Just recently i was actually thinking about this pricing approach for netflix, apple arcade or whatever else. Basically i use it so rarely that i could just subscribe when i want to watch anything, and unsubscribe immediately. This will enable subscription till end of billing period (one month). Then when i want o watch anything again then i will repeat again. And now kagi has implemented exactly this but automated from their own side. Im subscribing just to vote with my wallet.
Hopes that netflix or any other provider will implement this are small though. Because it's free money when someone pays for service and does not use it.
5 years ago, Netflix started proactively cancelling inactive accounts. They lose ~$10M/yr from this, but it's the ethical thing to do. (That said, I'd like them to use an even shorter window than 1 year of no activity.)
To be honest, it's insane to me that there's no law about this. If you're a subscription business and you see 0 activity on a paying customer for 60 days, you should be required to ask them whether they want to continue using your service (and no answer should result in service cancellation).
As a counterpoint, I found that Google had deleted all my servers from the GCP trial. I thought it's like AWS where it automatically starts billing you at the end. In fact was pretty sure I was paying for them (Google is definitely sending me strange unmarked invoices for something) but it turns out you have to activate it manually, and when I didn't, they just nuked the whole thing.
I disagree, because this would force all services to store the time of your last activity, even if they don’t want to track any such data for privacy protection. In addition, it would be prone to accidental cancellations losing you an important account, or the service could just claim you didn’t click the renewal button if for example they want to get rid of unprofitable customers (if you don’t use a service you also don’t generate ad impressions, or similar), which is difficult to disprove after the fact.
How hard is it to check your monthly bank statement and see if there’s anything unexpected? One normally should do that anyway.
I feel like the vast, vast majority of businesses that are conducting monetary transactions with their customers are storing, at least, their last login time.
The immediate second order effect of such a law would be to raise subscription prices on everyone to account for this automatic churn.
I would wager that most people who aren't watching their bills closely enough to notice they haven't actually used their Netflix account in a year aren't very price sensitive. They have money they are, by revealed preferences, willing to throw into the pot, which lowers the service cost for everyone else who does actually use it. If anything one should be the least sympathetic to their plight, from a welfare angle.
The business model you're actually looking for is a utility, or a pay-per-use model. Getting charged per API endpoint hit, or by TCP packets sent, or something. A subscription service is explicitly designed to avoid all that, because our brains like nice round predicable numbers. Sophisticated users everywhere use this model, but most of us have better things to be sophisticated all the time.
It's not fine to the millions of monthly active users who would have to cancel because prices rose from 14€ to 16€. It's inherently a consumer-hostile action to pass such a law, despite how it first appears.
This sounds like you're arguing that it's more customer-friendly for people who forgot to unsubscribe to subsidize people who are actually using it. "Churn" is just another word for people leaving when the costs exceed the value of the service, and as such is entirely beneficial to consumers. Low churn often means consumer-hostile actions like making it hard to unsubscribe or failing to remind users they're subscribed, other than the occasional service that has such obvious and widespread value that customers never unsubscribe. I struggle to think of examples of those services, where neither I nor anyone I know would want to unsubscribe. I can think of a few that I paid for too long because cancelling was a pain in the ass (up to and including cancelling cards because it was easier).
>[I]t's more customer-friendly for people who forgot to unsubscribe to subsidize people who are actually using it
You characterize my position exactly right. I only point out there are many options people might not use Netflix for two months beyond just forgetting to cancel it.
>Low churn often means consumer-hostile actions
Raising prices is the ultimate consumer-hostile action. That's where you have to start. It's unavoidable when you legislate higher churn.
>like making it hard to unsubscribe or failing to remind users they're subscribed,
Allowing competitors to price in an easier unsubscription flow is superior to legislating it across the board, for the minority of users who care about that more than a lower overall price. Heck, some companies go even further and offer this thing called a "money-back guarantee", or will just prorate you if you ask nicely. But again you usually pay extra for these niceties, because agreeableness can and should be a valued good in the world.
> I can think of a few that I paid for too long because cancelling was a pain in the ass
Well, I sympathize, and I've sometimes paid for subscriptions I didn't end up using too, but such is life. We don't always make the most out of what we pay for. That's not a good reason to inflict harm upon the majority of satisfied users of those things by causing their prices to go up using legislation, though.
> Raising prices is the ultimate consumer-hostile action. That's where you have to start. It's unavoidable when you legislate higher churn.
