Subscriptions are dominating the market these days, and that might not be a good thing.
Almost every one of us has a subscription to a streaming service today. We listen to music on platforms such as Spotify, watch films on Netflix and read books on a Kindle. But the subscription economy goes far beyond these services. Today, you can subscribe to literally anything, such as smoothies, food boxes and even underwear. There are even subscriptions to services that really need to be a one-time purchase, such as headphones and car features.
All of this makes one wonder, do we really own anything? Or are we heading towards a world where we pay a fee for everything we use? Let’s look for the answers together as we take a deep dive into the subscription economy.
The reasons behind the growth of as-a-service businesses
The biggest reason why we are seeing nearly everything being offered as a paid subscription today is that it gives businesses a regular stream of income. Instead of having to constantly look for fresh clients, you have a group of loyal customers who are steadily paying to keep your company up and running.
Subscriptions also make it easy to reel customers in, since it reduces the struggle of making a choice to buy something. Let’s say you can’t justify spending US$20 for a subscription service each month. But trying it out for free? That is something you probably would be up for. Then, before you know it, you have forgotten to cancel your subscription and get another monthly fee tagged to your credit card.
The erosion of ownership
Just because customers are purchasing subscription services doesn’t mean they are actively choosing this model. According to a study conducted by Deloitte, more than half of the customers prefer to make a one-time purchase if that is an option or if the subscription isn’t adding any value to them.
However, instead of making their products actually worth the price, some companies use the subscription model to hold customers’ products hostage so that they continue to pay for subscriptions. For example, the HP Instant Ink subscription makes your pre-purchased inks unusable if you cancel your plan.
Similarly, the video game developer Rockstar Games came under fire in 2022 for charging customers US$6 every month to play a game they already owned. While these might seem like minor inconveniences, they can have larger consequences in a world where every object we use is “smart” and comes with built-in software. For instance, these predatory practices could hypothetically one day be applied to essential commodities, like prosthetics, which naturally would be a major problem.
Some might see subscriptions as a boon, particularly in a world where houses are getting smaller and there isn’t any space to store all your belongings. With services like Spotify, you don’t really need to store copious amounts of CDs in your already packed houses. But is that really such a good thing? On a psychological level, the lack of actual ownership takes away our sense of belonging. So, let’s say you are a fan of the K-pop group BTS. Today, you can stream all their music digitally and buy virtual albums. But the fact that you don’t have anything tangible to reflect your fondness of the group weakens your connection with them.
What is the future of the subscription economy?
According to Statista, the market size of the digital subscription economy worldwide was worth US$650 billion in 2020, and this figure is projected to rise to US$1,500 billion by 2025. Suffice it to say, the subscription market isn’t going away. This means customers will have to adapt to this new form of ownership. But, adapting doesn’t mean not even putting up a fight against the cash-grabby tactics used by subscription service providers.
It is this desire to push back that has led to the right-to-repair movement in the U.S. This movement urges companies to create spare parts and tools that users can buy as per their requirements to fix their devices. This would give customers control over how long their device stays in working condition without them needing to upgrade it to a newer model or to another tier in the subscription plan (such as paying for stuff you already own, as we saw in the HP example). While this movement takes effect, you can still make changes to how you handle your subscriptions on a more personal level.
This means taking time to keep tabs on all the subscriptions you have and making sure to actively cancel them if they don’t give you any value. Make sure you don’t have auto-pay switched on so that the service cannot charge you before you even have a chance to cancel. When it comes to subscriptions inside apps on the Google Play Store or the Apple App Store, make sure that they require some level of authentication before a purchase is made. By doing all of this, you can save your wallet from unnecessary expenses and actually get the most out of your subscriptions.
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Header image courtesy of Envato