Once upon a time we owned things. Now we rent everything.
Most of us are familiar with subscriptions. The business model goes back to at least the early 1800s with magazines and evolved to the milkmen of the 1860s who were paid to deliver milk door to door on a recurring schedule. Those were the early one-size-fits-all versions compared to the endless commerce options available now. We’ve splintered into subsets and subreddits of interest. From Substack sermons to Patreon patronages, we’ve all funneled into micro-tribes. Social media entrepreneurs and influencers often spout video ads arguing that those looking for passive income and side hustles should subscribe to their online courses to ultimately learn how to create their own courses to sell in their teacher’s footsteps.
In March 2023, the Federal Trade Commission proposed a rule revision called “click to cancel,” which aims to make canceling subscriptions less difficult. Since then, lobbyists have balked that such a rule would cost businesses $2.7 billion, and though hearings have occurred, so have delays. Consumers deserve to be allowed to opt out of subscription fees they don’t want and perhaps never meant to agree to, just as consumers deserve customer support to be as prioritized as much as “audience retention” when decision makers are considering the bottom line.
Navigating customer service these days feels like clawing through a murky cesspool, blindfolded and gagged. Want to chat about a problem with Facebook, Uber or YouTube? Good luck with those chatbots churning out scripted answers with all the humanity of a toaster. The issues of today’s customer service standards go hand in hand with the issues around the ability to cancel a product or service.
The Business Model
Any industry can contain both lucrative and predatory aspects. Some companies, like Apple and Netflix, make canceling subscriptions very simple and straightforward within their apps, and others, like GoDaddy, do the same while always providing helpful and competent human customer service.
Many sites, however, do neither. According to a survey by Zendesk, “Of those reporting a bad customer experience, almost all of them (97%) changed their future buying decisions.” In many cases, the most important digital product priority appears to be centered around shaping the user experience to drive network effect to maximize screen time and revenue and not maximize customer satisfaction.
The virtuous loop for Pinterest.
The holy grail for most subscription services is a virtuous loop. The graphic above and the one below are both from a presentation by Sarah Tavel. The one above shows an example of one of the virtuous loops in the Pinterest business model. The one below illustrates that although Tinder has several virtuous loops, the most important metric of the site (supposedly being a successful date) is actually an offramp to leave the app, which is not ideal for Tinder.
The virtuous loops for Tinder.
Too Big To Cancel
It has been reported that “the global subscription economy market size is projected to be $1.5 trillion in 2025.” A report in 2017 claimed that 35% of Americans are paying for subscriptions without knowing it, and a 2022 study found that consumers spend $133 more per month on subscriptions than they think they do. Who hasn’t forgotten they signed up for a free trial at some point? Scams and forgotten charges are a nuisance, but even the ones you know about can be a nightmare to cancel.
Research from Toolkits and National Research Group found that 67% of consumers would be more likely to subscribe to digital publications if canceling subscriptions was easier. The central idea behind the FTC’s “click to cancel” proposal is that if it takes 30 seconds to sign up, it should take 30 seconds to cancel. If canceling is easy, you might want to return and use that service again. If it takes three days to cancel it, you will probably never return.
When it is possible to cancel, common hurdles still include persistent nudges and discount offers to stay subscribed when you try to cancel, burying or obscuring cancellation buttons and options, requiring phone cancellations and dealing with retention-focused call scripts, and the inability to cancel directly through the website/app you subscribed through.
The image below was posted on Reddit as a proposed lifehack to finally get a cable provider to cancel a subscription by saying you are going to jail and don't need cable anymore.
A screenshot of a customer service chat with Xfinity.
Canceling subscriptions has become needlessly complex, with companies employing tactics like offering discounts or making cancellation options harder to find. If you try to cancel copy.ai, for instance, you’ll be prompted with a popup offering “40% off for life,” which sounds like a good deal. But if they can offer that much of a discount, then why did they charge so much to begin with? Supply and demand in the internet and credit card age has only propelled a corporate mindset of charging as much as the customer can endure.
