Remember when you only had to buy things once? Subscriptions are killing us in a cost-of-living crisis
As Mumbrella can exclusively reveal, Australia is currently in the midst of a cost-of-living crisis.
Politicians are arguing about the best way to drive energy costs down, the supermarkets are under investigation because of how expensive basic necessities like food and Fanta are becoming, and everyday Australians are adding up the costs of their various subscriptions, and deciding which ones they can live without.
National Australia Bank data found that 37% of Australians cut back on a streaming service in the first three months of the year. A third of NAB customers had also actively cut magazine, apps, and other subscriptions during the same period.
This has been happening for at least 18 months now, according to various surveys and statistical reads. The Deloitte Media and Entertainment Consumer Insights annual report showed that, last year, the amount paid for TV subscription services, per household, fell from $62 per month to $57.
The point of news stories that highlight these findings is that we are in a cost-of-living crunch, and luxuries are the first to go in such instances. But an underlying point, and something that seems underreported, is the mental shift it represents – where we are now bundling together many disparate forms of entertainment, exercise, and eating under the budgetary line-item of ‘subscriptions’.
This is bad news for those businesses that rely upon the model – which seems to be everyone from bloggers to razor-blade sellers to food delivery services these days – as they are no longer just competing in their own fields, but against every company that’s chosen the same billing model.
Remember when we used to buy things once? Now, we buy the same thing every month, until we can’t afford it anymore. Then, we go without. We have – or don’t have, as the case may be – Google Cloud subscriptions, multiple video streaming subscriptions, video game streaming subscriptions, Audible subscriptions, Spotify subscriptions, subscriptions to meditation apps and computer programs and video chat software, and exercise programs and AI transcription services, and health-adjacent meal kits. Better Homes and Gardens subscriptions. The New York Times and the Sydney Morning Herald and Playstation and something called Peloton that keeps popping up on your bill, even though the pandemic is over, the treadmill is in the shed, and fresh air and footpaths are free to access (unless it’s New Year’s Eve, of course).
The recent and popular push to subscription models across all forms of business has obvious upsides from the point of view of the businesses themselves – a guaranteed, regular stream of income. That’s the goal, anyway. It’s hard to achieve though.
Microsoft now pushes you to save to its OneDrive cloud with all the grace of a used-car salesman every time you do anything worth saving on your PC, despite knowing you have a very good, very safe storage system on your computer. This is annoying as all hell, and makes for the worst user experience since Clippy was fired, but they are so insistent because their subscription-based business model relies upon you relying upon them.
Their old Office suite didn’t have enough inbuilt obsolescence for Microsoft’s liking – I could use a Windows 95 version of Word to write this column and have pretty much the same functionality and user-experience, save for a bunch of complicated nonsense nobody uses much – so now they charge you to use the software, instead of selling you a copy.
It used to be buy once; use until it breaks. Now you are on the hook, every month, until a better or cheaper version from a competitor comes along (like Google, who offers its entire suite of Office-like software for free, but charges for the extra cloud space you’ll inevitably need) Or, until you tally up all your subscriptions and decide you probably don’t need to be effectively renting a word processor or a calculator.
That’s the downside of the subscription model. You have to keep selling the dream. Microsoft once convinced me that it would be a shrewd investment to purchase an encyclopedia of the NBA on a CD-ROM for $99. If I’d have subscribed to that same thing, even in the pre-Wikipedia wastelands of the 1990s, odds are I would have quickly realised there’s only so many times you can search Charles Barkley’s real height before it loses its lustre (he’s 6’5″). I certainly wouldn’t have kept the subscription for long enough that it reached $100. I was sold it once, and I bought it.
Another problem with the subscription model is that it’s very hard to make a perennial seller.
One day you’re MySpace, the next minute… well, you’re MySpace. Netflix is only as good as its content is right now, and its content gets more diluted the more it has to compete with production houses and old-style networks for rights and content and talent and attention and streaming dollars. With streaming, you’re only as good as your current hit.
Alanis Morrisette sold over 33 million copies of her 1995 album Jagged Little Pill – even with how small her slice would have been (pretty small, I’d imagine, considering she was signed to a US major label as a Canadian child actor), she never needs to replicate that success again. That’s the beauty of selling something once. The downside is you can only sell it once, of course, which is the upside of the subscription model for those selling it. The customer is given access, and if they want to continue to have access, they need to keep paying – or the pipes get turned off. The customer pays the money, but they don’t own anything.
You own Jagged Little Pill, though. Everyone does. Which is why her latest release is a 106-minute ambient album without lyrics that is hosted on the Calm app. That sounds like a joke Rove would make, but it’s actually true. The point is, she sold something a lot of people once wanted (or, wanted once) and made a lot of money from it.
She doesn’t financially benefit if you still listen to it, and she knows you don’t reevaluate its fiscal worth every few months and wonder if it was worth the money.
With subscriptions, we are constantly working out what we are willing to pay for, and how much we are willing to pay. Every price hike makes us ask ourselves if we want it. Every price hike in a cost-of-living crisis makes us ask ourselves if we need it. We often don’t.
