising to be a sustainable revenue stream a site like ours would need to be 10 times the size we are currently in daily traffic. The only way I could get us to grow that much is to chase page views”
Basing ad revenue on page views isn’t smart. Access to a target audience has value. I recently finished a project involving advertising in an online publication. It’s doing very well revenue-wise and is not tied to views at all. The price of an ad is fixed, much like magazine advertising. And there’s one well-designed ad per page (taking some inspiration from The Deck). It’s a win for the reader and a win for the advertiser. Pay per click or per view is a poor model.
Perhaps we can talk about this over email. benbajarin at mac . com.
We are signed up with this. https://syndicateads.net Many sites in our category use it. Still not sustainable. The model you describe is what we are doing with our current sponsor. It is good but again, it all depends on size and reach for your pricing. We are large enough to get an ok price but not large enough to really get to a sustainable stream.
That is the issue. How big is the true audience size for a site like ours and would it ever be large enough to use that model. In all numbers I look at it seems a million uniques a month is the only way to be there. I’m not sure we can ever get there taking the high road. When I talk to the stats of the other guys like us, Horace, Benedict, etc, none are near the numbers to make an advertising only model remotely sustainable and they are trying!
So if you have other ideas, I’d be open to hearing.
I sent you an email follow up. Let me know if you don’t get it.
So well said Ben. Most of the things that Brian lists are things that are nice to have but can be cut out of his budget if he can not afford them and does not see the value of their products and services.
I am beginning to think that it is Google itself that is the problem, not simply the model of the search-based web. When content-rich sites like TechPinions can not prevail in an environment where readers are themselves acting in their best self-interest (the vastness of free information and analysis makes subscribing a questionable act of self-interest) then the problem is not in the information provider or the information consumer but in the mechanism that brings them together; primarily Google.
Possibly, however, as I point out the ad model is near impossible for a site like ours given we have not raised millions of dollars in capital. What I don’t think many realize is that you simply can not offer for free the analysis we do for insiders. There is massive experience, depth of data, and other content that stems way beyond what is free journalism or even data journalism. To have veteran industry analysts do what we are doing exists no where at the price range we offer. Which is why I hear regularly that we should up the cost due to the quality data we share and analysis of the industry.
Ultimately, perhaps a free trial will help which is what we are working on. That way people can experience it and see the difference. The goal of the subscription is to cater to the needs of those who work in the industry, or make decisions based on industry or market knowledge as a part of their job. Casual tech reader is not our target due to the way we dive into the information it simply lends itself to an in industry audience.
But I wanted to make sure some of our unique insights remain free, hence the free column daily. We are still learning at this but I know ads can’t be the only revenue stream we utilize.
Then you’re missing out on some great content. Don’t confuse subscription with access.
The “subscription economy” attempts to put us on subscription payments for what we already have.
I’m almost convinced, I may sign up after we’re done seeding at the farm here.
A few things. I have serious doubts that ads by The Deck are sustaining other sites — their money comes from other sources. You can get Insiders articles on a per-article price. No games, no bundles, no buy X before you can purchase Y shenanigans.
Subscription means guaranteed, long term income. The auto industry has been moving to a subscription based model as well, just look at the ever increasing length of financing options.
What a great point re financing! Thanks.
The Finance guys call it ‘forward revenue visibility.’ Rather than the ups and downs of selling items one-time, a subscription/lease/mortgage makes your accounting way simpler, since you’ve got a guaranteed cash-flow base to build on. Makes budgeting easier.
The 28-year old Excel-jockeys on Wall Street find it easier to do a forward-valuation…easier to sell to investors. All this is minus the ‘churn rate,’ of course. Now, if the churn rate goes high enough, the whole thing implodes. An outcome much to be desired.
Also, leases.
Apple clearly benefits from the subscription economy although its own services are mostly non-subscription. By far its biggest source of profit is subscription-enabled.