A screenshot of a deal offered when trying to cancel copy.ai.
Make Things More Complicated
In the 1980s and 1990s, companies began outsourcing nonessential work functions overseas. This led to the type of phone support with a prepared script and an inability to solve problems that still exists today, and AI chatbots are now replacing that one bad option with an even worse one. Both moves served the bottom line but not the customer.
Last fall, Tinder rolled out a widely mocked VIP tier of $499 a month for their dating app, and this month, Equinox announced a new membership that costs $40,000 per year. The strategy is clear for some businesses: Charge as much as possible and make it nearly impossible to cancel. On top of that, they’ve made customer support feel like a minefield of obstacles one must navigate even to discuss the idea of not paying anymore.
If you subscribe to the digital version of the Wall Street Journal and attempt to cancel, you will find an amusing labyrinth of confusion. Their website contains a menu item you can click that says “manage/cancel subscription.” Still, if you click on that link, the info on the page is unrelated to canceling, so you are driven in a circle to eventually realize that you can only cancel by phone. Canceling by phone is an option companies should still offer, but there is no reason (other than retention) not to allow an online cancelation function when signing up on the website is simple. The most infuriating aspect of this particular example is that there is already a button on the website for canceling—it just doesn’t do anything.
A screenshot of the cancellation page for the Wall Street Journal.
For many companies, making cancellations an arduous process is a deliberate strategy to reduce churn and keep revenue flowing, even at the cost of an adversarial customer relationship. Making it deceptively difficult to cancel a subscription is an example of what has been described as dark patterns in action.
Shift To Subscriptions
If you want to, you can sign up for a vinyl of the month, a hot sauce of the month, or a pair of fresh and stylish underwear every month. This allows us to feed our need to consume while simultaneously being exposed to new products that align with something we already desire. None of this was possible before this century of interconnected niche communities spawned from the internet.
There are subscription services people utilize for their pets. Some people pay subscriptions for home security systems like Nest and Ring. You can get a meal kit delivered, so you never have to eat out again. There are meditation apps you pay for and so on. This model is so omnipresent that it feels like things have always been this way. Until 2013, though, it was possible to make a single purchase of Microsoft Office. You’d buy a physical box at Best Buy and have your very own activation key, meaning you owned the tools included, and you could use that software without paying for it again. Then, in 2013, it became a forever subscription service if you wanted to keep using Word, Excel or PowerPoint. By 2017, Adobe had followed suit and stopped selling licenses, meaning that you have to pay monthly to use tools like Photoshop, Illustrator, InDesign and Premier. Countless examples of this exist.
Once upon a time, we owned things. Now we rent everything, paying tithes to corporations who dangle convenience like a carrot. In February, it was reported that “99% of U.S. households now subscribe to at least one or more streaming services.” Nearly all our content is streamed from sites like Amazon Prime, Netflix and Hulu. Even if you buy a movie on Amazon Prime or download it from Netflix, their terms can change anytime, and you never technically own anything tangibly. The same could be argued with your cloud storage, whether or not it seems like the content is yours. The same goes for music, whether on Spotify, YouTube or Apple. Back when you purchased vinyl, a cassette or a CD, you owned that music for the rest of your life. Now it just feels like you own it because it displays on your device.
The Key Takeaways
The subscription model is here to stay, but it can be improved. Think about what it says about these companies that the FTC needs to proposal a rule that says canceling a subscription shouldn’t be nearly impossible. Relying so heavily on revenue from customers who find it hard to cancel or who forget about their subscriptions is not a sustainable or smart long-term revenue strategy. Hopefully, the FTC will be able to follow through and address this headache to some extent, but consumers want and deserve more.
Companies must rise above the tactics of subterfuge and manipulation. Prioritize clarity, simplicity and unwavering customer support. Make the exit as inviting as the entrance so that leaving is a choice rather than an ordeal. This creates an undeniable trust far more valuable than fleeting profits gained through opacity. In the corporate competition for dominance, the wisest players understand that the strength of a relationship lies in mutual respect, not coercion.
