With streaming services, study aids and online subscriptions, consumers are overwhelmed by rising costs. Many feel that corporations only have one goal—profit.
A subscription structure is an effective model as it generates recurring cash flow and a loyal customer base. The structure rids of the ‘pain of paying’ as one doesn’t physically swipe their card or hand in cash. Consumers sign-up for many subscriptions and free-trial memberships and forget to cancel, which exacerbates the costs. As a result, the average American pays $273 in subscriptions monthly.
This poses a grave financial risk, especially to college students. Companies offer decreased prices for study aids and streaming platforms to entice students to pay for their platforms on top of college costs. This decreases the financial pain of paying for these services, but the prices quickly add up.
For instance, music streaming service Spotify now offers a $5.99 monthly college student plan as opposed to the typical $9.99 per month. Yearly, a student would still be paying $72.00 a year on that subscription alone.
As these subscriptions appear on monthly statements, it can overwhelm the consumer. This phenomenon—subscription fatigue—allows for the accumulation of small monthly fees to avoid the annoyance of multi-step cancellation procedures.
The use of free trials feeds into this problem as users either become too overwhelmed by their subscriptions to notice when a free trial has finished or become attached to the service within the free trial period.
Spanish teacher and reality television fan Stephanie Risius reflected on her experience with free trials: “They can be frustrating. I usually catch when the free trial has ended for something I have a subscription for because I receive an email telling me the subscription renewed, so I have caught all of those after that renewed month,” said Risius.
The prices of these subscriptions are also rising. In recent years, Quizlet, a popular study tool, has made many of its most effective features available at a monthly cost. Quizlet Plus offers these features at $8.99 per month for students and $36.00 per year for teachers. This price renews automatically each year, so if students and teachers are not regularly checking their bank statements, they could pay this price without realizing it.
Risius uses Quizlet and Edpuzzle to provide students more practice opportunities outside of the classroom. However, she understands the implications of the increased price in Quizlet and Edpuzzle after the COVID-19 spike.
“Quizlet and Edpuzzle were free during COVID to lure us in, and then afterwards became paid. We are lucky in that the school pays for our teacher plus subscription for Quizlet. Otherwise, we would struggle with providing these opportunities for our students,” Risius noted.
Streaming platforms have also seen an influx in price. Netflix adopted a common plan used by other streaming platforms: options with and without advertisements. Some may believe Netflix is lowering prices for customers, but their basic plan without advertisements was $9.99 until Summer 2023, but now costs $15.49, a $5.50 increase in price.
Streaming services were initially seen as a more affordable alternative to cable, but now, streaming services are separate payments, quickly adding up past the cost of cable. Many streaming platforms now produce original films and shows or purchase the rights to the show or film.
Netflix has not only significantly increased their prices, but also started releasing their popular television series in two parts. This forces consumers who only want to subscribe for the month of the series release to have to pay for two or three months before canceling.
Swetha Narmeta noted Netflix’s two-part series may diminish viewer interest. “People that aren’t invested in these shows may not even watch the second part. I’m normally someone that doesn’t get too invested in shows and only have small periods of time in which I actually binge-watch. These spaced-apart release dates don’t really help with that,” Narmeta said.
Subscriber exhaustion reached the Federal Trade Commission (FTC) during an informal hearing in 2023. This proposal would pose a $50,000 fine per violation of their “Click to Cancel” rule and allow for customers to seek redress. Despite a formal hearing in January 2024, the FTC has not successfully passed legislation.
The lack of success of this proposal should raise concerns from consumers as legal action could resolve the mental and fiscal drain of these subscription companies.
