7 ms·

All businesses will eventually turn into subscriptions

63 points by vivferrari 5y ago

sandworm101 5y ago
>> The subscription model was originally conceived by the utility companies that needed to keep providing a service over a prolonged period of time to their customers. The original subscription service was milk which had to be delivered fresh every day No. "16th century Germany also saw subscription-based, handwritten news. Those who subscribed to these publications were generally low-level government officials and also merchants." https://en.wikipedia.org/wiki/History_of_newspaper_publishing https://en.wikipedia.org/wiki/History_of_newspaper_publishin... That is just newspapers. The concept of a per-month or per-year rate for access a service has been a thing since at least ancient Rome.
pdonis 5y ago
Subscriptions make sense for things that you get a regular recurring supply of, like milk and newspapers. They might make sense for things that you can get regular upgrades for, like software (although often the "upgrades" aren't really worth much). But they make no sense at all for durable goods that can last for years without significant upgrades, like cars. The whole point with such goods is that you pay once and you own them for their entire useful life. (Actually, there is a subscription-type business model for cars; it's called "leasing". And the only people who do it are people who can afford to be fleeced. It makes no sense at all for an ordinary car owner. I once had a car dealer try to sell me a lease deal when I was there to pick up a new car. His deal had a larger monthly payment than the loan I already had pre-approved from my credit union, and the residual after 3 years--what I would have to pay then to own the car outright--was more than the balance on the loan would be at that point. I asked the dealer how it could possibly make financial sense for me to take such a deal. He had no answer.)
- onion2k 5y ago
  How it makes sense is simple - people who lease cars don't pay the final payment. They give the car back and lease a new one. That way they pay a bit more for a few years, but they avoid most of the cost of deprecation that they'd lose if they owned the car at that point. If you plan to buy a car and own it for a long time then leasing is silly. If you plan to keep a car for no more than a few years then leasing is a pretty good option.
  - pdonis 5y ago
    > How it makes sense is simple - people who lease cars don't pay the final payment. They give the car back and lease a new one. That way they pay a bit more for a few years, but they avoid most of the cost of deprecation that they'd lose if they owned the car at that point. If you don't plan to keep the car more than the few years you can get with a lease term, then yes, the comparison is different than the one I made, but what might tip the scales in favor of leasing isn't the depreciation cost but what options are (or aren't) available to you for terminating your old loan (which probably won't be paid off at that point) and getting a new one when you either trade in or sell your old car and buy a new one. Another downside of leasing is that, since you don't own the car, there are probably going to be restrictions on how you can treat it and what you can do with it (for example, mileage restrictions). That gets back to the more general issue of the pros and cons of ownership vs. renting, which is relevant for subscription business models more generally.
  - sandworm101 5y ago
    >> but they avoid most of the cost of deprecation Except that they don't. The dealer is taking the depreciated car back at the end of the lease. The dealer isn't giving customers a gift by taking the vehicle back at a loss. The lease price covers the entire cost of depreciation over the term of the lease. The customer may avoid seeing the depreciation but they are most definitely paying for it. Worse still, they are coving the most expensive part of total depreciation: the time between new to slightly-used. The people getting the real deal are those buying post-lease vehicles. By buying a slightly used vehicle they avoid the initial depreciation covered by the from-new lease.
- kristiandupont 5y ago
  Here in Denmark at least, there are quite a few car-on-demand services and apps by now. Cars are very (very!) heavily taxed in this country so that makes it hard to say that it indicates a global trend but there is definitely a trend.
- Cloudef 5y ago
  Tesla also is kind of subscription based
- philipov 5y ago
  > But they make no sense at all for durable goods that can last for years without significant upgrades, like cars. Which is why there is a war on durable goods, such as trying to develop viable cloud gaming to replace people's gaming computers with subscription services.
  - pdonis 5y ago
    > Which is why there is a war on durable goods Yes, and that war is not being fought to protect the interests of people generally. It's being fought to protect the interests of businesses that don't want to adapt to changing technology and market conditions. They would rather have planned obsolescence than recognize that some goods really don't need to be "upgraded" very frequently and see those resources allocated into new goods and services that would create more wealth. It would be better in the long run for everyone if that trend were reversed.
  - shreddit 5y ago
    I like these services a lot. I only need a laptop for my daily stuff, but once in a while (once a month?) i want to play a AAA Game. A gaming PC would be a waste of money.
    - pdonis 5y ago
      That doesn't mean you don't want a durable good at all. It means you want a durable good (the daily stuff laptop) plus occasional access to a particular service (playing a game). But many businesses would prefer that you give up the durable good altogether--that instead of your laptop for daily stuff, you entrust all your data and computing capacity to "the cloud" and just access it from your smartphone, which in their model you are basically renting from your phone provider.
  - sofixa 5y ago
