A good friend, one who keeps similar hours and passions to mine, forwarded me a recent provocative piece from Leticia Moranda of Bloomberg entitled We’re Drowning In Opinions. His timing was optimal, as I had recently just let my subscription to Bloomberg lapse.
My Bloomberg subscription, while it was a relatively minimal $35/year, overlapped with my legacy subscription to Business Week, a print magazine (yes, I’m one of those Luddites who still like the feel of actual paper in my hands) I had subscribed to long before New York’s other politically aspirational and saner billionaire put his surname in front of it. I have that subscription because at one time I was, I confess, so dense and distracted that I honestly thought those frequent mailings from third parties that looked like bill renewals were actual bills. When I had the income to do so, I would just fill out a check, often for the maximum term for maximum savings, and send it off along with my mortgage, gas, electric and the rest, At one point I had extended my Time Magazine subscription out for 15 years, not to mention many, many other titles that no longer exist. As print magazines continued to cease publishing, those few that remained that were connected to those third parties absorbed the remaining weeks. That’s why I still get Bloomberg Business Week, and I don’t need the other perks that go along with it.
Nor do many of those who are currently where I was once, opines Moranda:
The subscription economy has finally gone too far. It has now expanded to include free iced tea with a $11.99 monthly Panera subscription, free delivery of 7-Eleven snacks for $5.95 a month or Chinese-American food from PF Chang’s for a monthly $6.99. It doesn’t end there. Companies from Sweetgreen Inc. to Sephora now offer subscriptions for discounts on orders or free same-day delivery.
If it feels like you’re drowning in subscriptions, you aren’t wrong. It’s hard to keep track and, even if you do, you may eat at Panera a lot less than you thought after the first few months of guzzling free tea. For some companies, that’s part of the calculation, plus there’s the bonus of scooping up data on consumers while having them pay for the privilege of free delivery. What a steal!For retailers, subscription programs as opposed to free rewards programs make business sense. But at a time when people are cutting back on their spending, retailers have a higher bar to jump to convince stretched consumers to spend extra cash amid all the subscription noise.
Now, I never did subscribe to Panera, and, frankly, I despise their excuse for iced tea anyway (though I do kinda like their tomato soup on a raw day like this). But I would often subscribe whenever possible, if for no other reason than to support what Moranda accurately offers is the reason that we have seen the explosion of subscription models beyond merely those of print and video services:
The cost to lure in new customers has skyrocketed over the last couple of years as companies and states curb data tracking. Apple Inc.’s mobile operating software allowed customers to opt-out of tracking, limiting how much data marketers collect. Mozilla and Google started to phase out third-party cookies on their networks, further curtailing data collection. California passed a privacy law in 2018, which set a precedent that other states have followed.
The hope for companies is that super-users are balanced off by those who don’t quite use the subscription perks as much. So maybe a portion of shoppers rack up purchases at 7-Eleven and get the full bang for their buck; another chunk passively pays for the subscription and forgets to use it. Retailers and restaurants have pretty decent odds that people will subscribe and forget. Market research firm C+R Research found last year that people pay an average of $219 a month in subscriptions, over $100 more than they estimated.
So I suppose I was simply suppporting market research with my laziness. Fool that I was. And, I’m somewhat ashamed to admit, I still am.
I’m noticing an awful lot of these annual subscriptions are coming up for renewal, and now the card that many of them were glommed onto is maxed out. So between those declines and perhaps the most valuable app I have downloaded in years, Rocket Money, I get the chance to unsubscribe to an awful lot of those needless subscriptions. In my case, Netflix was one of them. My roommate has it, thank you very much, and I frankly watch not enough of it (at least now) to justify the expense. And, as David Satin of The Streamable wrote last month, the investment community is wising up to the concept that those that pay for the right to purchase or use something are often not customers, and therefore contributing to artifically inflated figures much like how bots and redirectes contribute to digital measurement:
One of the most consistent metrics of success for streaming services in the relatively short history of the industry has been subscriber totals. Quarterly earnings reports were scoured for the section regarding new customer additions, and Wall Street heaped both praise and dollars on the services that piled up the most users.
However, the industry has undergone some major changes in the last six months. Companies need a viable plan to make their streaming services profitable if they expect to gain investors’ favor now, and that means most in the streaming marketplace have some major work to do. As of now, Netflix is the only streaming service to report itself as profitable.
And, as we’ve seen, even Netflix has chinks in their armor. According to the most recent data available from Statista, Netflix reported roughly 209 million global subscription accounts and 46.55 million monthly average users (MAUs). That’s roughly two of every nine subscribers that actually engage with the service in a 30-day period. And, of those, as Gizmodo’s Kyle Barr noted yesterday, an even lower percentage of them are subscribing to what that otherwise indifferent investment community has been told will be streaming media–even longtime holdout Netflix’s–panacea–advertising:
If Netflix’s subscription tiers were all branches on a tree, then the newly-budded ad-based subscription tier started its life last year as the thinnest and weakest of the tree’s many limbs. However, new data reportedly shows that Netflix’s Basic With Ads tier is coming into its own, growing to be a branch that can finally support its own weight.
According to Bloomberg based on internal data, the ad tier had around 1 million monthly active users in the U.S. after its second month. The service came alive in November last year, and was at the time the least subscribed-to option among Netflix sign ups, according to analytics firm Antenna. New Antenna data shows that in January, the numbers of new ad-tier signups increased from 9% to 19%, finally gaining more subscribers than the Basic tier but still much less than Standard or Premium subscribers.
And the fact that I could glean that little bit of valuable data from a Bloomberg report makes me feel all the more relieved that they no longer get my $35 for the benefit of having had access to it.
I still do subscribe more than the average person. For things I actually utilize, there is a value. It costs a lot less to get newspapers and magazines I regularly read delivered. I pay for unlimited car washes since I drive for a living these days, and after my second car wash in a month I’m already ahead of what I would otherwise pay for one on any other day but Wednesday. And I still do pay for a number of video subscriptions. I did renew my Paramount+ because, frankly, when I travel these days I’m often at places without cable or satellite, so it’s my lifeline to local TV news and weather.
I’m well aware that there are far more savvy and alert savers out there than I am, which is frustrating to an industry long reliant on keeping as many people in their walled gardens as possible. The fact that video subscribers can opt out almost at will once they binge through a season of a show they actually want to watch has seen churn rise to proportions never dreamed of during the days where hundreds of thousands of HBO subscribers would opt in and out as seasons of the likes of THE SOPRANOS and GAME OF THRONES had increasing lapses between them.
And, as Satin added in his piece, the investment commnity has wised up to the true value of a subscriber versus a consumer:
Companies are increasingly shifting to focus on how they can generate increased revenue per customer they already have, especially since 93% of streaming users are considering churning away from a service in the next year. Another reason more media companies might stop reporting individual subscriber numbers: nobody cares. As stated, investors are more focused on profitability than simple viability these days, and the average user on the street has no use for the knowledge that Disney+ is the second-largest streamer in terms of subscriber numbers behind Netflix. Users knowing how many fellow users they have isn’t likely to be a deciding factor when they’re thinking about leaving a streaming service, and why would companies report a statistic that no one is listening to?