- 4 hours ago
Subscription services exist for nearly everything consumers buy. Many, like Netflix or Spotify, start out affordable, but the cost adds up over time. And while signing up is effortless, cancelling can be difficult. Companies such as Adobe and Amazon have even been accused by the Federal Trade Commission of using dark patterns to trap consumers in subscriptions.
But rising costs are only part of the problem. The subscription model is eroding consumer’s opportunity to own what they buy.
So how did we get to the point where practically everything is a subscription? And why is owning nothing making everything so expensive?
But rising costs are only part of the problem. The subscription model is eroding consumer’s opportunity to own what they buy.
So how did we get to the point where practically everything is a subscription? And why is owning nothing making everything so expensive?
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TechTranscript
00:00This printer costs $160, but HP would probably prefer it if you paid $8 a month to rent it instead.
00:10That might not sound like a lot, until you realize the subscription locks you in to a two-year commitment.
00:18After two years, you'll have spent $192 — 20% more than it would have cost to buy the printer outright.
00:28The subscription includes ink, but HP artificially limits how many pages you can print each month. Exceed that, and it charges you more.
00:37But it gets worse. After those two years, you still won't own this.
00:43HP's Terms of Service explicitly state you do not own HP device and subscription cartridges provided, even if you complete the entire subscription term.
00:55Over the past 20 years, subscriptions have taken over our economy.
01:01You can't buy a car today without — seems like a half-dozen subscriptions.
01:05I'm powerless. I just turn up one day, and suddenly I've got to pay more money.
01:10But the cost isn't the only problem. If everything is a subscription, we won't actually own anything.
01:18Consumers are fed up. And some are fighting for the right to own what they buy.
01:24It's a matter of liberty. Am I free to own things, or should I rent indefinitely?
01:30But challenging subscriptions means taking on some of the largest companies in the world.
01:36A whole bunch of industries that are not trying to make their products or services better.
01:41They're trying to find new ways to earn money from consumers every month.
01:46So how did we get to the point where practically everything is a subscription?
01:51And why is owning nothing making everything so expensive?
01:57Subscriptions feel modern, but they've been around for centuries.
02:03Americans used pay-as-you-go for newspapers, magazines, milk, and even fruit.
02:10But technology enabled companies to turn anything into a subscription.
02:16Consumers knew they were subscribing to a newspaper because it landed on their doorstep every morning.
02:22The fact that consumers are paying for services that they're not actually using is a trend that technology has enabled.
02:29It started with cable. For decades, most TV channels were free. And there weren't many options.
02:36Don't miss this wonderful chance to get a Captain video picture ring.
02:41But that changed in the 1970s. Satellites enabled nationwide broadcasting, and the government allowed more channels on the air.
02:50The first company to leverage this lucrative technology was HBO.
02:55It realized that consumers would pay monthly to access its curated channel.
03:00Cable was an early example of paying for a subscription without getting a physical product in return.
03:07And it was wildly successful.
03:09There's going to be a huge demand for material very shortly in a couple of years for cable.
03:15HBO signed up over 14 million subscribers in a decade.
03:21And by the mid-1980s, dozens of channels had followed its lead.
03:26I want my MTV!
03:30The percentage of households with a cable subscription jumped from 7.5% in 1970 to around 67% by 1999.
03:40But that was just the beginning.
03:45Starting in the 1990s, internet providers like AOL connected millions of Americans using subscriptions.
03:52You've got mail.
03:54And consumers started shopping online.
03:57Companies pretty quickly understood that this new structure of the relationship with consumers gave them opportunities, not for like a one-time payment, but for an ongoing monthly revenue stream.
04:13Companies took something that consumers used to buy once and instead asked them to pay continuously for access.
04:22Like software from Salesforce, music from Rhapsody, and online games from Blizzard.
04:29World of Warcraft. Try it for free at Warcraft.com.
04:34This shift turned products into services.
04:37There's so many people and so many internet users. And for us, this is the beginning.
04:43This sacrifice, this trade-off of control for convenience, right?
04:50Improved online payment systems reduced friction.
04:53And as e-commerce grew, subscriptions popped up for every aspect of daily life.
04:59But the rise of smartphones is what solidified this transformation in the late 2000s.
05:06For the first time on a mobile device, you can have the internet in your pocket.
05:10Using apps had become a daily routine, and it didn't take long for some developers to start charging small monthly fees for them.
05:19The subscription economy has grown from a small set of goods and services to almost everything you can think about.
05:29Even Sleeping has a subscription now.
05:32The company AteSleep sells a smart mattress cover that costs over $3,000.