    Maybe not everyone wants or can afford a gaming computer? Being able to play any game from a tablet, phone, laptop or TV is very useful. And at the current costs of hardware, and the evolution of hardware requirements, even 2-3 subscription services come out cheaper than building an equivalent gaming rig.
- the-dude 5y ago
  In NL we have subscription based bicycles ( Swapfiets ). Very popular with the youngest generation.
- PicassoCTs 5y ago
  They also make sense for brittle industries, that would disassemble once the market is supplied and then fall apart, loosing all the expertise and would have to reassemble after what is essentially a extended pig cycle. Its also a incredible resilient business model, as proven by the mobs various protection rackets. https://wiki.lspace.org/mediawiki/Firefighters%27_Guild https://wiki.lspace.org/mediawiki/Firefighters%27_Guild
- nickez 5y ago
  I would never own a car. But I suppose I don't want to drive a car that is older than 3 years and I don't enjoy selling used cars. I prefer the freedom I get to just hand the car back after 3 years and don't have to think about it anymore. Also no unexpected service costs and so on.
  - garmaine 5y ago
    That’s exactly how trade-in works at a dealership though.
    - tennisflyi 5y ago
      Then they're both pretty similar then or what?
- starfallg 5y ago
  Leasing can be a very cost effective way to having use of a new car. The trick is to find lease deals when manufacturers are offering heavy discounts to shift volume. This discount is then almost entirely used in the amortisation of your 18,24,36,48 month lease. The residual values are often pretty high compared with the original price minus the discount. This makes the lease payments super low. This may be market specific (I live in the UK) but I have leased Mercs and other premium vehicles paying less than 20% of the vehicles price at new for a 24 month lease. That's unbeatable value no matter how you look at it. The advantage in this case over buying the car with the discount is you don't have to take on any risk on whether the car would sell 2 or 3 years later, nor have the money held up in the car. As interest rates are super low, it makes sense to use that money to invest in something else with higher returns.
- asplake 5y ago
  > But they make no sense at all for durable goods that can last for years without significant upgrades, like cars. It makes complete sense if you see the downsides of ownership outweighing the upsides. You just have to separate the thing, ownership of the thing, and the job that it does. If you derive some value just from owning a car that’s fine, but if its job is to get you from A to B, renting and Uber can both be valid options over buying. The three options aren’t even mutually exclusive!
  - pdonis 5y ago
    > if its job is to get you from A to B, renting and Uber can both be valid options over buying For some people, perhaps. But you give up a lot of flexibility when you give up ownership. It's not just a matter of "the job" the thing does; transportation is not a single "job", it's an enabler for many, many different "jobs". And if you don't own any means of transportation, your ability to do all those things is dependent on some other entity, probably a faceless corporation that does not care whether you can get from A to B or not, it only cares about whether it can make money. Or, in the case of public transportation, a government in which your personal interest is rounding error compared to the powerful interests that influence what the government does. It may seem to you that in your personal situation, services like renting and Uber, or public transportation, are there whenever you need them and trusting that that will always be the case seems like a good deal. But historically, deals like that have a way of going sideways when you least expect it and can least afford it. At the very least, it's a good idea to always have a plan B in mind.
- vivferrari 5y ago
  Subscription will be enabled in all goods because all of them have a software layer today. Like the OS on the phone is updated and adds features to existing hardware the same is possible with all consumer goods. The same is happening with cars and I suppose will happen with your TV and other devices as well. It is a fiscal imperative.
- deleted 5y ago
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- maximus-decimus 5y ago
  I would argue it makes sense in that it creates an incentive to make the product good and durable. If you pay a one time fee and the product is just not great quality but does technically work, well you're stuck with it until you buy a new one. If you only pay when you buy something new, the seller has an incentive to make the object not last long because then you'll need to buy a new one. If you keep paying to rent it, they lose money every time they need to give you a new one because the old one breaks. About the car lease, you're missing the point that you don't pay taxes on the amount of car you're not buying either. It's also offering you a service : you don't have to bother trying to sell the car yourself. Also I would argue the biggest point is a ton of people live paycheck to paycheck and a small fee every month is a lot easier to do for them than a huge amount of money now.
FpUser 5y ago
Wet dreams
Jensson 5y ago
Gaming is ahead here, they thought subscriptions was the future 15 years ago and everyone tried to make subscription games. Then free to play with microtransactions came around and completely turned that on its head, microtransactions generates way more revenue than subscriptions! It might not apply to every field, but it is wrong to say that everything will turn into subscriptions.
- onion2k 5y ago
  Microsoft Gamepass is a subscription for gaming that is very popular. Netflix are building something similar right now. No doubt Sony have their own version in the works too.
  - Jensson 5y ago
