
The Subscription App Paradox - tzfld
https://hackernoon.com/subscription-software-paradox-d4a1aef4d88a
======
TeMPOraL
Apps are just a harbinger; this starts to happen everywhere else too. I
dislike how our ever more efficient economy makes your capabilities and
quality of life tied closer and closer to your _instantaneous_ income. Instead
of one-time purchases, more and more things are becoming money sinks now. This
might be great for the perfect citizens - young, punctual, hard-working
individuals steadily going up the corporate ladder - but it's incredibly
annoying for everyone else. Any small hiccup in your cashflow, and suddenly
you have to start cutting off parts of your life.

It's tolerable now, because you still can own most of the things. But will it
be 10 years from now? When because of e.g. sudden health expenses, you're left
wondering whether to cancel dishwashing or clotheswashing service for a month,
so that you don't have to cancel the service that feeds your kid at school?
Will everything you "have", and everything you can do, be solely determined by
the allocation of your cashflow to various available services?

~~~
red_admiral
I don't know if this is more of a European thing but it used to be the case
that unless you were wealthy you rented your fridge, cooker, TV etc. or at
least bought them on some kind of hire-purchase agreement.

In Switzerland you even used to pay a monthly subscription to the PTT to rent
your landline phone, separately from your phone line subscription. If you paid
a bit more per month you got one of the fancy models with buttons instead of a
dial. [source in German: [https://www.srf.ch/sendungen/kassensturz-
espresso/themen/ser...](https://www.srf.ch/sendungen/kassensturz-
espresso/themen/serien/espresso-retro/die-evolution-von-der-waehlscheibe-zum-
funktelefon-2)]

The whole service economy thing looks to me like it's going back in the
direction of the times when various versions of "servant" were a common
occupation.

~~~
tauntz
The concept of renting a fridge, TV or telephone is something that I haven't
even heard of before and I also live in Europe (though, Eastern Europe). Might
it only be a thing in Switzerland or in some Western European countries?

~~~
tonyedgecombe
We used to have it in the UK, I think Rumbelows was one of the bigger vendors.
Cheap consumer goods killed its business.

------
danieldk
The trend of subscriptions seems to be accelerating, I think it is detrimental
to the ISV ecosystem as a whole.

I have bought _many_ macOS applications in the last decade or so. And like so
many others, I do not shun to spend 50 Euro or more on an app. However, as of
recently I have been more restrained in buying applications, since it seems
that they could switch to a subscription model at any random moment. Instead,
I have been looking more and more at FLOSS alternatives. Even if their quality
is sometimes not as good, the prospect of being able to use an application
long-term makes them more attractive. Moreover, I have also started donating
more to FLOSS developers as a result.

~~~
ThomPete
I run a successful app with one time payment and I thought about turning it
into subscription. Instead I decided to keep it a one time payment and then
instead will be offering subscription add ons for extra services.

I hope that strikes a balance because I understand the issue from the
customers side but also want to make a living out of it too.

~~~
bitL
You can do both; one time payment for a major version for individual users and
subscription for businesses. Just don't do subscription-only please.

~~~
danieldk
Indeed. Please do both!

Microsoft has done this pretty well with Office. You can choose to get an
Office 365 subscription or buy Office standalone.

(Office 365 pricing is also extremely good for what you get, compared to most
software subscriptions.)

------
rocqua
At some point, an app is done or close to done. At that point, maintenance to
keep the app compatible is all that is needed. So, the company should
downscale. Only, companies don't.

