Believe it or not, there was a time when you could buy just what you wanted. Of course, there were things you pay for on a monthly basis like power. For the most part, you knew what you were getting and you got what you paid for. Health and car insurance are subscriptions the government kinda’ mandates so consumers also get screwed over by these businesses with deductibles when you actually need to use the service.
Subscription business models are based on the idea of selling a product or service to receive monthly or yearly recurring subscription revenue. They focus on customer retention over customer acquisition. In essence, subscription business models focus on the way revenue is made so that a single customer pays multiple payments for prolonged access to a good or service instead of a large upfront one-time price. Now, the economy is trending toward more subscriptions instead of ownership for cars, software, entertainment, and shopping. This increases the lifetime value (LTV) of the customer.
When you have to call “customer service” and have to endure a Filipino accent when being told what they can’t (or won’t) do, do you feel like a valued customer after they have your money?
Corporations make you pay for monthly subscriptions despite the fact that some of the services provided are those you really don’t want and would never pay for on their own.
You buy a cell phone so you can communicate instantly with others, but you also get a device that spies on you, “free” functionality apps that also sell your data, divulges your location to people you don’t know, and based on your activity online, sends you dozens of annoying ads per month for products you have no intention of buying.
Granted, there are some “free” products that people can obtain like Facebook, Twitter, and their Big Tech subsidiaries. They just sell your personal data to advertisers.
Mark Zuckerberg repeatedly claims Facebook does not sell data. The statement has become a shield in the tumultuous era for the company. But is it true?
“As a data scientist, I am shocked that anyone continues to believe this claim,” wrote Michael Kosinski, assistant professor at Stanford University’s Graduate School of Business, in a New York Times opinion piece. “Every time you click on a Facebook ad, Facebook sells data on you to that advertiser.”
— AZCentral, 2/15/19
Multiply that within the estimated 1.9 billion daily users, that’s a good chunk of income from what in essence are just social media websites and after they get user data, they can abuse their customers as they wish. That’s a business model probably not taught at the Wharton School… yet.
Music streaming subscriptions give you access to genres you appreciate, thus there may be two or three channels of music you’d religiously listen to. But as you (and millions of others) are paying for the service on a monthly basis, you’re also paying for genres you may genuinely dislike and artists you really abhor whose music you would never purchase.
Streaming services, like the music companies of old, screw the artists, but that’s another story altogether.
Cable companies charge monthly for hundreds of television channels while there may be less than a handful any given person may watch on a consistent basis. But since millions of viewers are paying (in some cases) close to a hundred bucks a month for bundle packages, consumers are paying for channels that would go belly up if they had to compete in an ‘à la carte’ environment.
Corporations like Amazon, thanks to their “Prime” subscriptions, are in the entertainment business, are actually making product. Some movie companies are in the streaming business. Simply by adding a “plus” on their brand gives you access to new productions of varying quality, old movies and shows you probably viewed years ago and will probably never voluntarily view again. Consistently good product is another thing, but at least Hollywood is getting paid….
But this is the current business model for corporations who want a steady stream of income despite how well their product performs and/or if all the “services” provided are what people really want or will use.
Apple Inc. is working on a subscription service for the iPhone and other hardware products, a move that could make device ownership similar to paying a monthly app fee, according to people with knowledge of the matter. The service would be Apple’s biggest push yet into automatically recurring sales, allowing users to subscribe to hardware for the first time — rather than just digital services.
— Bloomberg, 3/24/22
So now it’s not enough for families to pay outrageous monthly fees to pay for the phone and service but now Apple wants to charge people for the device’s guts every 30 days.
People used to buy physical newspapers because the wanted to be informed of local and national news. But now that the talent pool has degraded the product to the point where people just find the news they want online for free, some companies are putting out introductory hooks that can be as low as a dollar a week.
Seriously, if someone is trying to get you to buy something for a dollar a week, just how good is that product? In some cases, all you’re paying for is the privilege of seeing and hearing people blab. On the course of one’s daily activities, paying people (some of whom you may not choose to hear) to talk doesn’t exactly sound like a wise use of the monthly budget.
For the most part, when you pay a subscription you are subsidizing mediocrity. Some companies are making you choose between paying for crap or losing functionality of an expensive device you either bought outright or are making more monthly payments on.
While there are some aspects of subscription services you need or enjoy, you’re also paying for services and/or talent you may truly despise. That’s how they all stay relevant, fed and you get to pay for it. This is the current business model so suck it up.
That is until the Internet goes down.
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