    Microsoft Gamepass is tiny, Fortnite alone makes way more money than Gamepass. And you have a lot of popular free to play microtransaction games with scale similar to Gamepass. So at the moment subscription model for games is basically dead, some do it but most of the industry is going where the money is at: microtransactions. There is still demand for non microtransaction games, yes, but that part of the market is still tiny. Microsoft gamepass is them trying to capture a chunk of that part, but likely it will never compete with the microtransaction games.
- elthor89 5y ago
  Some in the gaming industry tried/are trying hard to make Netflix of gaming subscription work. Micro transactions work right now but maybe tomorrow it is subscription based gaming again.
  - Jensson 5y ago
    The difference between movies and games is that popular games become entire entertainment platforms on their own. Fortnites revenue is about 20% of Netflix entire revenue, it would be really hard to convince them to join some subscription service. And the second point, for games using a subscription service isn't cheaper. Fortnite is free to play, most people doesn't pay much so spending all your time in Fortnite and not using those subscriptions is the cheapest option for entertainment.
bullen 5y ago
I agree that computer hardware manufacturers need to either build poor quality (selling you a new light bulb every 1000 hours) or rent things out as peak Moores law unfolds, even if some predict the litho to keep getting smaller (EUV) the CPU performance per watt will not increase, mostly because the architecture can't take advantage of the new transistors and random memory speed has been stuck for 20 years.
- Aeolun 5y ago
  > random memory speed has been stuck for 20 years Isn’t this just because random memory speed has never really been the limiting factor for a lot of things?
  - maximus-decimus 5y ago
    Trying to write fast c++ code is eye opening about how slow ram can be. Adding two number on the cpu is gonna take ~1 ns. Getting the number from ram takes about ~100 ns. If you store your numbers sequentially in memory, you can bulk download them and it isn't so bad. But let's say you used a linked list where everything is store in a different memory location... you're basically gonna take 100 longer to iterate over a linked list than an array and that's entirely because of ram speed. Same thing if you're storing Integer objects into an arraylist in Java or something similar since your array contains pointers and you have to check a new ram location for every number. Facebook wrote their own version of a C++ string to reduce heap use because of this. What I'm saying is you can often get around it for stuff that matters, but a lot of code that wasn't written with that in mind is definitely limited by ram speed. And let's be honest, most people who are not programming in C or C++ don't think about RAM data locality.
- bserge 5y ago
  Or build more shit, which is already happening. A computer in your pocket, a computer in your fridge, a computer on your face (still hate that they insist on that for AR glasses and smartwatches), a computer for your car, a computer for games, a computer for your dog. Oh and you can't swap parts between them or even fix them without professional equipment and training.
rolls-reus 5y ago
I think the Jetbrains model of perpetual fallback licence and renewals for continuous updates beyond the subscription period is the most fair model for both the user and the developer. Wish more companies would adopt this.
- purplecats 5y ago
  I hope its obvious that that's precisely why it won't be adopted. thriving companies aren't made by making fair transactions with users, its by forming parasitic relationships.
- mgreenleaf 5y ago
  I second this. When I saw that they were moving to subscription I was suspicious, but with the fall-back license and discounts for subsequent years' updates, I'm very happy with it. I have the All Products Pack and love it.
breakingcups 5y ago
The title was more intriguing than the article. It seemed a bit incoherent.
nbzso 5y ago
You will own nothing and you will be happy. I am waiting all this to crumble under its own weight. The concept of ownership will not go away. It takes time the masses to realize, but eventually they will realize the truth. And will buy nothing. This ultimately will bring people down to earth and they will revolt. The picture planned by Davos elites and most powerful corporations has one big flaw. There is no way to save corrupt system by pretending that countries can do something for their citizens by some "social" agenda and continue to increase taxation and regulation over small businesses and regular people. Corporations are not paying at all. https://itep.org/55-profitable-corporations-zero-corporate-tax/ https://itep.org/55-profitable-corporations-zero-corporate-t...
- narrator 5y ago
  We'll all just eventually "lay flat" like they do in China now when we figure out that hard work doesn't get one anywhere meaningful. https://www.brookings.edu/techstream/the-lying-flat-movement-standing-in-the-way-of-chinas-innovation-drive/ https://www.brookings.edu/techstream/the-lying-flat-movement...
  - kybernetyk 5y ago
    That’s what happened in communist Poland. When a doctor makes the same amount as a receptionist or a street sweeper the motivation to be a doctor is pretty low.
    - homero 5y ago
      Respect and power are still strong drivers
      - ghuin 5y ago
        Who's going to respect you if you make the same money as a grocery store cashier? Personally I would think you're a sucker. Also what power would you have in a Communist country?
LurkingPenguin 5y ago
> There are still places in the world where getting things is hard; but in most of the developed and developing nations, that is not the case. [*except in America where it seems like getting anything involves a 3-week wait] Except in America? That's a hell of a caveat. Putting that aside, as an American who lives overseas, it all depends on what things you want to get and in many cases, how fast you want them, how much you're you're willing to pay. Things you take for granted in one place can be very difficult to get in another.
CMCDragonkai 5y ago
IMO, appreciating assets should be owned, depreciating consumables should be rented.
delaaxe 5y ago
All subscriptions will eventually be free
hungryforcodes 5y ago