As such, the subscription pays for way more than simple upkeep. It pays for a
large development team to continue to add features to an app that is
essentially already done.

~~~
josephg
Yes, this is a constant sourse of amazement for me too! The chrome team at
google is well over 1000 people. (The opensource code base now has over 800
committers). The initial release had 100 committers[1], so probably about as
many man hours have gone into google chrome in the last year than were put
into the project in its first ~5 years of existence or something. In the last
year just shy of 1.5 million non-blank lines of code[2] have been added to the
browser, which is more code than was in the whole browser when it was first
launched, webkit included.

But what does all that new code _do_?? I'd challenge anyone who's not a
developer to name a single new feature added to chrome in the last year. I'm a
web developer and I struggle to name more than 5 changes.

Its easy to pick on chrome because the numbers are mostly-public. But the same
is probably true of facebook.com, ms office and all sorts of other big company
products. As features compound, the marginal value of each additional line of
code added becomes vanishingly small. (All the really useful features have
already been added, and project iteration gets much slower in big projects).

There are thousands of engineers working on facebook.com. If they all quietly
left and were never replaced, how long do you think it would take before
anyone in the public would notice? 6 months? 1 year? Longer?

And if thats the case, what a waste of that huge pool of talent. If you could
leave your job without any of your users noticing or caring, what a waste of
your education and your potential. Quit and start that company you've always
been dreaming about starting. Go do literally anything of substance.

[1]
[https://www.openhub.net/p/chrome/contributors/summary](https://www.openhub.net/p/chrome/contributors/summary)
[2]
[https://www.openhub.net/p/chrome/analyses/latest/languages_s...](https://www.openhub.net/p/chrome/analyses/latest/languages_summary)

~~~
icebraining
Just taking a cursory look to their blog, there's PWA/WebAPK, Payment Request
API on desktop, Web Share API, WebUSB, WebBluetooth (in progress),
improvements to WebVR, Network Information API, new headers like Clear-Site-
Data, the new Web Push Encryption format, out-of-process iframes, headless
support, native notifications on macOS and IndexedDB 2.0.

And of course, there are countless bug fixes and other small improvements, and
all of this has to work on six operating systems.

~~~
josephg
To be clear, I'm not saying Chrome's thousands of engineers aren't busy.
They're obviously adding literally millions of lines of code that does
_something_. I'm saying the features they're adding are very marginal. All the
important stuff was added years ago. 1000 world-class software engineers can
help solve some of the world's really important problems, and writing a "web
share API" or bringing back web notifications sounds like a tragic waste of
their talent.

"I saw the best minds of my generation consumed putting advertising next to
pictures of cats"

------
Walkman
I really like 1Password's old model for a user point of view; they asked money
for every new major version of 1Password, but old version bug fixes were free.
This way, if you needed the new features or newer OS support, you could pay
for the new major version (same as buying a new suit) or you could use the old
version if it was fine for you. This model is fair, but still generates more
income for the developers from loyal users who upgrade.

~~~
Silhouette
That's how most software used to work. You paid for the big new versions, but
if you had one already, you might get minor updates for free either from the
Internet or even going back a bit further from the cover disc on the front of
a magazine or a BBS.

The thing is, that model relies on the big upgrades being sufficiently
attractive to users that they will pay more money just to get the new
features. It's clear what you're getting and what you're paying for it. That
works well if you keep making big steps forward with whatever your software
does that are valuable to your users. It doesn't work so well if all you've
got to offer is a few incremental refinements that don't much change the value
of your product. As others have been mentioning, sometimes software is
essentially complete, and this way you can't just keep selling something
that's done to the same customer over and over again.

This is why some of these calculations about the cost effectiveness of
subscriptions for business software make me laugh (and then not subscribe).
They'll compare the cost for an ongoing subscription today with the cost of
buying every new version before, ignoring the fact that new versions before
might not have been a big advance and plenty of customers probably only
upgraded every other version or less, or in some cases not at all.

~~~
falcolas
There's another option to "keep building new features for an existing app":
Take your expertise and apply it to a new app.

Why keep all your eggs in a single bucket when you have a great opportunity to
diversify and not risk pissing off your customers with pricing changes?

~~~
Silhouette
That's also how a lot of software companies used to work. Even the big
business names like Microsoft and Adobe added major new products to their
portfolios over time. At the other end of the spectrum, there were people
writing indie games or little utilities to make your computer work better in
some small way, who might have dozens of products in their back catalogue that
were all low-cost, one-off purchases.

A lot of software today seems to be more like movie or sports franchises: once
you've found a winning formula, you just keep cranking it out with slight
variations from one year to the next. After all, as long as there are enough
suckers in the market to pay your bills if you do that, what's to stop you?

------
mherrmann
For me, the determining factor is whether it costs the vendor something to
provide the service. Running a server? Fair. An app that runs on my hardware?
Not fair. Updates? Requires development effort, so totally fair. etc.

