Fed up with everything being a Subscription? Maybe it's time for regulation?
With the number of software and service subscriptions at an all-time high, and the loathing of software subscriptions even higher, maybe it’s time for governments to admit that there is a serious problem here. Companies will continue to push the envelope of what is acceptable, using increasingly sophisticated ways to lock in customers into unfriendly models. They will never regulate themselves, so maybe it’s time to consider legislation to address the issue. I’m not talking about banning subscriptions or anything, but rather regulating them so that they are a little more consumer-friendly, and a little less corporate-evil.
In the beginning, even though many people were against the idea of renting software, there were some aspects you could see as net positives. They did offer a lower entry price for people to access certain software packages than would otherwise have been feasible. When Adobe went subscription-only, despite all the pushback, it did offer a way to access its full software suite that many would have found difficult. The price was initially around €50 per month, but the full package cost more like €2500. Annual upgrades were around €1000, so it wasn’t entirely a terrible deal.
Unfortunately, any silver lining is long tarnished. Now that everything is a subscription, people are often shelling out hundreds or even thousands a month for software. And companies are constantly jacking up prices, killing products or changing their terms and conditions. Any sense of a user/developer balance has pretty much gone at this point. Now everything feels like you’re trapped in a corporate contract, whose sole purpose is to maximise shareholder returns and the user or even the product is now mostly an afterthought.
This has been getting even worse now that AI has entered the equation. The rush to make everything be about AI has pushed companies to do things that are, in many cases, against not only their interests, but also those of their shareholders and customers. Companies are funnelling money into bolting AI onto software regardless of whether it works or not. They just have to be able to say they have some AI strategy. Debt is being racked up on the promise that, at some point, this “transformative technology” will actually transform. And customers are the ones getting the most screwed.
The idea of the market sorting this out now seems a far-fetched dream, as no one is going to rock the boat now that they realise that subscriptions are the way to lock in customers and make the most money. While it may be the case that small companies are now dependent on subscriptions to even survive, I’m not sure if you can make that case for big corporations. Regardless, it seems unlikely that companies will suddenly get an infusion of moral clarity and reverse course.
So perhaps it’s time for this unchecked free-for-all to be, you know, checked. I get that some people out there are fundamentally opposed to any legislation, but something has to be done.
Humble beginnings and false starts
There have been some moves in the right direction. In the United States, under the Biden administration, the FTC was supposed to implement a rule to make cancelling subscriptions easier, but it was buried in legal challenges and is currently in limbo. It’s unclear if this will ever proceed (I did my best to research this, but couldn’t get a definitive answer to whether or not this is dead.)
The Digital Services Act in the EU includes provisions on subscriptions, but they are fairly weak and buried in bureaucratic language. For example, you can’t make cancelling a subscription harder than signing up for one. Stronger terms are currently being considered, but these are still not strong enough, in my opinion.
What is actually needed
So, what should be considered, then? I’m sure some people reading this want subscriptions banned outright, but that seems unlikely at this point. I will attempt to strike a balance with my suggestions here. Likewise, I’m by no means a legal expert, so I can’t say if any of these suggestions would be even enforceable or legal, but I do think it’s a fair compromise to protect consumers.
So, what follows are four suggestions for how to rein in the runaway subscription banditry. I don’t think any of these should be overly difficult to implement or overly onerous on companies. I’m also sure that if some of these were considered, the companies in question would push back massively.
Ban Monthly Pricing for Annual Subscriptions
This is something I’m sure everyone has come across at one point or another, and it drives me mad. When you go to sign up for a subscription, either to a product or a service, they give you the price of an annual plan but display it as “per month” pricing. This is totally misleading, as it’s not an actual monthly fee; it’s an annual fee. Often, the actual monthly price for a subscription is buried somewhere and is usually much pricier.
Now, to be fair, this has improved in recent years, and most places now at least display the actual yearly price in brackets beside the monthly price of said annual subscription. But not everyone. This may be because of the transparency clause in the DSA, although I’m not sure on that. In my opinion, this is not enough. They should display the actual annual fee as the price, making it the most prominently displayed. If they still want to display how this compares to the monthly price, then fine, have that the one in small print and in brackets. Regardless, the actual annual cost should be the one displayed prominently.
I know that this was standard practice for a long time, but I never understood it. It always seemed kind of scammy, and in my opinion, if you have to be this duplicitous about your pricing, it should be an immediate red flag about your actual services.
