Subscription-Based Models and the Love of Convenience

The bourgeois prefers comfort to pleasure, convenience to liberty, and a pleasant temperature to the deathly inner consuming fire.”

-Hermann Hesse

As the economy moves seemingly inexorably towards the extraction of profit, subscription based models have become more and more prevalent, to the detriment of the consumer. Subscription models have moved from the picturesque milk deliveries of the 1950s, to requiring contemporary consumers in some countries to subscribe to use their heated seats. While subscription models vary in value and utility, there is a stark difference between providing a physical product and enabling the use of a product already owned by the consumer. It’s clear that modern subscription models are moving towards the extraction of profit at the expense of the consumer.

Today, subscription models are synonymous with streaming services. Streaming services are online subscription-based services that provide access to a library of content, like Netflix or Hulu. As recently as the late 2010s, Netflix and Hulu were the primary services on offer, with a breadth of branded products, including Paramount and Disney properties. Since then, however, streaming services have fractured, with a plethora of companies all searching for their portion of the industry, such as the aforementioned Paramount and Disney. Most subscription services, with the exception of entirely ad-based models like Pluto, charge consumers between $10-15 dollars a month to access their library. Because of this, 53% of American adults pay over $15 a month for streaming services, and 35% of those pay over $30. While $15 may seem small, it stands in stark contrast to the eras of DVD and VHS.

Another group of services that has become ubiquitous in recent years are the finance-anything services like Klarna, Affirm, or even PayPal Credit. Services like these offer financing on most items above a meager price-point, typically $30-40. These services are booming, with Klarna alone achieving 34 million consumers in the USA. While they are generally zero-interest and collect their profit through a retailer fee, it stands to reason that their model convinces consumers to buy things they don’t need now, and pay later.

Anyone who steps back for a minute and observes our modern digital world might conclude that we have destroyed our privacy in exchange for convenience and false security.”

-John Twelve Hawks

Insurance is quite possibly one of the oldest subscription models in existence, with some types of insurance even being mandatory to hold. When one looks at the mechanism, it becomes clear that insurance, too, is just a subscription based service. The insurance company calculates the statistical risk to insure the individual and turns that risk into a dollar amount, and then charges the consumer that and a healthy profit on top. Insurance isn’t necessarily all bad, of course, but the model is soundly subscription-based.

As aggressive as they can be, subscription models aren’t all bad. Streaming services essentially have to use an ad-based or subscription based model, otherwise the constant strain on their server hardware would cause them to lose money. Insurance companies have to adjust actuarially as well. Services like the heated seats subscription of BMW, navigation subscriptions, and highly upcharged “box” delivery services however, are hard to argue in favor of. One can only hope that consumers begin to prefer quality over convenience.

Leave a Reply