------
kitx
Think the fairest model is one where you pay once for the app, updates are
free for a set period of time, then you have to pay again to upgrade if you
wish to. If not, the old version is yours indefinitely.

Well aware that the App Stores do not offer this option, but it is possible if
you implement your own billing system on macOS or Windows.

------
jakobegger
Who is your customer? Are you selling to a journalist that uses your app to
write every day? Are your customers athletes that exercise 3 times a week?
Then yes, go for it, charge for a subscription.

Or do you have a long tail of „casual users“? Bloggers that write an article
or two every month. Casual runners that want to track their weekend runs.
Someone who wants to touch up vacation photos once a year.

Then a subscription is unsuitable. Casual users will pay once for a premium
app, especially if they expect to use it for a long time. But its gonna be
hard to convince them to pay a monthly fee.

Most apps will have a mix of regular and casual users.

Just make sure to think of the different audiences your app has. Your business
model will decide which of them you can keep.

~~~
koolba
> Casual users will pay once for a premium app, especially if they expect to
> use it for a long time. But its gonna be hard to convince them to pay a
> monthly fee.

I don't think so. It may not be as easy to convince as "just $1!" but I bet
the customers will come.

I also think they'll forget to cancel. That's where the real casual money is.
Thousands of customers oblvious to the monthly fees.

It's like gym memberships but without the high pressure sales tactics. The
customer signs up, uses it for a a week, then gets billed monthly for the next
year.

~~~
pbhjpbhj
Are you promoting stealing people's money using the gym-membership model? It
sounds like you are.

That model is what you come to when you realise burglary doesn't scale.

~~~
koolba
> Are you promoting stealing people's money using the gym-membership model? It
> sounds like you are.

I'm not promoting it. I'm calling it out as the natural progression of
switching to a subscription model.

When a customer sees "$1/month" vs. "$12/once" what they're really seeing is
"$1" vs "$12". The apps on a subscription model will win out.

> That model is what you come to when you realise burglary doesn't scale.

It's not subscription themselves that are bad. It's selling a product that
relies on your customer not using the product to be profitable. Limited space
in the gym leads to overcrowding which incentives them to not have you come.
The less you come, the less crowded it looks, the easier it is for them to
sell memberships (i.e. subscriptions).

------
binaryanomaly
Imho the problem are not subscriptions per se but it’s how you treat your
customers. If customers feel treated unfair and ripped off developers
hopefully feel the churn. If the switch and the pricing is fair most people
won’t mind in the longterm. Ulysses is imho a negative example how you should
not do it. They were so much in love with themselves they completely failed to
look at it also from a customers perspective (not everybody is a professional
writer who purchased the expensive apps) which of course set up many people.
Don‘t be evil, ignorant and arrogant...

------
codecamper
The problem is that the ios app store (not sure about play) does not offer a
paid upgrade option.

It is unrealistic to expect developers to toil away, improving software each
year, using new platform features, all for no incremental income from existing
users.

I'm an app developer with a relatively successful app who spends about 1
minute every 6 months thinking about upgrading the app. No money, no honey.

~~~
thejosh
What about new users? Wouldn't you want to keep improving to attract new
users? Depends on your market though I guess.

~~~
syllogism
Don't updates roll your review ratings, though? For user acquisition I'd
rather be sitting on 500 reviews and a 4 star rating that point out some legit
problems. That's better than releasing a new version and having the reviews
reset to 0.

------
bitL
This is the reason we need alternatives to iOS and Android - to allow real
customer-centric mobile OS where users aren't held hostage. Would it be a big
problem for OS manufacturers to add more options, such as paid upgrade that
could retain access to previous version's settings instead of being completely
sandboxed from it? Of course not. Would it be a problem to offer a year-long
automatic upgrades while retaining the last version once payment runs off,
instead of blocking access? Of course not. It's just greed, the need to have
"predictable income" and to stuff it to the user that allows this to happen.
Instead of trying out and buying an app as a one-off if I like it, I am not
going to even look at a non-essential app that requires a subscription.

------
kuschku
A major issue with this is that incomes are different in different places.

Maybe to someone in Silicon Valley spending a hundred to two hundred bucks a
month on a bunch of apps is reasonable, but to a student that has less than 50
bucks left after rent and groceries (and might need to buy new clothes
sometimes, too), this is ridiculous.

It’s a similar issue with the completely ridiculously priced smartphones.
Android often loves breaking their APIs, so you need to test the new releases
on a physical phone before they’re public. Google now dropped the Nexus
phones, so that means you need a Google Pixel. The cheapest Google Pixel is
900$ in Germany. How the hell am I supposed to pay for that? Or is App
Development now supposed to only be a thing for big businesses?