So I'm going to get a subscription to MacDo, just because I want a burger three times a year?
- blowski 5y ago
  I imagine the author would say that you'd get a subscription to Deliveroo, who themselves would have a subscription with McDonalds.
- bserge 5y ago
  Well, it's a great way to make you want it more often :D Why not get a burger, already got a subscription.
blowski 5y ago
Seems like one of those articles that predicts whatever's somewhat true right now, will continue getting ever more true forever. Like the growth of my puppy. I imagine in 100 years, people will look back at articles like this as evidence of the strange time when people didn't own things. But eventually - so will go the article - the disadvantages outweighed the advantages and a new business model (or the recurrence of an old model) came to prevail. Until it too passed.
jonplackett 5y ago
The reason this will happen is NOT because it’s better for the customer (though in some cases it is). If a company is getting a recurring payment they can afford to spend a lot more acquiring a customer because they can compare that with a yearly / lifetime cost. If you’re selling a one off you can’t justify any more than that in your marketing. It becomes an arms race and the subscription companies win out because they get more money from more customers and ultimately use that to make a better product. It’s happened like that with iPhone apps. Remember when you could buy a gif editing app and it didn’t come with an annual subscription? I miss those days.
- ikrw77 5y ago
  I've been using a free, simple workout tracking app which stores data locally for the past 5 years on the same device. I recently recommended it to a friend, only discover it's now subscription/cloud only.
tim333 5y ago
All my life, quite a while, subscriptions have been available. In spite of that I have almost none. I prefer to buy the flat, car, even my phone for cash. It's mostly cheaper and less hassle. I think subscriptions will me available in most businesses but whether consumers will chose them is another matter.
zkmon 5y ago
The transition from "slow-down in working age population" to "subscription model" appears a bit drastic. Both are huge topics, but could be slightly unrelated. Population growth stagnation may not be the major driver for subscription model. It is just a new way to to increase the cost of product and spread the cost in time so that it doesn't hurt the customer. Same as buying stuff on loan. You can buy a car or home with almost zero down payment and keep paying the amount over next 20 years. It is essentially paying for usage. You can call it subscription. Outrageously, I find that even education/training also moved to subscription model. You keep taking the same exam every few years and keep paying them.
A4ET8a8uTh0 5y ago
I read stuff like that and I shake my head. I mean from get go the premise that everything will be subscription based is about as valid as that everything will be digital is just not true. There are things that people will not be willing to subscribe to ( https://www.cnet.com/roadshow/news/car-subscription-service-buying-leasing-explainer/ https://www.cnet.com/roadshow/news/car-subscription-service-... ) and if you see the prices you can immediately tell why. I will admit that I am biased, because I hate the trend Tesla started with making cars more like trial software and I absolutely despite Musk for his role in that, but based on what I saw in my MBA classes, he is certainly not a lone voice. In other words, attempts will be made, but its hardly unavoidable version of the future. I sure as fuck am not paying extra for DRM'd lights in my car.
xg15 5y ago
I honestly don't understand how this makes (macro-) economic sense. The article talks about a situation where there is more supply than demand. We can turn this around and say there is a scarcity of "demand slots", where a demand slots is the willingness of a consumer to make a single purchase. Demand slots are limited, but at least they are "sustainable": If you have a middle class with stable jobs and disposable income, you'll have a fresh supply of demand slots each month for businesses to consume. Subscriptions are not sustainable: There is only a limited number of subscriptions a household with constant income can take. The number of "subscription slots" has a hard limit given by the number of people employed and overall wage levels. They don't renew unless there is significant wage growth. So if businesses want to switch from one-time purchases to subscription models to keep up growth, this new growth will hit limits even sooner. For consumers, it will be a situation where you can either choose to be financially irresponsible - or to subject yourself to a barrage of nag-screens and intentionally worsened service each day, as every company and product you interact will try to upsell you. Also prepare to renounce and abstain from things a lot more consciously as you do today, as you'll constantly have to evaluate which functions of daily life you currently need an which you can tolerate giving up for the moment. "Personal responsibility" is all well and good, but the term rings hollow when half of the economy depends on you making irresponsible decisions.
torgian 5y ago
I hope not.
carlosr2 5y ago
Countries are already (mostly mandatory) subscription based
Kihashi 5y ago
This article did not live up to the promise of its headline. I stopped reading part way through the meandering generalizations (with no references or citations) before I got to the main thesis.
deleted 5y ago
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katsuragi 5y ago
The first part that then seques into the subscription based economy part is pretty shallow and fails to provide much of an argument for the emergence of subscription based services. Imo, it's not very accurate either. European immigrants didn't conquer the US from native americans primarily because of a higher birthrate, it had more to do with firepower. Japan accepts very few immigrants simply because they don't want to, not because of language barriers or lack of a colonial past. And so on.

