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Subscriptions Are Remaking Corporate America (2018) (barrons.com)
42 points by whinythepooh 4 days ago | hide | past | web | favorite | 61 comments

subscribe to read hahahah

For one, I hope subscriptions die. It's a pernicious trend that is borderline fraud for consumers (like gyms, profiting from users who simply forget to unsubscribe or making it painfully hard to unsubscribe). It's also exclusionary for most of the world for whom the subscription price might be a year's income. With downloadable software it was kind of possible to find a crack online, but web apps and content make it almost impossible.It also makes individual property ownership impossible. we need honest,anonymized payments on the web.

I think subscriptions are fine; it is the banks that give power to corporations by making it impossible to control who bills your accounts.

If you could easily see recurring billing charges and cancel on your bank's end easily, companies would have to step up and offer a useful service.

Part of the problem is that they handle much differently than purchases. To buy something you need to have enough money at some point in time. Subscriptions require you to have a stable cashflow. The former is usually easier than the latter.

On top of that, subscriptions are also relationships you have to keep track of. With a lot of subscriptions, it can become overwhelming.

Most subscriptions are on credit cards, and having available credit implies a stable cashflow (even if you are operating at a loss).

Visa/Mastercard debit cards are a thing.

In fact, I'd argue that credit cards are US thing. You can pay for most stuff on-line with debit cards just fine. Over the past decade, I had to use PayPal maybe 3 times, because some braindead payment system wouldn't accept debit cards.

(It may differ between classes and countries, but over here in Poland around people I know, having a private credit card is like shaving with a straight razor - it's awesome if you can handle it without hurting yourself, but most people can't and are smart enough to not even try.)

You can pay for almost anything online with a debit card if you get a Visa/Mastercard debit card, which is included with practically every bank account over here in Australia. Obviously Visa/MC charge merchants more to accept their debit cards than the national domestic EFT payment networks, but it works well from the consumer experience point of view.

Over here it's quite normal for middle-class people to have personal credit cards, but it's not as important for building up a good credit rating or anything like that as it is in the US.

> having a private credit card is like shaving with a straight razor - it's awesome if you can handle it without hurting yourself, but most people can't and are smart enough to not even try.

as someone who treats a credit card like a charge card (pay it off in full every month, without exception), I don't really understand this mentality. imo, managing a debit card is way harder. I have to ensure that I have enough money in my checking account every time I make a purchase. it feels like inevitably my payday will line up in such a way that I overdraft on a purchase I could have easily afforded by the end of the month.

To use debit card, all you have to do is to know how roughly how much money you have. You have to know this even if you have a credit card, otherwise you risk not being afford to pay it off.

The danger with having a credit card is that you have an option to not pay it off. With debit cards, it's impossible. You can overdraft a little if you're tricky, but that's about it - whereas with a credit card you can end up going negative and finding it difficult to get back to black (whether because of your own faults or external circumstances).

I compared a credit card to straight razor because both are useful and safe in skilled hands, but create danger of hurting yourself if you're unskilled - a danger that doesn't exist with safety razors / debit cards.

In the US, the fraud protections on credit is way better than debit

I agree but at the same time I feel like companies are bolting “as a service” onto literally everything. Take Rosetta Stone for instance. There’s zero need or benefit from that to being subscription but there it is. Games as a subscription also make we want to die unless it’s an MMO where you’re constantly getting new content.

I don't know, I was falling into a pattern in games where I kept spending $40-60 just to find out I don't really like a game. A subscription service lets me try out a bunch of stuff and sink time into what I actually like.

Steam lets you refund a game for any reason if you have under 2 hours playtime. I have never found that I liked a game for the first 2 hours and didn't like it at all after that.

In the UK that is (and has been for a while) the case:

If you set up a direct debit (allow a company to withdraw money from your account) you will be able to view all the details about it on your web banking (which company, how much and when the last debit occurred).

But most importantly, you can unilaterally cancel the direct debit from within the web banking interface. It will notify the company that you cancelled it on your side and you are guarnateed to not have any money withdrawn from them.

This makes life easier but does not solve the problem completely. Cancelling a direct debit does not cancel any debt you have (obviously) but it also doesn't cancel your account/contract with the company. So there is nothing stopping the company from continuing to bill you. It will just make it harder for the company to recuperate their money.