~~~
yjftsjthsd-h
> you need to test the new releases on a physical phone

Why not use the emulator?

~~~
kuschku
Because that doesn’t expose issues that appear with the UI gestures, or some
interactions.

I’ve tried with the emulator, but it never is the same as the real device, and
you just can’t test pinch-zo-zoom for example on an emulator.

~~~
dogma1138
You can use any android device to send multi-touch, gestures and sensors
events to the emulator: [http://tools.android.com/tips/hardware-
emulation](http://tools.android.com/tips/hardware-emulation)

Android Emulator also has been supporting "multi touch" via the mouse and
keyboard for a while now, IIRC it's alt+click.

Android devices that run stock android and get monthly updates can be bought
for under 150 and even 100 EUR e.g. WilleyFox.

~~~
kuschku
> Android devices that run stock android and get monthly updates can be bought
> for under 150 and even 100 EUR e.g. WilleyFox.

Yes, sure, and I’ve still got my Nexus 5X – but Google only provides the
preview releases for the Pixel devices from now on, all other devices only get
those after release.

------
rtpg
The example apps that this person gives seem to prove subscription models
being a good alternative more than anything

Guardian for 2.50 a month. How much did newspapers cost?

10 a month for VPN service. You have to rent a server right?

80 bucks for Dropbox a year. How much does that external terabyte hard drive
cost, let alone the syncing feature.

Not to mention that a lot of stuff is in easily exportable formats....

There's always going to be one off apps, but most of this stuff is too nice to
be supported by one off purchases (far before it's considered "done"). Paying
100 dollars a month for premium software when we spend all our time in our
computer is ... Fine I think.

Though the counterargument is that I wouldn't spend 100 bucks a month on
chairs.

~~~
tomc1985
Subscription services are blatant rent-seeking. Startups should be ashamed to
have their hands out like common street hawkers. I don't care if there are
recurring monthly expenses for your company to meet, you used to be able to
buy software and now, increasingly, you can't.

We are very quickly heading down the path to a full-blown _renteer_ class, who
don't own anything and live at the mercy of their myriad service providers,
who by-the-way seem more concerned with their perverted version of
'innovation' then customer satisfaction or avoiding product sunsets.

~~~
ryanwaggoner
That's not what rent-seeking means. They're adding value, not manipulating
public policy, no regulatory, capture, etc.

I think what you're trying to say is that they're charging more than you think
they should. That's not what rent-seeking means.

These apps are providing value and doing so under a subscription model. If you
don't think they provide sufficient value, there are almost always loads of
competitors. Additionally, it makes no sense to sell a lot of software under a
one-time fee. There are significant ongoing costs for support, maintenance,
servers, etc. It makes as much sense as selling one-time fee access to the
grocery store.

~~~
tomc1985
In many (most, imo) cases the value added is minimal, sometimes added
seemingly only to justify the monthly costs.

And it is very much rent-seeking. How could you not describe big 5's lobbying
activities as conducted at least partially for regulatory capture? Look who is
in charge of the FTC and FCC, particularly that one kid that tried to act cool
to tech geeks, what's-his-name.

And that is not even what I meant by rent seeking. We are seeing a new kind,
at least in tech: subjugation of consumers means of production, achieved by
carefully dispensing bits through services instead of allowing customers to
retain control of them (via un-drm'd media or downloads). The purpose of this
change is to create more revenue for the owner.... which is rent-seeking.
Similar things have been going on for years with consumer stables...
DollarShaveClub's One Wipe Charlies (expensive) to replace toilet paper
(cheap), or juicero (expensive) to replace a blender and fruit (cheap).
Chemical cleaners (expensive) instead of centuries-old natural techniques
(cheap) even when chemicals are inappropriate to the cleaning job. And so
on...