05:38Most of its functionality is locked behind a $17 monthly fee.
05:42That subscription is mandatory for at least your first year.
05:47I probably have 10 to 20 monthly subscriptions.
05:51Am I allowed to use the word in shittification here?
05:53Netflix, Hulu.
05:54Dropbox.
05:55Vogue.
05:56HBO Max.
05:57Google Storage.
05:58Apple TV.
05:59New Yorker.
06:00Amazon Prime.
06:01YouTube TV.
06:02My local YMCA.
06:04I do actually pay for Peacock.
06:06NBA League Pass.
06:08You do not get access to local games.
06:10If I want to watch a Knicks game, I have to subscribe to a totally different service.
06:15I'm convinced that there's just like a few hiding that I don't know about.
06:19Oh, Spotify.
06:20Oh my gosh.
06:21It's really impossible to have one service that gives you everything you actually want.
06:27Technology proliferated subscriptions, but the reason they're everywhere is because they make companies a lot of money.
06:35Subscriptions give companies recurring revenue, something investors love.
06:41And subscriptions are sticky.
06:44They're good at retaining users because most are automatic.
06:48People are four times more likely to cancel when they have to make an active choice.
06:53That allows them to make more money than they would with more transparent pricing schemes.
06:58Neil and his colleagues found that companies earn as much as 200% more revenue thanks to inattentive subscribers.
07:05Industry has figured out that this is a profitable business model and they've been moving towards it to maximize their profits.
07:15One company doing exactly that is Adobe.
07:19It's been selling software since the 1980s, typically releasing a new version every year or two.
07:25But in 2012, the company launched its Creative Cloud subscription.
07:30Instead of allowing consumers to buy the software once and upgrading when they want, Adobe now sells all of its apps bundled together for a monthly fee.
07:40So if you want permanent access, you need to keep paying.
07:44Even after you've spent way more than the software used to cost.
07:48Adobe faced heavy criticism for its decision.
07:53But there's no doubt it transformed the company.
07:57Three years after launching Creative Cloud, revenue was higher than ever.
08:02In 2024, it soared to $21.5 billion, over five times higher than before Adobe launched the subscription service.
08:11Adobe really was a pioneer in realizing that they can squeeze a lot more revenue out of consumers by signing them up for subscriptions rather than selling software and letting consumers keep it and use it however they want.
08:26Another company that's made a fortune off subscriptions is Apple.
08:30Since 2015, it has launched at least eight subscriptions.
08:34Now, when you buy an Apple Watch, the company hopes you'll also subscribe to Fitness Plus and Apple Music.
08:41Of course, you'll also want to protect it with AppleCare.
08:44Annually, these cost about the same as the Apple Watch itself.
08:49Apple's been remarkably successful at finding new ways to squeeze money out of its customers.
08:54Apple's services revenue, which includes subscriptions, rose from around $20 billion in 2015 to over $96 billion in 2024.
09:05Subscriptions, from a company's perspective, is the way to go.
09:09The real question for me is, is it the way to go for consumers?
09:14At first, many subscriptions may seem like a good deal for the convenience they offer.
09:19But the lifetime costs are more opaque.
09:24Take a look at this subscription from computer hardware company NZXT.
09:29It lets you rent a gaming PC, with the option to cancel at any time.
09:34The middle tier costs $129 per month, which might appear like a steal.
09:40But let's do some math.
09:44It'll only take 15 months to spend more than the value of the computer itself.
09:50It's common for a PC to last more than five years.
09:54In that time span, you'll have paid NZXT over $7,700 through its subscription.
10:02For that amount, you can buy the PC four times over.
10:06Other companies entice users with free trials or sign-up promos, hoping they'll stick around even after the subscription outlives its value.
10:18It's becoming almost anti-customer, where it feels personally, as a customer, that I'm preyed upon.
10:26And the problem isn't just that the cost adds up over time.
10:30Many companies purposefully make it difficult to cancel.
10:34Dark patterns are when a company designs a user interface, like a website, to deliberately trick or deceive customers.
10:44Once companies have consumers' payment information, charging people is frictionless, raising prices is easy, and canceling subscriptions can be really hard.
10:55Sam Levine was director of the FTC's Bureau of Consumer Protection under Joe Biden.
11:04What I saw during my time of government is some of the biggest companies in the world were some of the biggest abusers of subscriptions.
11:12The FTC sued Amazon in 2023 and Adobe the year after, arguing the companies tricked users into signing up for subscriptions and made it deliberately difficult to cancel.
11:24Let's take a look at Adobe's Creative Cloud.
