Technology has not only transformed the way we live, but it has also upended the business models through which we access and pay for this technology. Two decades ago, buying software typically came via purchasing a license - such as Microsoft Office. This purchase involved granting clients access to the full suite of functionality indefinitely. This all-or-nothing high-cost purchase decision saw either the loss of potential customers who did not want to pay the full price for a license, or clients overpaying when they only needed certain features. Hence, the development of tiered product offerings was logical for both the developers and consumers. Creating products that were the right fit, also helped to reduce instances of software piracy.
Our Addiction to Subscriptions
The rise of high-speed internet and ubiquitous cloud computing meant software could be downloaded faster and more affordably anywhere in the world. Consequently, the software delivery model shifted from purchasing a perpetual license to a monthly subscription fee. This change was welcomed by large software firms and their investors due to the steady revenue stream it generated.
Customers were initially attracted by entry-level prices and later encouraged to upgrade as they became accustomed to the product and required additional features. However, egregiously, companies have been caught changing the 'terms of sale’ to introduce subscription requirements after customers have made their purchase. Alternatively, companies can increase subscription amounts to respond to inflation and also the need for higher profit margins. Thus, the subscription economy emerged. We found ourselves subscribing to not just a few, but dozens of services, with free trials sucking us in or monthly fees so trivial—often just 99 cents per week—that we scarcely give it a second thought. We even used technology to subscribe to food delivery services and how we managed our health.
Moreover, with billing integrated into our smartphones via the Apple Store or Google Play Store, entering credit card details became unnecessary. A single tap could lead to numerous ongoing financial commitments, while unsubscribing could take 7-8 clicks. The subscription process was intentionally made effortless, while the cancellation process was made cumbersome, resulting in an accumulation of monthly charges that often went unnoticed. We subscribed to almost everything: Netflix, Spotify, Kayo, Audible, in-game credits, Roblox credits, Microsoft 365 and Live, Adobe products, Google Drive storage, various App extensions, LinkedIn Premium, YouTube Premium, eBay Plus, Amazon Prime, Stan, Disney+ etc. Our smart TV alone has so many subscription services that we a new business model - Hubbl - was created just to simplify all our streaming subscriptions services into a single television subscription service.
Software Eats Hardware
However, software has now enabled hardware products to transition to the subscription model as well. Instead of manufacturers settling for a one-time payment at the point of sale, they can now turn items like laptops, smartphones, scooters, cars, tractors, or household appliances into ongoing revenue streams. The profitability of this approach has been facilitated by the convergence of the internet of things. Products that incorporate software and internet sensors, can now take advantage of being rented rather than purchased. Devices that were once bought for ownership are now acquired through both a purchase price plus subscription services. Failure to subscribe renders the product useless. This strategy is known as 'Planned Obselence'.
Despite the positive aspects of the subscription model, such as the concept of 'only pay for what you use', it has also brought about negative consequences, including hidden price gouging by corporations. Companies have shifted their product operations towards 'contingent services', which means the product will only continue to work if the customer pays for specific updates. In-built diagnostics can enforce an upgrade or maintenance schedule as determined by the manufacturer. If the customer does not pay, the product is remotely shut down. Whether these intervention sequences are necessary or simply financially beneficial for the manufacturer is up for debate. Regardless, parameters are hard coded into the purchase and customers are now an ongoing revenue stream if they wish to keep using the product they had bought. This model was often brought in by stealth and without considering the consumer's best interests.
John Deere and Apple
There are some dark sides to the subscription model. Consider the case of John Deere. When a farmer purchases a tractor, they expect to use it for their agricultural needs. In the past, if something broke down, the farmer, who usually had a range of skills, could repair it themselves. However, with the growth of software-enabled tractors, John Deere now mandates that only their authorized technicians can travel to the farm to carry out repairs. The farmer is then burdened with the high hourly rate and travel expenses of the technician, all while being unable to use the tractor until the repair is completed. This results in higher profit margins for the manufacturer, lower margins for the farmer, and higher food costs for the rest of us.
This costly and inefficient situation is not exclusive to the agricultural industry. Many of us have likely experienced issues with our smartphones, such as sudden battery deterioration or screen damage. Replacing a battery or screen should not be a costly endeavor when these parts are readily available and replaceable as standalone units by ourselves or 3rd party repairers. Unfortunately, attempts by consumers to repair or replace such components on their purchased products have been hindered. ABC news reports that Apple deliberately designs its iPhones to have shorter lifespans. Furthermore, Apple codes its products to be unable to be repaired unless they are geo-located within an Apple Genius Bar. Again, this move boosts the share prices of large organisations, at the expense of the consumer and the environment.
The Moral Imperative of the Right to Repair Movement
Both of these cases illustrate how increased software integration into hardware products is forcing consumers to pay twice - often in unethical ways. Louis Rossmann, a New York computer store owner and YouTuber, has been a vocal proponent of enacting Right to Repair legislation. He has pushed for law changes in various US state to safeguard consumers who buy products from unjust corporate practices. Rossmann argues that greedy corporations are preventing consumers from fully 'owning' the products they acquire.
Australia has its own Right to Repair movement. In 2021, the ACCC welcomed changes which allowed consumers to select the motor vehicle servicing professional of their choice. But Australia needs to pick up the pace on reining in these exploitative practices. While subscription models have their place, regulation needs to ensure transparency in purchase contracts and that companies are not deliberately disabling products before the end of their natural life. By addressing these issues, we can prolong the useful lifespan of our purchases and consequently reduce unnecessary waste in landfills. Less waste is beneficial for the environment and will also ease the 'Cost of Living' crisis. Clean Up Australia is a key advocate for the Right to Repair and the ACS Foundation also supports the movement.
The ACS Foundation is a not-for-profit technology organisation established to the benefit Australia's future through technology. We provide advocacy, scholarships and experiences that benefit Australia's next generation of technology professionals.
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