63 points by vivferrari 5y ago

>> The subscription model was originally conceived by the utility companies that needed to keep providing a service over a prolonged period of time to their customers. The original subscription service was milk which had to be delivered fresh every day No. "16th century Germany also saw subscription-based, handwritten news. Those who subscribed to these publications were generally low-level government officials and also merchants." https://en.wikipedia.org/wiki/History_of_newspaper_publishing https://en.wikipedia.org/wiki/History_of_newspaper_publishin... That is just newspapers. The concept of a per-month or per-year rate for access a service has been a thing since at least ancient Rome.

pdonis 5y ago

Subscriptions make sense for things that you get a regular recurring supply of, like milk and newspapers. They might make sense for things that you can get regular upgrades for, like software (although often the "upgrades" aren't really worth much). But they make no sense at all for durable goods that can last for years without significant upgrades, like cars. The whole point with such goods is that you pay once and you own them for their entire useful life. (Actually, there is a subscription-type business model for cars; it's called "leasing". And the only people who do it are people who can afford to be fleeced. It makes no sense at all for an ordinary car owner. I once had a car dealer try to sell me a lease deal when I was there to pick up a new car. His deal had a larger monthly payment than the loan I already had pre-approved from my credit union, and the residual after 3 years--what I would have to pay then to own the car outright--was more than the balance on the loan would be at that point. I asked the dealer how it could possibly make financial sense for me to take such a deal. He had no answer.)