Interesting, what if your bank account is a UK account but with a US based bank that also has branches in the UK (is that even a thing)?

This is UK specific, so if the bank has a UK banking licence and it implements direct debit then they have to adhere to those laws and regulations.

PayPal has many issues, but this is one of the things they get right, and I tend to steer in their direction for anything recurring as a result.

You can cancel a recurring payment with a few clicks.

Good to know! Is it all administrable from mobile?

SEPA direct debit (and the earlier non-SEPA versions) allow the bank to do just that: show a list of charges, set monthly limits and cancel the authorization.

Unfortunately, most foreign companies don't offer SEPA, but my bank also offers virtual CCs that are tied to a single biller, so not only I can revoke them at any time, they are also useless if leaked.

Regular CCs are a pain in comparison.

>I think subscriptions are fine

Is that correlated with having ample money to pay for them?

Many useful things take money to accomplish, I would be suspicious of anything that provides a service for free.

That being said, health insurance is an example of a subscription in the USA I find predatory.

I'd like to see free trials regulated. 80% of the ongoing price should be the maximum discount allowed for any first billing period. It's like a tollway on-ramp advertising "free* toll for X miles, for the next Y minutes" ... "(*) after which, as much as we care to charge". It stifles assessment of the value for the service as a whole, which is the stated point of a trial. A cheap sentiment is understood but an expensive rate is locked-in. It's a Fake Gesture.

Dark patterns at the off-ramp deserve more attention too. Try to unsubscribe from netflix and they would just as soon give you an extra one or two months free, asking you to cancel later. They know something finally prompted you to the task after a few months of sparse usage which may not happen the next time. Before you know it, you helped make a trusted account on a friends device and it becomes easier to justify the expense.

Funny to read this, VISA near silently installed a program whereby replacing your Debit/Card (lost, stolen, etc) automatically updates that card everywhere it is being used a payment method. You can't even cancel a card and see what dies. You have to opt out of this program.

To be honest, I don't mind this at all.

"100% of our readership agrees..."

The Starcraft community requested subscription content for years during the hots years. The popular reasoning was that the game needed refreshing and updating but that a company can’t afford to do it without incentives - and the ongoing revenue would incentivize them to keep the game in great shape.

Then again, you can’t use subscription software at all after the company completely moves on either - no windows 95 compatibility mode to keep using your expensive desktop applications. So you still end up with unusable software eventually - longer peak but a shorter life for more cost

The fundamental problem is how difficult and expensive it is to make software and maintain it year after year

It doesn’t have to be that way though. The company can open source the server.

They could also release a final patch that unlocks all content and removes the license check.

I signed up for “subscribe and save” because it gave me like a 5% discount on my Protein purchase from Amazon.

Before the next 5 lb jar was supposed to get sent, they sent me an email saying they were about to charge me and I had until X date to cancel.

You can make subscriptions work if your intentions are good and you’re not looking at them as a revenue stream based on people forgetting to cancel.

I ended up cancelling that next shipment but ordered again a few weeks later.

The model isn’t bad. Just depends on the execution.

> You can make subscriptions work if your intentions are good

I am afraid investors only care about growth. First they are going to grow untill no more subscribers. Preferably the company will have monopolistic position by that time. Then they will start increasing rates up to "what market will bear". Then they will start tweaking "personalizing" experience with microtransactions etc trying to squeeze more. Add regulatory capture to this. This rent-seeking won't stop.

A year ago I downloaded an interval running app for 10 dollars. Recently I recommended it to a family member only to find out they changed the pricing to 10 dollars per month for the same features.

You can’t tell me that interval running app is as useful to you as a Spotify subscription. 10/mo is pretty steep comparatively!

I bet it's all the "social" features running apps cram in now. Last time I looked (admittedly a couple years now) it was slim picking if you wanted an app that didn't sync your data to the cloud or offer some sort of social feature.

I stopped using apps. I run to clear my head and try to stay healthy, not brag that I run.

At a certain point it gets cheaper to find a Mac on Craigslist, sign up as an Apple developer, and build it myself

Subscriptions for SaaS are essentially a lease, and leases are almost always preferable to sales for the one doing the leasing. See e.g. IBM[1]


Software (and other media with a high development cost, but low marginal cost such as films) are particularly valuable to lease, because you remove the secondary market, which can cannibalize sales.

