Do you own anything? I mean, really own anything? Or do you just rent everything from someone else? That’s the question that haunts me every time I pay my monthly bills for Netflix, Spotify, HelloFresh, Apple One, and dozens of other subscription services that I use. I don’t buy movies or music or food anymore. I just pay a fee to access them whenever I want. It’s convenient, sure. But is it worth it?
Welcome to the subscription economy, where you don’t own anything, but you can access everything. It sounds like a utopia, doesn’t it? You get to enjoy unlimited variety and choice, without the hassle of maintenance, storage, or disposal. You get to customize your subscriptions to your preferences, needs, and goals. Everything can be tailored to what one might desire.
But there’s a catch. There’s always a catch. The subscription economy can also make you spend more than you need, consume more than you want, accumulate more than you can manage, and own less than you think. It changes your lifestyle, values, and culture in ways you may not realize or appreciate.
The Good
One of the main benefits of the subscription economy is that it lowers the barriers to entry for consumers. Instead of paying a large upfront cost to buy a product or service, you can pay a small recurring fee to access it. This makes it easier for you to try new things, experiment with different options, and enjoy more variety and choice. For example, you can watch thousands of movies and shows on Netflix for less than the price of a movie ticket, listen to millions of songs on Spotify for less than the price of a CD, or get fresh ingredients and recipes delivered to your door by HelloFresh for less than the price of eating out.
It also offers more convenience and flexibility for consumers. You don’t have to worry about maintenance, repairs, storage, or disposal of the products or services you use. You can also cancel or switch your subscriptions anytime you want, without any long-term commitments or penalties. For example, you can pause your Peloton membership when you go on vacation, change your Birchbox preferences when you want to try new beauty products, or cancel your Amazon Prime subscription when you don’t need it anymore.
Finally, the “Utopia” provides more personalization and customization for consumers. You can tailor your subscriptions to your preferences, needs, and goals. Let’s take the latest trend among automakers – this one specifically introduced by BMW – subscription to heated seats. Naturally, it is not the only feature available in this model, but I just had to choose the latest Twitter scapegoat. Despite the media outrage (we’ll talk about it in a second), the feature has a few benefits. It lowers the base price of the car (as you don’t pay for the feature upfront), also impacting second owners who could just choose which features they want. What’s more the convenience still applies here as you could just pay for it during winter.
The Bad
Let’s go back to the BMW case. The main problem that caused people to lose their minds over it is that in this scenario you pay for something you already have. It’s not like they send someone to install it and, once you stop paying, they take it away. No. You pay for something that you physically, already have. Completely understandable to find it a bit greedy.
After this short rant, we take a long breath and go back to the whole ecosystem. One of the biggest issues is that it makes you spend more than you need. The low monthly fee may seem affordable and attractive at first, but it adds up quickly over time. According to a survey by West Monroe Partners, the average American spends $273 per month on subscription services. Many tend to forget or neglect their subscriptions after signing up for them, resulting in wasted money and unused services. In the poll, most thought they spend less compared tothe previous year (a $40 increase in reality) and 100% were unaware of how much they spend. This is further shown in a different study (Waterstone Management Group), which found 84% of Americans underestimate how much they spend on subscriptions, and 28% of Americans have subscriptions they haven’t used in the past year.
Moreover, many subscription services use psychological tricks such as scarcity, urgency, social proof, and reciprocity to persuade you to sign up for them or keep using them, even if you don’t really need or enjoy them. Who can say no to a free trial? More importantly, who can remember when it ends?
The other issue is that a subscription model can make you own less than you think. By renting – instead of buying – products and services you give up some control and ownership over them. You depend on the providers to deliver quality, reliability, and security for your subscriptions. You are dependent on the financial health of the provider, as you probably won’t be able to access your subscriptions if the providers go out of business. And then you have to cope with the case of increasing prices or changes in policies– which can, again, prove frustrating.
The Ugly
The subscription economy is not only changing how we consume products and services, but also how we live our lives and shape our society. It has implications for our personal finances, our environmental footprint, our social interactions, and our cultural values.
On one hand, it can help us save money, reduce waste, connect with others. We can save money by paying only for what we use instead of buying things we don’t need. We can reduce waste by renting resources instead of owning things we don’t use. And we can connect with others by joining communities around our interests (way easier to find to talk about series and movies in the Netflix era).
On the other hand, the subscription economy can also make us spend and consume more. We can spend more by falling into the trap of endless subscriptions instead of budgeting wisely and consume more by succumbing to the lure of unlimited options instead of being mindful of our needs. The result is getting stuck with a $40 LinkedIn Premium bill, as you just forgot to cancel (and didn’t need in the first place).
The important thing is that although 72% of people believe there are “too many” subscriptions, the model is here to stay, and it will continue to grow and evolve in the future. According to a report by Zuora, the global subscription market has grown by more than 400% between 2012 and 2020, 5 to 8 times faster than traditional businesses and another report predicts that 75% of organizations will offer subscription services by 2023.
As consumers, we have the power and responsibility to shape the future of the subscription economy in a way that benefits us and society. We can do so by being aware of the pros and cons of subscription services, making informed and intentional decisions about our subscriptions, and by demanding transparency and accountability from subscription providers. The subscription economy offers us a new way of accessing products and services that can enrich our lives in many ways. But it also comes with a cost. We have to watch out to avoid fallingl into the spiral of paying for services which we end up using only those few times a year when our boredom reminds of their existence.