11:28It defaults to a plan that looks like it's month-to-month, but it's actually a year-long commitment.
11:36The FTC said Adobe didn't clearly state that customers needed to pay a fee to unsubscribe early.
11:42These fees were so big and so important to Adobe's bottom line that one executive of Adobe described it as being like heroin in how addicted the company was to these fees.
11:54Adobe declined Business Insider's request for comment.
11:58In 2024, it told The Verge that the quote was taken out of context and said cancellation fees made up only a small part of Adobe's revenue.
12:08Folks who rely on Adobe services and Adobe products and end up getting ripped off by a company that is charging them huge fees and making it really difficult to cancel.
12:20Adobe appears to be making its subscription terms clearer.
12:25Screenshots from 2017 show that users had to click into the fine print to learn about the cancellation fee.
12:32The FTC's case showed that in 2023 Adobe's signup page mentioned a fee, but didn't immediately disclose the amount.
12:40As of December 2025, it states upfront that users must pay half your remaining annual commitment, which could cost hundreds of dollars.
12:51The FTC's case is still in litigation, but others have already been successful.
12:57It should be as easy to unsubscribe than it is to subscribe, but it doesn't feel like that's the mechanism that most businesses are going for.
13:07The FTC was working on a rule called click to cancel that aimed to make canceling as easy as signing up.
13:14The rule was hugely popular, but earlier this year, the Eighth Circuit, one of the federal courts, struck down the rule on procedural grounds,
13:24saying that industry should have had more chances to weigh in on the rule.
13:29And there's no indication that the Trump administration is planning to continue work on the rule.
13:34Removing subscriptions from your life isn't easy.
13:39As companies connect more products to the internet, the distinction between owning and paying for access gets blurrier.
13:53Printers, security cameras, exercise equipment, and even cars all limit features behind subscriptions.
13:59These are all things that are software dependent.
14:04And so when you don't have control over the software code, that means you don't have control over the physical product itself.
14:13Sometimes that means features get added, features get taken away without the consumer's consent.
14:19It even gets to whether the device continues to operate at all.
14:24Aaron co-wrote a book in 2016 called The End of Ownership.
14:29Since then, he's only become more pessimistic.
14:33I think things are worse than we imagined they would be.
14:38Our daily behavior is really built around the idea that the things that we use every day are within our exclusive control.
14:50And I think when we move away from that, what's the model for what a non-ownership economy looks like?
15:02There's some very smart people out there who describe this as a kind of return to feudalism.
15:09A world in which we don't own anything, we don't control anything.
15:14And the benefits of these resources are sort of, you know, hoarded by the handful of technology and media companies that control our access to them.
15:28Mergers further concentrated this control.
15:31And with less competition, prices could rise.
15:34They're in a much better position to sort of eliminate consumer surplus and push consumers to paying the maximum price that they can bear.
15:46That might look good for a handful of companies, but I think ultimately it's pretty harmful for society as a whole.
15:55The erosion of ownership has already happened to media.
16:04In 2024, 84% of U.S. recorded music revenue came from streaming.
16:10Physical sales accounted for 11%.
16:14It's even lower for movies and TV shows.
16:17Spending on physical media made up less than 2% of revenue.
16:22Consumers don't own the majority of media they consume.
16:25Which means they give up the right to resell it, loan it to a friend, or pass their collection down through generations.
16:34When Netflix blocked password sharing, it made this imbalance clear.
16:38When you move to digital, those secondary markets are essentially eliminated.
16:43And that's something that a lot of publishers, studios, video game developers, that they've been hoping for for a very long time.
16:54But a growing number of consumers don't want ownership to die.
16:58Take a look at this graph.
17:00Since 2005, the number of vinyl records shipped grew by over 1,200%.
17:06It's an old idea to physically hold something and look at it, but at the end of the day, it just feels good.
17:17It's wonderful to be a part of this re-emergence of a physical life that I think people are really missing in an age of complete digitization and dehumanization.
17:27This neighborhood in Brooklyn, New York sees itself as fighting against that dehumanization.
17:36Shop owners refer to it as Analog Alley.
17:39Because within a few blocks, you'll find board games, books, records, and VHS tapes.
17:46After one night of complaining one too many times, Jess yelled at me to start the store.
17:52So we started the store.
17:54Pretty much that's what happened, yeah.
17:57Night Owl Video's merchandise proudly declares death to streamers.
18:02I think the pitch from these streamers when they started was affordability and accessibility of great movies.
18:09And now it's the complete opposite because they've started making their own movies and they want to push those onto people.
18:16Removing the titles that clearly people actually want to watch.