Regulate Minimum terms and cancellation fees
This is the one that Adobe got into the most actual trouble for. It still somehow gets away with it, mind you, by being marginally more transparent about it. It’s when a company offers a monthly subscription, but you have to sign up for a minimum subscription length, usually a year. This kind of thing was the typical mobile phone contract model, where you have to sign up for a two-year contract or something like that. In the case of mobile phones, though, you’re actually paying for the cost of the phone, and after the period, you get to keep the phone. With software subscriptions, there isn’t really a legitimate reason to enforce minimum contract terms like Adobe does. I do understand that some companies need a long-term commitment to break even, but if that’s the case, they should just offer only annual subscriptions and be done with it. The whole thing of offering monthly subscriptions, but you have to sign up for a year, is confusing, and again, kind of scammy. This is especially true when they hide the fact that you can get charged a massive fee if you cancel early.
There have been some moves on this, at least in terms of transparency, but I think they should ban this practice outright. Much of this is down to the fact that many companies know people won’t pay subscription prices if they see the full annual fee, yet they still need revenue to make a profit (or a large enough one to appease shareholders). But again, if you have to deceive or trick your customers, isn’t that a bigger issue with your business model? I don’t know if there’s some kind of compromise to be had here, perhaps by capping the cancellation fees, but either way, this is one of the most egregious practices by companies selling software subscriptions.
After a set time, you get to keep the last version of the software
Another thing that really ticks people off about all software moving to subscriptions is the need to keep paying for it, indefinitely. Even when companies stop updating the software or providing any meaningful new features, you have to keep paying. In some cases, people pay just to access files. In the good old days, before the proliferation of subscription software, you could skip a version or not update, and your software would still work. If a new version of an application didn’t offer any new features that you needed, you didn’t have to pay for the upgrade. You would still own the licence to use the software. This put the onus on companies to actually make upgrades worth paying for.
With subscriptions, you have to keep paying, even if you’ve paid more than the perpetual licence version of the software would ever cost. This is why people feel trapped. If you require said software for your job, and you don’t really have any alternatives, you are completely at a company’s mercy. You can’t cancel your subscription because you need access to your files, and you can’t “not pay for the upgrade” to express your dissatisfaction. The customer-developer relationship has become entirely skewed toward the developer.
To combat this and reset the balance a little, companies should allow you to keep the last working version of the software after you’ve paid for it for a set period. So, if you’ve subscribed to a software for three years, for example, and this is more than the cost of the software would have been, then if you cancel the last version you installed, it should keep working. It should effectively revert to a perpetual licence. Now, of all the suggestions here, I suspect this is the one that companies would fight the most.
Interestingly, there is one company that I know of that does this. Capture One offers a perpetual licence for free if you’ve subscribed for 5 years and then cancel. Before that, they offer discounts on their perpetual software depending on how long you’ve subscribed. I think something like this should be mandatory.
Make time-outs a mandatory option
Another thing about subscriptions is that they don’t really take into account of individuals or companies having cash flow issues. If you are a creative, this can be especially true, as the creative industry tends to ebb and flow with the seasons. Sometimes, having to continue paying for subscriptions, even when you might not need the application for a period, can be especially frustrating for people. What should be offered is the ability to “pause” a subscription.
This is especially true in situations with minimum terms; should banning that not be an option? You should be able to pause your subscription for a number of months without losing any long-term benefits or having to pay any fees. So, for example, you don’t lose any files that might be stored in the cloud and so on.
I know of some online services that already offer this option. Epidemic sound is one example. I think it would be beneficial if this were applied to software, so that you could at least open and save or export files during a paused subscription, but you just couldn’t use any other functions of the software. Obviously, you wouldn’t want to go into too many specifics, or this would be a bureaucratic nightmare, but it should be made an option. In the EU, companies must give you a 14-day grace period after you subscribe. I would consider this to be something along the same lines. Companies would have to offer a number of months’ time-out in a subscription.
Of course, this would be less of an issue if minimum terms were banned, as you could just cancel and renew. However, you would want to do so in a way that doesn’t lose any connected files, account settings and so on.
Conclusion
I realise that most of what I’ve written here is pretty much a fantasy, even if it is a reasoned one. Corporations have such dominance now that they’re pretty much calling the shots. And they’ve been using the threat of AI being some sort of mysterious force that will take over the world unless they’re allowed to continue unrestricted, as a threat to avoid any kind of legislation. For all the faults of the EU overreaching with some of their big laws, at least they’re doing something. Unfortunately, many of the big legislative projects, which start out as good ideas, tend to overreach and get buried in complex bureaucracy.
Reining in subscriptions doesn’t have to be overreach, though. A few simple steps like those outlined above could really help tilt the balance back a little towards the consumer. I’m sure many people would like to do a lot more, but I’m trying to be realistic here. Even if the very idea of regulating seems unrealistic in itself. But who knows, maybe some company will make a killing by reverting to perpetual licences, and everyone will jump back. One can dream, right?
Originally posted on my Designtography blog as a member only story