1: https://www.jstor.org/stable/40751117?seq=1

Leasing is preferable for Business if you need creative book keeping because you live over your means or need to hide something.

For SaaS I agree but subscriptions for stationary bike, for food, for printer ink, for traktors, etc.

Stationary bike and tractors fit the mold perfectly; if you can't use it without the subscription, it's effectively a lease.

Food and printer ink are different because they are consumables.

So because of the timing on this article, the notes on Apple’s PE ratio are interesting to consider. Apple is now trading at a P/E ratio of 23 (Microsoft at 28), and Apple has made a point of trying to reorient / reclassify revenue as subscription revenue over the last several years. Even still I think this argument is rather weak, I think looking at a coarse metric like P/E to induce a single fact is a little too much.

I wonder if sometime in the future, there is going to be subscription fatigue.

I don't know how it scales at all.

I just cancelled Netflix because I'm also paying for Amazon Prime. Netflix hasn't had anything worth watching for a good few months but it took me longer than that to go in and cancel it. But the trajectory suggests that you'll need to sub with Amazon, Netflix, HBO, Disney, etc. if you want the full range of streaming TV. You're going to have to start micromanaging that if you don't want to throw your money down the drain.

Patreon's another one. Really cool idea, but everyone with a Youtube or a blog or a Twitch stream is pushing it. So it's a case of subscribing to one person for $10 a month or 5 people for $2 each.

After that, you can get a monthly subscription of underwear, shaving stuff, make up, etc. at which point it seems like a purely wasteful cash grab.

The problem is, even with the increased competition, prices are only increasing.

> But the trajectory suggests that you'll need to sub with Amazon, Netflix, HBO, Disney, etc. if you want the full range of streaming TV. You're going to have to start micromanaging that if you don't want to throw your money down the drain.

I expect someone will make a site or app or service for managing this, which lets you maintain a "want to watch" list with optional priorities.

For each streaming service, the app would tell you which if the items you want are on that service, and how many total hours of content that is. You can use this to help decide which, if any, streaming services you should subscribe to for each month.

I have no idea where one would get the data for such an app, but this site [1] seems to have it, so I infer that it is possible to get it. They have a paid API, so maybe they could even be used as the data source.

[1] https://reelgood.com/

I'll need to subscribe to an app in order to manage my subscriptions. Of course, that app will only deal with media-related subscriptions. I'll need another app to manage food/health related subs. Rinse. Repeat.


I'm already there. I just hate random money coming out of my account. I just gave fastmail $130 for three years. I wish I could have given them a thousand for lifetime so I would just never have to think about it again. I bought a lifetime Plex Pass for $150 so I would never have to think about it again. And no hard feelings if these services were to shut down.

I can deal with a large one time payment. A bunch of random 5 dollar a payments a month isn't going to float. I crawl through my credit card statements looking for oddities. And it just bugs me.

Selling lifetime services for something like that is very risky. It would be like paying someone a few million dollars and then they have to try to budget it out for the rest of their life. Also what happens if the company runs out of money and cant continue services. You have already paid for a lifetime subscription but they have no money to give you a refund.

That is why I said "no hard feelings". Fastmail or Plex could shut down tomorrow. I would be disappointed, but I wouldn't scream for a refund.

As long as I felt that they tried I would be alright.

Our wonderful journey wouldn't cut it. But a simple, we went broke would be cool.

try privacy.com one off credit cards with fixed limits. use them for each service that may bill you again.

The problem isn't with unexpected or fraudlent charges. It's with the expected ones. Each subscription is another recurring charge, of a different amount and at a different time. Eventually it can become a death of a thousand papercuts.

I too share the subscription fatigue, and avoid subscriptions as much as possible. I prefer to pay once, up front.

eh, but the comment you are responding to had a solution that worked for me for some time. I haven't used privacy.com, but bank of america used to have a way for me to create virtual credit card numbers; I'd simply create one for every subscription I had, and it was really easy to just disable the virtual credit card.

Bank of America has discontinued this service, and I haven't setup a new workflow, which is disappointing. but I mean, it is one solution.