onion2k 5y ago
How it makes sense is simple - people who lease cars don't pay the final payment. They give the car back and lease a new one. That way they pay a bit more for a few years, but they avoid most of the cost of deprecation that they'd lose if they owned the car at that point. If you plan to buy a car and own it for a long time then leasing is silly. If you plan to keep a car for no more than a few years then leasing is a pretty good option.
- pdonis 5y ago
  > How it makes sense is simple - people who lease cars don't pay the final payment. They give the car back and lease a new one. That way they pay a bit more for a few years, but they avoid most of the cost of deprecation that they'd lose if they owned the car at that point. If you don't plan to keep the car more than the few years you can get with a lease term, then yes, the comparison is different than the one I made, but what might tip the scales in favor of leasing isn't the depreciation cost but what options are (or aren't) available to you for terminating your old loan (which probably won't be paid off at that point) and getting a new one when you either trade in or sell your old car and buy a new one. Another downside of leasing is that, since you don't own the car, there are probably going to be restrictions on how you can treat it and what you can do with it (for example, mileage restrictions). That gets back to the more general issue of the pros and cons of ownership vs. renting, which is relevant for subscription business models more generally.
- sandworm101 5y ago
  >> but they avoid most of the cost of deprecation Except that they don't. The dealer is taking the depreciated car back at the end of the lease. The dealer isn't giving customers a gift by taking the vehicle back at a loss. The lease price covers the entire cost of depreciation over the term of the lease. The customer may avoid seeing the depreciation but they are most definitely paying for it. Worse still, they are coving the most expensive part of total depreciation: the time between new to slightly-used. The people getting the real deal are those buying post-lease vehicles. By buying a slightly used vehicle they avoid the initial depreciation covered by the from-new lease.
kristiandupont 5y ago
Here in Denmark at least, there are quite a few car-on-demand services and apps by now. Cars are very (very!) heavily taxed in this country so that makes it hard to say that it indicates a global trend but there is definitely a trend.
Cloudef 5y ago
Tesla also is kind of subscription based
philipov 5y ago
> But they make no sense at all for durable goods that can last for years without significant upgrades, like cars. Which is why there is a war on durable goods, such as trying to develop viable cloud gaming to replace people's gaming computers with subscription services.
- pdonis 5y ago
  > Which is why there is a war on durable goods Yes, and that war is not being fought to protect the interests of people generally. It's being fought to protect the interests of businesses that don't want to adapt to changing technology and market conditions. They would rather have planned obsolescence than recognize that some goods really don't need to be "upgraded" very frequently and see those resources allocated into new goods and services that would create more wealth. It would be better in the long run for everyone if that trend were reversed.
- shreddit 5y ago
  I like these services a lot. I only need a laptop for my daily stuff, but once in a while (once a month?) i want to play a AAA Game. A gaming PC would be a waste of money.
  - pdonis 5y ago
    That doesn't mean you don't want a durable good at all. It means you want a durable good (the daily stuff laptop) plus occasional access to a particular service (playing a game). But many businesses would prefer that you give up the durable good altogether--that instead of your laptop for daily stuff, you entrust all your data and computing capacity to "the cloud" and just access it from your smartphone, which in their model you are basically renting from your phone provider.
- sofixa 5y ago
  Maybe not everyone wants or can afford a gaming computer? Being able to play any game from a tablet, phone, laptop or TV is very useful. And at the current costs of hardware, and the evolution of hardware requirements, even 2-3 subscription services come out cheaper than building an equivalent gaming rig.
the-dude 5y ago
In NL we have subscription based bicycles ( Swapfiets ). Very popular with the youngest generation.
PicassoCTs 5y ago
They also make sense for brittle industries, that would disassemble once the market is supplied and then fall apart, loosing all the expertise and would have to reassemble after what is essentially a extended pig cycle. Its also a incredible resilient business model, as proven by the mobs various protection rackets. https://wiki.lspace.org/mediawiki/Firefighters%27_Guild https://wiki.lspace.org/mediawiki/Firefighters%27_Guild
nickez 5y ago
I would never own a car. But I suppose I don't want to drive a car that is older than 3 years and I don't enjoy selling used cars. I prefer the freedom I get to just hand the car back after 3 years and don't have to think about it anymore. Also no unexpected service costs and so on.
- garmaine 5y ago
  That’s exactly how trade-in works at a dealership though.
  - tennisflyi 5y ago
    Then they're both pretty similar then or what?
starfallg 5y ago
Leasing can be a very cost effective way to having use of a new car. The trick is to find lease deals when manufacturers are offering heavy discounts to shift volume. This discount is then almost entirely used in the amortisation of your 18,24,36,48 month lease. The residual values are often pretty high compared with the original price minus the discount. This makes the lease payments super low. This may be market specific (I live in the UK) but I have leased Mercs and other premium vehicles paying less than 20% of the vehicles price at new for a 24 month lease. That's unbeatable value no matter how you look at it. The advantage in this case over buying the car with the discount is you don't have to take on any risk on whether the car would sell 2 or 3 years later, nor have the money held up in the car. As interest rates are super low, it makes sense to use that money to invest in something else with higher returns.
asplake 5y ago
> But they make no sense at all for durable goods that can last for years without significant upgrades, like cars. It makes complete sense if you see the downsides of ownership outweighing the upsides. You just have to separate the thing, ownership of the thing, and the job that it does. If you derive some value just from owning a car that’s fine, but if its job is to get you from A to B, renting and Uber can both be valid options over buying. The three options aren’t even mutually exclusive!
- pdonis 5y ago
  > if its job is to get you from A to B, renting and Uber can both be valid options over buying For some people, perhaps. But you give up a lot of flexibility when you give up ownership. It's not just a matter of "the job" the thing does; transportation is not a single "job", it's an enabler for many, many different "jobs". And if you don't own any means of transportation, your ability to do all those things is dependent on some other entity, probably a faceless corporation that does not care whether you can get from A to B or not, it only cares about whether it can make money. Or, in the case of public transportation, a government in which your personal interest is rounding error compared to the powerful interests that influence what the government does. It may seem to you that in your personal situation, services like renting and Uber, or public transportation, are there whenever you need them and trusting that that will always be the case seems like a good deal. But historically, deals like that have a way of going sideways when you least expect it and can least afford it. At the very least, it's a good idea to always have a plan B in mind.
vivferrari 5y ago
Subscription will be enabled in all goods because all of them have a software layer today. Like the OS on the phone is updated and adds features to existing hardware the same is possible with all consumer goods. The same is happening with cars and I suppose will happen with your TV and other devices as well. It is a fiscal imperative.
deleted 5y ago
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maximus-decimus 5y ago
I would argue it makes sense in that it creates an incentive to make the product good and durable. If you pay a one time fee and the product is just not great quality but does technically work, well you're stuck with it until you buy a new one. If you only pay when you buy something new, the seller has an incentive to make the object not last long because then you'll need to buy a new one. If you keep paying to rent it, they lose money every time they need to give you a new one because the old one breaks. About the car lease, you're missing the point that you don't pay taxes on the amount of car you're not buying either. It's also offering you a service : you don't have to bother trying to sell the car yourself. Also I would argue the biggest point is a ton of people live paycheck to paycheck and a small fee every month is a lot easier to do for them than a huge amount of money now.

FpUser 5y ago

Wet dreams

Jensson 5y ago

Gaming is ahead here, they thought subscriptions was the future 15 years ago and everyone tried to make subscription games. Then free to play with microtransactions came around and completely turned that on its head, microtransactions generates way more revenue than subscriptions! It might not apply to every field, but it is wrong to say that everything will turn into subscriptions.