Some customers will now be paying 0, which is incredibly consumer-friendly for them. I'm also not immediately seeing a direct link between churn and prices. Eg if 5% of users unsubscribe but are replaced by new subscribers, I'm not seeing how the price needs to go up.
I do see how losing subscribers who weren't using the service requires raising the price, but that's largely a distortion of the market anyways. The service was offered at an unsustainable price, propped up by users paying who didn't actually want to.
> Allowing competitors to price in an easier unsubscription flow is superior to legislating it across the board, for the minority of users who care about that more than a lower overall price. Heck, some companies go even further and offer this thing called a "money-back guarantee", or will just prorate you if you ask nicely. But again you usually pay extra for these niceties, because agreeableness can and should be a valued good in the world.
That's just information asymmetry, which is again a market distortion. Users are generally unaware of how hard it is to cancel when they sign up, which unscrupulous businesses use to offer their product at below-market rates propped up by people who don't actually want to be subscribed. I would buy into this theory if they were slapping banners up that said "you must come to a physical ___location during extremely inconvenient hours and bicker with a rep for 45 minutes to unsubscribe". They do not, because people would avoid their service (for good reason).
> That's not a good reason to inflict harm upon the majority of satisfied users of those things by causing their prices to go up using legislation, though.
The ratio is much closer than you're letting on. Netflix's latest numbers say a full quarter of subscribers don't actually use the service. I'm struggling to see how subscribers are harmed by having to pay for the cost of providing the service, and especially not how it's preferable to prop these services up with subscribers that don't want to use it.
It also just generally encourages a cancerous business strategy of making things that consumers don't really want, and the business knows they don't want, but being able to coast off the subscriptions people don't bother to cancel. It's bad for the market. Those dollars could be going to innovative products that people actually do want if they weren't being soaked up by useless subscriptions. It also creates subscription fatigue, making it difficult for legitimate businesses to convince people to subscribe. I almost flat out refuse to do subscriptions these days, even if it's something I think I would use.
If something is to be considered insane, it is to demand a law for this. Mind your business – used to be written on the currency. If I buy a chicken and leave it in the fridge without eating it, should I also demand my money back from the supermarket?
Not just free money. I'm pretty sure the lions' share of any streaming service's income is from users that are subscribed but don't consume everything for that month. Their business model relies on this.
I think this is a vast overestimation. The majority of people notice every payment they make every month, a Netflix subscription is a choice that they would not continue to make if they were not using Netflix. Those of us who can afford to pay Netflix whether we watch it or not are the minority of wealthy people. I think you would be surprised to learn how many normal people juggle different subscriptions by cancelling/subscribing each month.
I have personally met people who, like me, really don't have cash to splash; but who, unlike me, and to my surprise, have literally told me "I pay for all the streaming services every month, whether I use them or not, there's no way I could be bothered to cancel/re-subscribe". So, from my limited anecdotal experience at least, no, it's not a vast overestimation, and in fact it's probably often not about how wealthy people are either - it's about how many people out there are willing to pay for the privilege of set and forget, rather than having to think about one more thing on a regular basis.
I think both statements are somewhat true. And we can look to COVID to see some evidence of this because when everyone was suddenly home and wanting to consume TV, Netflix had to lower the bit rate on even their premium tier to keep up with demand.
If Netflix wasn’t relying on a degree of inactivity with in their infrastructure then they wouldn’t have needed to lower the bit rates.
It makes sense, when you think about it. Over provisioning is a common practice when dealing with expensive finite resources. For example ISPs have been doing this for decades, offering households higher individual bandwidth than is available if every household within a local radius was to fully max out their throughput. VMWare also offers this to allow individual VM to consume more RAM than the total available on the host.
The key is not to over provision so much that it becomes noticeable under “normal spikes” — and I think we can all agree that COVID was anything but normal.
Isn‘t this the classic gym subscription example? How many people have a subscription and actually don‘t use it. There is an episode of Friends about that.
About the fair pricing:
Would love to have this also for my car lease ;) But more on a weekly bases.
Gyms get you by making memberships cheap and easy, and cancellations incredibly difficult.
The flip side of that is that only a small fraction of their members could actively use their memberships or they wouldn't have enough space. The active members get their membership effectively subsidized by people who don't use their memberships.
Apparently up to 50% of a gym's sign-ups happen in the month of January due to new years resolutions, and January/February are the busiest months as a result, though the majority keep their membership even after their resolve to go tapers off.