------
raffomania
I'm hopeful that a Patreon-like donation model will prove successful for
apps/products with a passionate userbase. Ulysses, as described in the
article, does seem to have a pretty active community with a lot of people
willing to pay.

~~~
tobltobs
Maybe times will change but currently you are lucky if you waive less then 98%
of your possible income if you use a donation model.

------
Silhouette
This seems to be happening much more with mobile apps than desktop software,
and I can't help feeling this is partly a response to not being able to charge
a serious price for a serious app as a one-off. In mobile world, apps cost a
few dollars at most. That's just how it is, because everything in the early
days was quick and cheap and that set the market's expectations. It doesn't
matter that you needed to spend a billion dollars in R&D and your app is the
secret to eternal life, if it's more than $1.99, it's too expensive and the
bad reviews will pour in. So if you really are building something that is
expensive but worth it, you need to disguise the price, and thus almost
everything serious uses either in-app purchases or a subscription model to
avoid the scary number.

Compare this to the world of professional software, where it's almost the
other way around. Businesses are used to spending lots of money on software,
because it makes them more money in return, but they won't do so lightly. To
get businesses to pay on a subscription basis, even the biggest names in the
industry have had to set their subscription levels at a tiny fraction of the
previous cost for a one-off purchase, because businesses will do the sums and
won't take the deal if it's going to work out too expensive.

~~~
tonyedgecombe
It seems to be happening in desktop as well, I was looking for some
bookkeeping software and it has all shifted to subscriptions in the last
couple of years.

~~~
Silhouette
There are definitely moves in that direction on desktop as well, for sure.
Microsoft, Adobe and Autodesk are some of the big names that traditionally
made expensive business software and increasingly rely on subscriptions (and
bulk licensing for larger businesses, though in itself that's nothing new). No
doubt there are many smaller players trying to follow the same path, though I
find it interesting that other smaller players are starting to compete based
on _not_ having the downsides of a subscription. It seems the market is big
enough for both variations, at least in some areas.

------
wkrause
If people are paying for a subscription then the market is clearing. Or in
other words the customer has decided that they are better off with the service
than without.

I think part of why people dislike subscription models is due to the reduction
of their personal consumer surplus. Under a one time purchase model, power
users who get value out of a product for many years get a nice windfall. Users
who only need or use the product for a shorter period of time have a smaller
consumer surplus since they're paying the same price.

A subscription model almost functions as a form of price discrimination. You
end up charging more to those that get value out your product for a longer
period of time. I'd imagine this has the effect of increasing producer surplus
at the expense of consumer surplus.

In theory every consumer has a one time price such that they would be
indifferent between a perpetual model and the subscription model. The issue is
there isn't a way for the supplier to segment the market in a way that is as
efficient as the subscription model for every user. If you offer the two
models together you create an adverse selection problem where only consumers
who estimate a greater consumer surplus from the one time price will choose
that option, lowering overall revenue for the supplier.

------
ducttape12
I've found the flipside of the subscription model; I'm actually able to use
commercial software for free. Most subscription software has a free tier, and
most of the time it's good enough for my needs.

In the few cases where it isn't, thanks to having some technical knowledge,
I'm able to string some utilities or services together to accomplish what I
need.

------
_pmf_
Web and app developers have pushed hard to obsolete mature desktop software
that costs money with low effort MVPs that have a subset of functionality, but
are cheap. Now they have established a new, lower baseline for quality, they
switch and want to have proper money for their low quality product.

------
forkLding
I guess we can use a car buying model instead, either pay upfront for a lot or
pay subscription until you dont want to or until the amount exceeds upfront
payment, I think it will be easier to stomach for users.

------
msmithstubbs
Several of the app subscriptions listed appear to actually be subscriptions
for content (Apple Music, The Guardian, Medium) while others are actual
services being paid for (Dropbox).

------
turowicz
You either pay for each version of the software or a subscription in a SaaS
model. I don't see anything wrong with that.