The medium often decides this value for us. Podcasts for example, rarely cost the user money – unless they want to pay for extras, or support the podcaster, who is usually doing it for little if nothing. And free, ad-supported TV (you know, the old business model) is currently booming, as well, making that a tantalising choice for the cost-conscious viewer. Most online news is free to access and there’s rarely a story broken by a paywalled news outlet that isn’t replicated by dozens of free sites within minutes. When times are tough, people will take what they can get for free, and pay for only what they need. And all subscriptions are in the firing line. Especially ones that offer something you can get for free elsewhere. Like on YouTube, which is after all, the world’s biggest streaming service, and a (largely) free one at that.
Come to think of it, it’s been pretty canny of subscription services to label themselves as such. You don’t tend to hear your internet described as a subscription service, despite the fact you are subscribed to it, you pay a set fee monthly, which may rise occasionally with different available tiers depending on what you need, and you can choose from competing services. You can be upsold. Yet, the internet is deemed a utility, like electricity and water – how TV used to be treated, when it beamed rather than streamed into the house.
In a cost-of-living crisis, however, subscriptions seem a lot less like a regular bank transaction going on in the background, and a lot more like a bill, in a mounting pile of bills. And when it is a bill, it stops seeming like something you are choosing to purchase, and starts seeming like something you have to pay. There’s a psychological difference in the agency of buying a movie ticket, and in having Netflix dock your pay each month.
According to that Deloitte survey, 20% of respondents had a news subscription they haven’t used for six months, 27% have a long dormant gaming subscription, and a whopping 30% have at least six month’s worth of magazines piling up, unread. Even when it’s a physical magazine reminding you of the money being leached from your account each time it thuds onto your front veranda, the passivity to subscriptions is strong. Until a cost-of-living crisis.
In a cost-of-living crisis, ‘subscriptions’ is a line-item in your exercise book budget, with all guilty parties bundled together and variously struck through with a blue pen (who has a red pen at home?). In a cost-of-living crisis, subscriptions are money deducted from your bank account on a regular basis, like rent or a mortgage, like electricity, like the internet. Subscriptions are the reason you have less money in your bank account to spend. And, at least when spending is active, it feels like a choice; even if you are very deliberate in your choice of subscriptions, somehow you feel piloted along by the experience.
Let’s talk specifically about television streaming, and the growing number of paid subscription offerings available at the moment.
The way these things usually shake out, we’ll most likely see one of these scenarios play out:
a) Most of the various new players that have sprung up in the field will wither away, leaving two or three major survivors, who will cut up the pie accordingly.
b) Many more players will pop up still, each vying for subscription dollars, and each more niche than the last, lowering both the quantity of their content and the price point to access it, in order to operate at an achievable (profitable) scale.
c) The subscription model will be superseded altogether, most likely by the old ad-supported model where we are the product being sold to and sold, but we get to watch the Shannen Doherty-era episodes of 90210 for free, so it’s all good by us.
At the moment, c) is already occurring. Of the reasons given for the cancellation of streaming subscription in the Deloitte Class of 2023 study (which is what they should have called it), the growing popularity of ad-supported subscriptions, and an increase in free-to-watch content, are two of the top three, alongside the rising cost of living.
Option b) is how I predict the Spotify/Apple/Tidal (lol) battle will shake out over in the music streaming world, once the major record labels realise they have ceded control to tech overlords and simply start their own competing services – and once Spotify realises that, if it’s yet to break a profit in 16 years, it may never do so.
But a) seems the most likely for TV. Despite the best efforts of competition regulators, most industries end up with a duopoly fighting at the top, with the odd dark horse disruptor type every few years, who enters the race, trots into contention and then drops back into the middle of the pack. An Aldi, if you will.
But who knows? Maybe DVDs will become retro-cool in a few years, and Gen whatever-letter-comes-after-Z will proudly build up their film and TV collections, and be anti-streaming, like those annoying share-house uni students who boast of not having a television and wear short sleeve tees over long-sleeve ones.
After all, subscription services, now being a line item in a household budget very much under scrutiny, don’t just compete in their field anymore. They don’t even compete with all other forms of entertainment.
The psychology displayed in surveys about cutting ‘subscriptions’ suggests that a meditation app, a Pro Tools audio editing software subscription, and a TV network are all competing for the same allocated money. In many people’s heads, they are.
This is a problem that needs to be worked out. And the answer probably lies somewhere out there, in an online course you can subscribe to.
Enjoy your weekend.
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Nathan Jolly is the Deputy Editor of Mumbrella. He joined the team in July, 2023.
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Repeating and updating my comment from SMH subscription rise article:
I subscribe to the SMH currently, mainly to support their investigative journalism. I also have all these:
$43 per month for SMH
$64 per month for AFR
$25 per month for Netflix (just downgraded quality due to price rise & but must stay ad-free)
$18 per month for Disney
$13 per month for AppleTV
$14 per month for Spotify
$15 per month for Stan
$10 per month for Prime (recently selected ad-free for $2.99 extra)
No one (who actually checks their various auto-renews) can afford all of this.
Best strategy is to go into your Apple account every so often and cancel all subscriptions and then re-subscribe if you have to.
What we are slowly ending up with is the same as we had when we were (if old now) young: three or four TV channels but instead of them being free with ads they cost $20-25 per month, also with ads. Win win win for media companies!
If the ABC can’t come out on top of the ratings during this cost of living crisis then they need a big kick.
Got to go now, going to have cold white bread and water whilst doom screening some old series I used to watch for free.
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