Gym memberships are also a thing people think they should have more than they actually desire to use them. So many people want to be healthy and get in shape, but aren't committed to actually doing the work. So when it comes time to think about cancelling plenty of people keep the gym membership because they think theyshould use it but then don't make the time.
Whereas Netflix and other streaming? It's so easy to just stay in and binge watch. The logical thing to do is cancel when you aren't using it to avoid paying year round, but they bank on the combination of laziness (takes effort to cancel) and ease of use - if you watch even just once or twice a month it starts seeming worthwhile.
And I'd bet most users still make them money. There's a huge fixed cost to setting up a giant content streaming service like Netflix, and to acquiring their content catalog, but they've hyper optimized the distribution so I'd expect all but the heaviest users make them money. And with ad supported plans, watching more would mean they get to serve more ads and make even more money.
In Europe it's law to make cancellations as easy as signing up. Also using the same methods; so if you can sign up through the web it's not allowed to only offer cancellation by registered mail that must arrive on a full moon only.
With the advent of various car renting apps, I was so excited about not owning a car, and basically using just-in-time renting option. Turns out, at least in my part of the world ([0]), that it's such a PITA.
When you plan ahead, it's manageable. Sometimes, a car for renting is not available long term because people plan for the same time (e.g. holidays) and the provider doesn't have big enough car fleet to cover these peaks.
When you have an unexpected trip though, e.g. suddenly needing to go to Ikea, a spur-of-the-moment trip, etc., that's when this all falls apart. In my town, this was then 40:60, favoring no cars being available.
In the end, I just bought a car. 5 days out of the week, it sits on the street and depreciates in value. We take it on trips for the weekends, though, and have been absolutely loving it.
[0] central Europe, don't really need a car for daily life, but it's nice to have sometimes
I live the rental only life and only when needed. That being said when I looked at buying a car, it would be cheaper if bought second hand as it basically doesn't depreciate unless you drive commercially. The key is getting something that is already old and with a lot of mileage. Adding 10% more mileage to a car with 100k+ miles and adding 3 or 4 years to a 15 year old car doesn't really depreciate, it's all the same value. So if you ride the wave of old second hand cars you can switch every few years and you can even sell them for higher than you got them in years where the second hand market moves up.
Yes but I want the car in front of my home :) I understand the concept that I pay also for the luxury to drive around whenever I want etc. It was more a musing ala eat the cake and have it :)
I see lots of short rentals that just idle on the street for days sometimes. Here the provider pays of course (and I assume it’s not in their interest).
> Hopes that netflix or any other provider will implement this are small though. Because it's free money when someone pays for service and does not use it.
Right. This is the sort of pro-consumer practice that is obviously morally right, but will not be widely adopted without consumer protection laws. Outside of small, niche businesses like Kagi, there is no pressure to treat customers with respect.
Netflix cancels after billing you for two years. Kagi doesn’t bill you if you don’t use the product that month. Do you understand those are not the same?
Slack does, or did, do this. I believe Trello, too.
I found out about this because I noticed our Slack bill was quite a lot lower over some Christmas/January period. It was because so many folks were away, and so they didn't charge us for seats that were inactive for > 30 days.
Yes, lots of businesses charge based on MAU. You can pre-pay for a certain MAU, which will get you a lower price per user, but at the expense of paying even if they aren't used. Which is fair enough.
We canceled Netflix some time ago. Being too busy, spending our precious free time on something better than browsing through the not that brilliant quality collection, trying to find something we would not regret wasting time on. Probably 5% or less is for us in there? For the 'staring out of our head being exchausted for any meaningful thing including sleeping' times there is Amazon Prime, which we have for deliveries anyway. Once in every 2 months or so? (our pure TV is neglected, being a black rectange decoration mostly)
Kagi in the other hand is useful.
Probably that's why Netflix has to play hardball with their customers, chasing their money hard and strong, pushing them around, not Kagi? : )
I do this for all services now, it requires more active management on my part, but the mindful spending is worth it - both for the wallet and as a market signal. I used it most recently for Claude which has had scaling issues, diminished quality, defaults to concise responses.
Kagi does keep a running subscription, so you are only getting until the end of that subscription month. But, in context and reality, it is pretty good.
Hopes that netflix or any other provider will implement this are small though. Because it's free money when someone pays for service and does not use it.