The Rise of Subscriptions

                          

I grew up in a time when a subscription usually meant subscribing to printed materials. Newspapers and magazines were necessary for those who wanted to stay informed. Before the internet, this was how we read the news, followed sports, or kept up with hobbies.

You could also subscribe to mail-order collectibles. There were ads in magazines offering commemorative plates, coins, or figurines at an attractive introductory price. If you bought one of these items, a subscription would begin automatically, and a new piece would arrive each month. It was an easy way to build a collection and an easy way to keep paying.

Music and movie companies also used subscriptions. Companies like Columbia House and BMG offered great introductory deals on CDs or DVDs. After that, customers were enrolled in a plan where they would send a featured selection each month unless it was declined in time. Everything arrived by mail, which meant items had to be physically sent back if they were not wanted. It required more effort than today’s digital subscriptions, but the model was already there.

The Modern Shift

In the early 2000s, subscriptions expanded into everyday services, such as carwashes, where they were branded as “memberships”. The gym membership is a classic example of how well a monthly membership works for the provider. The monthly fee seems affordable, but gyms actually rely on the fact that many members won’t show up regularly. This business model works because most people pay for more than they use. 

Then came the innovation of movie rentals by mail. Netflix started by shipping DVDs directly to your home. It was simple and successful. Soon afterwards, Netflix became one of the first major companies to embrace streaming video, changing the entire entertainment industry. The iconic movie rental stores quickly became obsolete. Meanwhile, music had already shifted toward subscription access, after the industry backlash against free downloading platforms such as Napster and LimeWire. 

There were other experiments along the way. MoviePass attempted to offer unlimited movie theater tickets for a flat monthly fee. It gained attention quickly but ultimately failed because the economics didn’t work.

Streaming Success 

Streaming subscriptions have become the most successful subscription models ever created. For a relatively modest monthly fee, users can get access to vast libraries of movies, shows, music, and video games. This has greatly changed the way that people throughout the entire world access their entertainment.

Unlike the way subscriptions worked in the past, there’s no shipping, no returning items, and no physical storage required on digital subscriptions. Everything is instant and convenient. Instead of buying a product, you pay for ongoing access to an entire catalog. If you lose interest in a specific product, it’s fine because you never really own any of it.

   The Deluge

After streaming proved successful, subscriptions spread into nearly every area of life. You can now subscribe to receive monthly boxes for clothing, beauty products, pet supplies, shaving kits, and other “for men” products, among many other things. Meal kits deliver pre-measured ingredients and recipes straight to your door. Even simple pleasures like unlimited drinks or unlimited appetizers at certain restaurants are offered for a monthly fee.

Digital services quickly followed suit. Ride-sharing apps, food delivery services, investment platforms, and countless other apps now offer “plus” memberships. If you don’t subscribe, you often get a lesser experience - fewer perks, slower service, or higher fees. There is constant pressure to subscribe when using digital services.

Many of these memberships start with free trials and low introductory offers. At just a few dollars a month, they always look like a good deal at first. But most people don’t bother to cancel, and the monthly charges increase quickly.

We’ve even seen subscriptions creep into unexpected areas, from vehicle and appliance features to software tools, and many other things. Where does it end when we have to pay a monthly fee to unlock features on an item we already own?

   Dangers

A few dollars per month doesn’t seem like much. But a large “collection” of subscriptions can quickly add up to hundreds or even thousands of dollars per year.

Many companies make signing up quick and convenient but cancelling can be complicated. Some platforms intentionally make the cancellation process confusing or time-consuming.

There’s also price jacking. Raising the price by just one dollar per month may feel insignificant to an individual at the time. You may not notice one dollar a month at first, but it adds up with time. For the company, however, raising monthly rates means enormous additional revenue if they have millions of subscribers.

Many subscription-based platforms collect significant amounts of personal data. They also store your credit card information, which can be misused or leaked in data breaches.

Psychologically, subscriptions can create a sense of attachment. You may feel like you’re “giving up” if you cancel. There is always a mild thrill in receiving a monthly box or accessing exclusive content. Video streaming platforms often use exclusive shows to make cancellation feel like a loss, or to get users to come back.

Over time, a subscription lifestyle can resemble renting everything rather than owning anything. Wealthy individuals often focus on owning assets that generate income. They collect rent. They don’t typically build wealth by paying it.

   Solutions

Here are a few key points to consider:

• Make sure your subscriptions don’t overlap.

• Cancel after a free trial if necessary.

• Cancel anything that isn’t being used.

• Review your bank and credit card statements regularly.

• Know your total yearly cost, not just the monthly fee.

• Be willing to go without certain content if it doesn’t justify the price.

• Stay proactive instead of letting subscriptions run on autopilot.

   Summary

Subscriptions are not inherently bad. They can be useful tools when they truly add value to our lives. I consider my AAA membership to be essential for affordable and reliable roadside service. My gym membership is also valuable. I also use YouTube Premium and Apple Music. Subscriptions and memberships can simplify things, save time, and provide convenient access to products and services you enjoy. But they should serve you, not quietly drain your finances month after month. Being selective is key. In many cases, it’s more cost-effective in the long run to own certain things rather than continually rent access to them. Convenience is powerful, but you need to stay in control. Rather than get excited when one of your favorite brands offers perks for a monthly fee, take a look at the economics behind it, and make a calculated decision for what works for you. 

Written by Leroy B Fisher.

To see published books by this writer, search "Leroy B Fisher" on Amazon.