Are Subscriptions Fair?

Subscription pricing, once the domain of newspapers, magazines, and cable bundles, is lately becoming much more common in everything from online video and movie tickets to razors and meal kits. One newish area that has been causing a lot of anguish has been subscription pricing for apps, as summarised on Metafilter. I was inspired to write this comment in defence:

A couple of years ago, we switched Zombies, Run! from being a paid app with IAPs for new seasons, to a subscription-based service costing (now) $25 a year. The subscription allows us to pay not just for the cost of developing new content and features, but also the very significant costs of just keeping the app running on the latest versions of iOS and Android; not to mention working properly on new phone sizes and supporting basic new OS functions.

I’m not sure whether people realise quite how much work it is to just keep *exactly the same app* working over time. There is always something in new iOS and Android versions that breaks our app (and other devs’ apps); and particularly on Android, new phones will often also break things.

The simple fact is that most indie app developers are not swimming in cash, and that if thy decide to switch to subscriptions, usually it’s not out of a desire to squeeze every last penny out of users, but just to keep the lights on and not be continually terrified that tomorrow may bring zero sales.

Our switch to subscriptions was also driven by industry-wide shift towards freemium pricing for smartphone apps and games. Yes, there are old-schoolers who refuse to download freemium games, but they’re far outnumbered by people who – not unreasonably – prefer the much less risky option of downloading a game for free and seeing whether they like it before paying anything.

Some of that shift is also down to startups that were unnaturally juiced by venture capital firms. This is less common nowadays, but it was not unusual for investors to pump a few million in to an app development company in the hopes of making the new Runkeeper or Instagram. That investment is made with the goal of making a 10x or 100x return in a few years time, which in turn requires hyper-growth – and you don’t get hyper-growth by asking your users for anything terminally embarrassing like actual money.

I think the economics of this strategy have been more or less ruined by the fact that the most popular and generic non-gaming apps have now either been subsumed into the Google/Apple/Facebook nexus of free utilities; or into much larger lifestyle brands like Nike and Adidas, who effectively use them as marketing. That leaves more niche utilities apps like Ulysses (a writing tool) and Zombies, Run! which are small enough to fly under the radar of most VC firms; or professional apps like Adobe Creative Cloud, which are extremely expensive to develop.

I spotted some familiar themes among comments on the Metafilter and Hacker News posts, and I thought it’d be interesting to run through them here:

“Digital subscriptions are more like renting, not subscribing”

If you subscribe to the paper edition of The New Yorker, you get to keep all your magazines forever, whereas when your digital subscription ends, your access to the content completely ceases (just as Netflix does). This is a fair point although it ignores the fact that:

  • Digital subscriptions are often cheaper than print subscriptions
  • Most customers don’t place a high value on continued access to the content they had while they were subscribed…
  • …and in any case, this is balanced out by most digital subscriptions offering you access to the complete back catalog of magazines and issues, unlike print subscriptions

So I don’t buy this as a strong argument against digital subscriptions, although it varies an awful lot for each app – not just due to the type of features or content you get, but also due to the individual pricing.

“What about people with no money?”

It’s ahistorical to think that quality journalism – or quality software – was ever cheap, let alone free. Yes, there was a short period from, say, 1995 to 2015, where investors didn’t care about making money, but we’ve now returned to the norm where good, established stuff mostly costs money and bad or unreliable stuff is mostly free.

And I don’t see how subscriptions are necessarily any more expensive than paying up front for software. If you think $10 a month for Adobe Creative Cloud makes it unfair and inaccessible to poor people, I don’t see how paying $200 upfront was somehow far more accessible. You could equally argue that by lowering the initial signup cost, subscriptions are more accessible.

I, too, would prefer to live in a world where most people earned more and software was more affordable. I just don’t think that subscription pricing is at all related.

“Micropayments are the answer for journalism”

Only if you want your journalism to be entirely click-driven. I’m sure Blendle would take exception to that argument, but if your goal is to fund quality journalism, then I don’t think that paying only for the articles you read is the best way to go.

“Subscriptions contribute to the centralisation of data…”

This is a new one to me. Insofar as any monetary engagement with Google and Apple will reinforce their dominant position as platform owners, I can’t argue against this, although it would also require that you don’t pay for anything on these platforms. And I don’t think that’s a practical suggestion if you want to participate in modern society.

2 Replies to “Are Subscriptions Fair?”

  1. It’s true that “Digital subscriptions are often cheaper than print subscriptions”, but more than offset by the cost savings of printing & delivery, so a non-argument in favour of digital subscription pricing. I’ll buy the other two reasons though.

    Can I pick you up on “I, too, would prefer to live in a world where most people earned more and software was more affordable. I just don’t think that subscription pricing is at all related.”?
    On a cursory analysis, if everyone were paid more (let’s assume evenly, this is a nice pleasant suggestion after all), the cost of the software would presumably increase, since the developers making it would have cost more. So (a) doesn’t allow (b), and thus renders the suggestion impotent in the immediate instance.
    That said, surely we do live in that world – consider what people were making 20 years ago, and the purchase power thereof, and the cost of software then. We now earn more, have greater purchasing power, and software is cheaper per package, let alone that it does more too. And it will only continue to head in that direction. Hoorah!

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