onion2k 5y ago
Microsoft Gamepass is a subscription for gaming that is very popular. Netflix are building something similar right now. No doubt Sony have their own version in the works too.
- Jensson 5y ago
  Microsoft Gamepass is tiny, Fortnite alone makes way more money than Gamepass. And you have a lot of popular free to play microtransaction games with scale similar to Gamepass. So at the moment subscription model for games is basically dead, some do it but most of the industry is going where the money is at: microtransactions. There is still demand for non microtransaction games, yes, but that part of the market is still tiny. Microsoft gamepass is them trying to capture a chunk of that part, but likely it will never compete with the microtransaction games.
elthor89 5y ago
Some in the gaming industry tried/are trying hard to make Netflix of gaming subscription work. Micro transactions work right now but maybe tomorrow it is subscription based gaming again.
- Jensson 5y ago
  The difference between movies and games is that popular games become entire entertainment platforms on their own. Fortnites revenue is about 20% of Netflix entire revenue, it would be really hard to convince them to join some subscription service. And the second point, for games using a subscription service isn't cheaper. Fortnite is free to play, most people doesn't pay much so spending all your time in Fortnite and not using those subscriptions is the cheapest option for entertainment.

bullen 5y ago

I agree that computer hardware manufacturers need to either build poor quality (selling you a new light bulb every 1000 hours) or rent things out as peak Moores law unfolds, even if some predict the litho to keep getting smaller (EUV) the CPU performance per watt will not increase, mostly because the architecture can't take advantage of the new transistors and random memory speed has been stuck for 20 years.

Aeolun 5y ago
> random memory speed has been stuck for 20 years Isn’t this just because random memory speed has never really been the limiting factor for a lot of things?
- maximus-decimus 5y ago
  Trying to write fast c++ code is eye opening about how slow ram can be. Adding two number on the cpu is gonna take ~1 ns. Getting the number from ram takes about ~100 ns. If you store your numbers sequentially in memory, you can bulk download them and it isn't so bad. But let's say you used a linked list where everything is store in a different memory location... you're basically gonna take 100 longer to iterate over a linked list than an array and that's entirely because of ram speed. Same thing if you're storing Integer objects into an arraylist in Java or something similar since your array contains pointers and you have to check a new ram location for every number. Facebook wrote their own version of a C++ string to reduce heap use because of this. What I'm saying is you can often get around it for stuff that matters, but a lot of code that wasn't written with that in mind is definitely limited by ram speed. And let's be honest, most people who are not programming in C or C++ don't think about RAM data locality.
bserge 5y ago
Or build more shit, which is already happening. A computer in your pocket, a computer in your fridge, a computer on your face (still hate that they insist on that for AR glasses and smartwatches), a computer for your car, a computer for games, a computer for your dog. Oh and you can't swap parts between them or even fix them without professional equipment and training.

rolls-reus 5y ago

I think the Jetbrains model of perpetual fallback licence and renewals for continuous updates beyond the subscription period is the most fair model for both the user and the developer. Wish more companies would adopt this.

purplecats 5y ago
I hope its obvious that that's precisely why it won't be adopted. thriving companies aren't made by making fair transactions with users, its by forming parasitic relationships.
mgreenleaf 5y ago
I second this. When I saw that they were moving to subscription I was suspicious, but with the fall-back license and discounts for subsequent years' updates, I'm very happy with it. I have the All Products Pack and love it.

breakingcups 5y ago

The title was more intriguing than the article. It seemed a bit incoherent.

nbzso 5y ago

You will own nothing and you will be happy. I am waiting all this to crumble under its own weight. The concept of ownership will not go away. It takes time the masses to realize, but eventually they will realize the truth. And will buy nothing. This ultimately will bring people down to earth and they will revolt. The picture planned by Davos elites and most powerful corporations has one big flaw. There is no way to save corrupt system by pretending that countries can do something for their citizens by some "social" agenda and continue to increase taxation and regulation over small businesses and regular people. Corporations are not paying at all. https://itep.org/55-profitable-corporations-zero-corporate-tax/ https://itep.org/55-profitable-corporations-zero-corporate-t...

narrator 5y ago
We'll all just eventually "lay flat" like they do in China now when we figure out that hard work doesn't get one anywhere meaningful. https://www.brookings.edu/techstream/the-lying-flat-movement-standing-in-the-way-of-chinas-innovation-drive/ https://www.brookings.edu/techstream/the-lying-flat-movement...
- kybernetyk 5y ago
  That’s what happened in communist Poland. When a doctor makes the same amount as a receptionist or a street sweeper the motivation to be a doctor is pretty low.
  - homero 5y ago
    Respect and power are still strong drivers
    - ghuin 5y ago
      Who's going to respect you if you make the same money as a grocery store cashier? Personally I would think you're a sucker. Also what power would you have in a Communist country?

LurkingPenguin 5y ago

> There are still places in the world where getting things is hard; but in most of the developed and developing nations, that is not the case. [*except in America where it seems like getting anything involves a 3-week wait] Except in America? That's a hell of a caveat. Putting that aside, as an American who lives overseas, it all depends on what things you want to get and in many cases, how fast you want them, how much you're you're willing to pay. Things you take for granted in one place can be very difficult to get in another.