18:19While prices started out low, every major streamer has increased the cost of its subscriptions.
18:26You're being fed from an algorithm and fooled into thinking that this algorithm is super, super tailored for your particular taste.
18:34You're probably just going to end up scrolling for an hour and not finding anything you want to watch anyway.
18:38Jess and Aaron hope Night Owl's human curation reminds patrons they don't have to let an algorithm pick their next movie.
18:53For your consideration, Spirited Away, this is like, pretty rare.
18:57Night Owl offers an estimated 8,000 to 10,000 movies on DVD, Blu-ray, and VHS.
19:05But I tried to order copies through the distributor, too, and I couldn't get them.
19:11They're backordered.
19:13Young Frankenstein is backordered.
19:14It's really cool to see a younger generation who didn't necessarily grow up buying DVDs like we did, embracing that idea, really enjoying it and enjoying searching through the stacks to find great stuff.
19:30DVDs and Blu-rays haven't experienced the same comeback vinyl has.
19:34But for Night Owl, selling dead media has been a success.
19:39A physical collection comes with tangible benefits.
19:43Streaming catalogs change all the time, as licenses swap hands or companies like Disney remove titles to write them off as financial losses.
19:53Blu-rays can also look and sound better than streaming because they're less compressed.
19:59And the quality doesn't change depending on your internet speed.
20:02But more importantly, curating a collection is the way Jess and Aaron show their love for their favorite media.
20:11Streaming has devalued art in almost every way.
20:17I think that it's really important to preserve the films that you love and to really experience them.
20:22The expressions on a lot of people's faces when they come in, it's like, wow, this still exists.
20:29It's really a nice thing.
20:32Fighting the subscription trend became a personal mission for James Kuda, too.
20:40I deeply hate subscriptions, unless they make sense.
20:44His company, Procreate, has become wildly successful by asking its users to buy its apps once.
20:50Yes, we would technically make more money if we were going down a subscription route.
20:56We're all in business to generate revenue.
20:58But I think the other part of that story is we're here to generate revenue and provide value to the customer.
21:04And I think that part is just not being evaluated.
21:07We're sort of prioritizing revenue generation at the expense of the customer.
21:12I think that creates quite a lot of brand damage because you're not eliciting a feeling of joy or fun when you're interacting with that brand.
21:22You're creating a sense of aggravation and a feeling of entrapment, which customers don't forget.
21:27Gamers are feeling the aggravation too.
21:32Microtransactions, battle passes and online-only functionality are all too familiar in modern gaming.
21:38The customer should have more, basically, freedom to own their media.
21:45Because the more of the control lies with the company that either distributes or creates the ecosystem,
21:53the more opportunities for unfair practices.
21:59They are becoming the standard and no one knows that they're unfair anymore because they haven't seen anything else.
22:03The platform GOG is committed to preserving retro games.
22:08But even with new titles, it offers users an offline installer without digital restrictions.
22:14That means you can install a game even if the publisher no longer sells or supports it.
22:19The aim was to solve that for consumers and to build a digital distribution platform that would keep the good things about physical distribution,
22:28but move them into a more convenient digital era.
22:33You have the files, but they're yours. You can keep them.
22:37It's a matter of liberty. It's a matter of whether I can actually own something and whether a company takes something away from me.
22:46Am I free to own things? Is that okay for me to own or should I rent indefinitely?
22:53If anything.
22:58We're not delusional. I don't think streamers are necessarily going anywhere,
23:02but I do think that people are going to become more aware of how they're spending their money on entertainment.
23:10Consumers should make whatever choices work for them.
23:13I'm not here to tell everybody that they're wrong for having a Spotify subscription and everybody just needs to buy vinyl records.
23:21But one of the things that troubles me is that for people who want to buy tangible copies, that's becoming increasingly difficult to do.
23:29There are products that many of us no longer want and we're still subscribed to, and that's generating revenue for those companies.
23:40And it means that a new company, which is offering a product that we do want, they may not have an opportunity because our money is tied up somewhere else.
23:48But the FTC is going to keep playing whack-a-mole unless it actually issues a rule that applies to every company in the economy saying you can't trap people in subscriptions and you can't lie to people when they're signing up.
24:03What worries me is I think the status quo is more desirable to the companies that control these markets and I don't think they're likely to yield that control without a real fight.
24:33I hope that you can help them with those markets and that's why I would give back one quick question.
24:37I hope that you could share my thoughts with your thoughts with your thoughts today.
24:40For more information, visit our website, visit www.bio.gov.au.
24:42biggum.au
24:44www.bio.gov.au
25:03You
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