I didn't mean that. Let me rephrase it more clearly: recurring payments are a problem by themselves, the more of them you have, the more problem they are. This makes things offered as subscriptions inferior to actual products you can buy one-off, at least in this aspect. If you're wealthy enough to put money for couple years worth of service into a virtual CC for every service you can use, you're probably wealthy enough to manage all this stuff for you anyway.

>recurring payments are a problem by themselves, the more of them you have, the more problem they are.

In some ways, I agree. In others, I don't. I mean, the problem is largely in the difficulty of unsubscribing. If that were easier to manage (and virtual cards are one way to deal with that) I think it's not such a problem, and even has some advantages. But you could easily argue that this difficulty of unsubscribing is built into the business model; people who sell subscription based services know that the harder it is to unsubscribe, the more money they will make, so... incentives are not, as it were, aligned, and that tends to lead to suboptimal outcomes.

I think there are valid arguments for the subscription model; I know before buying a car, I rent all of the models I'm considering, for a week or more. This is often harder with things like software, which don't have as strong of ownership protections as physical goods, meaning I usually can't rent software to try it out, if it's not sold on a subscription plan. I'd consider renting a car permanently, (except that it's either massively expensive or massively inflexible; getting out of a lease, as far as I can tell, is way harder than selling a car, and renting cars outside of a lease is uneconomical. I feel the same way about commercial real-estate; usually the penalties for breaking a lease seem a lot worse than just selling the goddamn building a year into ownership. And this is possibly your objection; if you have perfect knowledge of your future needs, buying software up front is probably a lot cheaper. But, without the ability to sell the software when you are done, it's not really comparable.)

>If you're wealthy enough to put money for couple years worth of service into a virtual CC for every service you can use, you're probably wealthy enough to manage all this stuff for you anyway.

I think wealthy people would be willing to pay for an easier solution to this. I would. the virtual credit card solution is clumsy because the software is bad (I haven't actually gotten the capital one solution suggested earlier setup, it might be great, but the citi solutions and the now defunct bank of America solutions require flash and are... clumsy) - the problem isn't the money; for all the virtual credit card solutions I've tried, the payment goes to your regular credit card, so you don't need to sink any capital, it's just work

(but, of course, this is mostly about how difficult it is to cancel subscription services. If it were easy, this wouldn't be a problem. - I think this is our major point of disagreement.)

You make very good points, but I'm not sure if you correctly identified our point of disagreement - because I believe there is problem with subscription model itself (at least for individuals, I get the capex vs. opex incentives for companies), on top of the problems with unsubscribing.

I was readying a long comment addressing your individual points, but I realized I can compress it all to this:

The overall reason why I prefer ownership of durable goods over subscriptions (and the planned obsolescence economy) is reduction of variance in opportunities and quality of life. At the time when I have the means, I can buy something. If I have less means or that something is very expensive (e.g. a new car, a house), I can convert it into a "subscription" myself using my bank, via various forms of loans and installment payments. And then when I go broke, I can still use the thing I own, perhaps to help myself get out of the predicament. Subscriptions bundle this all together, making the utility directly dependent on my cash flow, prevent me from optimizing the value I derive from them (through ToS that limit a lot of non-standard use cases), and deprive me from the ability to use a good in the time of crisis.

I have a card with Capital One and can do virtual cards too. There is even a Firefox extension to make it a few clicks to make a new one and input the info.

I guess I should mention that I am poor-ish. Right now I am getting lumber from a reclaimed lumber place and making furniture in a Amish style. Then my sister paints and distresses it. So if a bunch of random five dollar charges hit my account at once and I am not expecting them it could be a problem.

I heard that but never got it setup. I did a bunch more poking today, and it looks like they want me to use a chrome extension (I'm mostly a safari person) I should spend more time looking up how to get that working, 'cause it was way more convenient than just canceling my credit cards every six months.

I think there already was, at least in Germany -- based on contracts that made it quite hard to unsubscribe. I think a key to avoiding a general subscription aversion is to make it very easy to unsubscribe.

> I think there already was, at least in Germany

Yup. Two years contracts, automatically renewed, with three months notice period for cancellation, cancellation by post (yes, by a papper letter), no early cancellations. Reverting the monthly direct debit transaction to "give a hint" to the predatory "service provider" triggers furious response from their accounting and customer service, and transaction cancellation fees. It's hard to imagine how the setup could be even more predatory for a customer. Fuck, even the memory of dealing with this raises my adrenaline level.

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