CMCDragonkai 5y ago

IMO, appreciating assets should be owned, depreciating consumables should be rented.

delaaxe 5y ago

All subscriptions will eventually be free

hungryforcodes 5y ago

So I'm going to get a subscription to MacDo, just because I want a burger three times a year?

blowski 5y ago
I imagine the author would say that you'd get a subscription to Deliveroo, who themselves would have a subscription with McDonalds.
bserge 5y ago
Well, it's a great way to make you want it more often :D Why not get a burger, already got a subscription.

blowski 5y ago

Seems like one of those articles that predicts whatever's somewhat true right now, will continue getting ever more true forever. Like the growth of my puppy. I imagine in 100 years, people will look back at articles like this as evidence of the strange time when people didn't own things. But eventually - so will go the article - the disadvantages outweighed the advantages and a new business model (or the recurrence of an old model) came to prevail. Until it too passed.

jonplackett 5y ago

The reason this will happen is NOT because it’s better for the customer (though in some cases it is). If a company is getting a recurring payment they can afford to spend a lot more acquiring a customer because they can compare that with a yearly / lifetime cost. If you’re selling a one off you can’t justify any more than that in your marketing. It becomes an arms race and the subscription companies win out because they get more money from more customers and ultimately use that to make a better product. It’s happened like that with iPhone apps. Remember when you could buy a gif editing app and it didn’t come with an annual subscription? I miss those days.

ikrw77 5y ago
I've been using a free, simple workout tracking app which stores data locally for the past 5 years on the same device. I recently recommended it to a friend, only discover it's now subscription/cloud only.

tim333 5y ago

All my life, quite a while, subscriptions have been available. In spite of that I have almost none. I prefer to buy the flat, car, even my phone for cash. It's mostly cheaper and less hassle. I think subscriptions will me available in most businesses but whether consumers will chose them is another matter.

zkmon 5y ago

The transition from "slow-down in working age population" to "subscription model" appears a bit drastic. Both are huge topics, but could be slightly unrelated. Population growth stagnation may not be the major driver for subscription model. It is just a new way to to increase the cost of product and spread the cost in time so that it doesn't hurt the customer. Same as buying stuff on loan. You can buy a car or home with almost zero down payment and keep paying the amount over next 20 years. It is essentially paying for usage. You can call it subscription. Outrageously, I find that even education/training also moved to subscription model. You keep taking the same exam every few years and keep paying them.

A4ET8a8uTh0 5y ago

I read stuff like that and I shake my head. I mean from get go the premise that everything will be subscription based is about as valid as that everything will be digital is just not true. There are things that people will not be willing to subscribe to ( https://www.cnet.com/roadshow/news/car-subscription-service-buying-leasing-explainer/ https://www.cnet.com/roadshow/news/car-subscription-service-... ) and if you see the prices you can immediately tell why. I will admit that I am biased, because I hate the trend Tesla started with making cars more like trial software and I absolutely despite Musk for his role in that, but based on what I saw in my MBA classes, he is certainly not a lone voice. In other words, attempts will be made, but its hardly unavoidable version of the future. I sure as fuck am not paying extra for DRM'd lights in my car.

xg15 5y ago

I honestly don't understand how this makes (macro-) economic sense. The article talks about a situation where there is more supply than demand. We can turn this around and say there is a scarcity of "demand slots", where a demand slots is the willingness of a consumer to make a single purchase. Demand slots are limited, but at least they are "sustainable": If you have a middle class with stable jobs and disposable income, you'll have a fresh supply of demand slots each month for businesses to consume. Subscriptions are not sustainable: There is only a limited number of subscriptions a household with constant income can take. The number of "subscription slots" has a hard limit given by the number of people employed and overall wage levels. They don't renew unless there is significant wage growth. So if businesses want to switch from one-time purchases to subscription models to keep up growth, this new growth will hit limits even sooner. For consumers, it will be a situation where you can either choose to be financially irresponsible - or to subject yourself to a barrage of nag-screens and intentionally worsened service each day, as every company and product you interact will try to upsell you. Also prepare to renounce and abstain from things a lot more consciously as you do today, as you'll constantly have to evaluate which functions of daily life you currently need an which you can tolerate giving up for the moment. "Personal responsibility" is all well and good, but the term rings hollow when half of the economy depends on you making irresponsible decisions.

torgian 5y ago

I hope not.

carlosr2 5y ago

Countries are already (mostly mandatory) subscription based

Kihashi 5y ago

This article did not live up to the promise of its headline. I stopped reading part way through the meandering generalizations (with no references or citations) before I got to the main thesis.

deleted 5y ago

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katsuragi 5y ago

The first part that then seques into the subscription based economy part is pretty shallow and fails to provide much of an argument for the emergence of subscription based services. Imo, it's not very accurate either. European immigrants didn't conquer the US from native americans primarily because of a higher birthrate, it had more to do with firepower. Japan accepts very few immigrants simply because they don't want to, not because of language barriers or lack of a colonial past. And so on.