The auto industry and businesses associated (repair shops/ parts chains manufacturing)are screwed once someone fires the silver bullet of battery technology. Electric cars last far, far longer than internal combustion. The days of paying a mechanic a grand to pull your engine half apart to replace a 12 dollar part are over. Wipers and tires and brake shoes will become your biggest concerns. Read of one guy who has an old VW electric vehicle. He said he had to rebuild the body because it was rusting as the vehicle was over 30 years old. And in that time he had not one single problem out of the motor. Technology is going to displace many, many people.
Few auto shops repair parts these days. It’s nearly always subassembly replacement. Transmission fails? Install a factory-rebuilt exchange. Same with most engine repairs. The days of condensers and points are long gone.
For many cars you need to replace your oil each year, brake fluid every two years and the battery (probably) after four. Oh – wipers are still a once-a-year item too.
So it’s no surprise that auto companies are looking at revenue sources. BMW wants $200 per year to keep its phone-in-case-of-an-accident service active (has a few other benefits bit not many). And the update for maps is $250. No thanks – my iPhone does a better job than “Candide” ever did. This is not a service – it’s a ripoff.
The auto industry is facing massive changes and not just from electric cars. Greatly improved reliability and longevity is undermining the traditional dealer mechanism, although dealer organizations in many states have been able to get protection under restrictive state laws. This will not last for long.
The discourse below by Space Gorilla and Ben Bajarin has caught me thinking with re the challenge of growing this site while maintaining it ad free…
Ben, you’re working on Creative Strategies, in whole part dealing with high-level analytics, data, marketing and among other things…
I think its high time techpinions employ those same tools you utilize in your everyday craft to expand the reach of this site even further. Utilize every marketing gimmick and technique that are savvy to grow readership of this site.
The more I think about it… its seems like a paradox… that the best in tech/marketing industry analysts are finding it hard to grow this site. Otherwise you’re not optimizing the business potential of this site.
Goodspeed,
Ace
Thanks for the feedback. Yes, I have yet to start doing any real marketing for our services. Part of that is needing the budget to do it but it is a goal for second half of this year.
Ben may have convinced me to pay for the Insider goo. I’m on the cusp! But I’m so cheap! But there’s a lot of value in those articles! Decisions!
I am a paid member and recommend it.
Your subscription buddy didn’t do his job?
Ha. Too busy stopping me from tweeting.
Anchovy oil for dogs? Never heard of that. Have an elder dog. Maybe I would try it with her.
good fish oil for dogs is, in my non-medical, non-vet, non-expert opinion, better than aspirin, glucosamine or pharmaceuticals. I give it to all my dogs once a day with their breakfast.
Another solution is to use a credit card with an expiry date before the renewal so the company has to write and one has a chance to reconsider.
Interesting views on the Subscription Economy – the reality is, we are moving away from a transactional world – I don’t buy DVDs, I use netflix, I don’t pay a one time fee for my gym, it’s a membership, I don’t like fixed models for music sharing with only 5GB, I like to upgrade and buy more storage on a pay-as-you-go model – They are all “subscriptions”, and it’s about allowing the customers to consume how they like, when they like: http://www.techradar.com/news/world-of-tech/management/why-a-subscription-model-could-be-the-future-for-all-businesses-1249302
Well, I suppose I should be clear: if it benefits you, great. But too often a subscription delivers more than you need — and they make it difficult to stop subscribing.
I love tech, but at the same time I see it as freeing. It allows you to go off and practice a bit of Thoreau if you wish, but you don’t have to be a complete recluse cut off from everything. Find the balance in it and cut the fat where needed. And above all, turn the sh*t off now and then and just be.
Hey Brian – Thanks for the piece! In the spirit of healthy debate, here’s a response from Zuora:
http://blog.zuora.com/zblog/2014/05/are-subscriptions-the-ultimate-evil-a-response-to-brian-s-hall.html
Well stated response. I have updated this post to include a link to yours.
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