And what does the author think the alternative is? He mentions the collapse of advertising, so they clearly don't think that ad-supported models are the way of the future.
I am completely unconvinced. The fact that the "average/median" income from these models is low is completely unsurprisng. We should expect that the vast majority of the income would go to the very top performers. This is not an indication that subscription doesn't work, just that it's going to end up looking like acting, music, and professional sports. Those are all real careers that have persisted for a very long time where the "average" wage is extremely low.
This article does a bad job clearly stating what the author thinks the problem is (just vaguely gesturing at average wages without explaining why that should matter), doesn't suggest an alternative at all and instead seems to snidely be sniping at non-mainstream journalists and creators.
Years ago I subscribed to a daily newspaper (still subscribe to a weekly news magazine), I subscribed to insurance for my car, home, etc - still do. I subscribed to cable tv, I subscribed to my phone line, I subscribed to my apartment by paying rent, I subscribed to a transport service by paying for a season ticket. As recently as 5 years ago I subscribed to a milk and bread service.
Subscriptions are nothing new. Those subscriptions (short of cable tv) would be nothing unusual 100 years ago.
His examples of beer and cinema are odd as I current consume both, neither through a subscription, however mail order wine clubs date back 100 years.
What is new is the subscription to things you already own, the “heated seat” debacle for example.
>What is new is the subscription to things you already own, the “heated seat” debacle for example.
Enabling additional functionality (or limiting it) for hardware you've already purchased isn't unheard of in business products--including computers--where the unit margins support it. But consumer unit margins are usually thinner and most consumers don't really accept it as a "fair" practice.
Heated seat subscriptions are bad because by not paying for them, the heated seats are objectively costing you. You are paying for extra weight, streets are paying for extra weight, materials are extra mined and produced so the environment is paying for extra weight. Etc.
It is directly and indirectly objectively negative for you to have heated seats that you don’t want and are not subscribed for.
I doubt that's anyone's complaint. It's more likely they'd have been annoyed to have had crippled seats in a car they'd bought and have to pay an on-going fee for no reason beyond greed. There are no other on-costs for manufacturers unlike other subscription-based products.
Yup and that's not something new either -- it's been pretty standard practice for many decades. But similarly "controversial" from the start for consumers (while basically a non-issue for corporate customers).
I worked for a long ago minicomputer company that sold a scaled-down version of their first SMP system in 3 flavors--and the only difference was microcode that throttled the performance of two of the models.
And when I was an analyst, many people were always surprised to hear all the games that IBM played with mainframes (and to a lesser degree with POWER servers) to sell you the same compute capacity that was cheaper when only used for certain workloads (like Linux) or that was inaccessible until activated "on demand."
IBM is a well known rent seeking megacorporation. That shouldn’t mean that it is OK to do this. Now they are selling open source software with per CPU licensing, but want to prevent others to sell the same software. This should not be accepted by the society.
I doubt subscriptions will entirely go away, but maybe some of them will. Things like software as a service often don't make sense to me. It seems like companies who used to make software and sold it as a complete package realized that people aren't going to consistently buy their software again if what they have is working for their needs. So now instead of writing software and selling it they have to constantly justify their continued existence by making ever-increasingly niche changes and persuading people that they need the update. This seems unsustainable to me.
That leaves out a lot of the story. Those purchased packages often went out of date after a couple years, I remember being stuck on a different version of omnigraffle than other people I worked with because it was a pain to go through procurement to buy a new version. This was a giant headache.
There are also new truly useful features that people have come to expect that doesn’t work well with packaged software. Online collaboration, syncing across devices, etc.
for mobile, sure. IOS and Android moved fast and odds are software you buy 5 years ago simply won't work if not maintained. Because that's a design choice of the mobile OS.
Meanwhile, Windows and Linux focused a lot on backwards compatibility. Not perfect, but you can trust that 99% of software from Windows XP onward will work on Windows 11 with zero tweaking. Microsoft Word '00 and Adobe's CS1 suite (2003) were complete packages sold at a single cost and should still do their job in 2023.
>There are also new truly useful features that people have come to expect that doesn’t work well with packaged software. Online collaboration, syncing across devices, etc.
That is one fair point. Featues that require upkeep of a server make sense to monetize as a subscription.
>Software is never really finished
Tell that to my grandmother’s rock solid install of MS Word 2010 that she still uses. It’s okay for businesses to want more money, but people didn’t forget how reliable software was just 10-12 years ago.
> Software is never really finished and often has to be hosted and maintained on an ongoing basis.
I have no problem paying for updates, as long as the product would keep working without an active subscription (what happens if there’s no connectivity, servers are down, the provider goes bakrupt or change its terms?)
That is one great thing about how Jetbrains monetizes. You "subscribe" for a year of some IDE and after a year's worth of subscriptions you keep the 20xx version that you subscribed to. So you can use 20xx as a standalone or subscribe so that you get updates for 20xx + 1.
It really varies. (And obviously the dollar amounts matter.)
Subscribe to software that is an ongoing part of my regular workflow(s) and is regularly being enhanced? I'm mostly OK with a subscription to that--see Lightroom/Photoshop for me.
Subscribe to some utility I maybe pull out for a task once a year? Nope.
I think thats because you are looking at the poor performers; the real goal is finding a way to turn your product into a service (and thus ongoing purchases) because doing it well becomes a license to print money. Doing it poorly becomes more like wheedling or strong arming.
The reality and hard truth of the matter is that not everything needs to be a service, but capitalistic structures will try and force everything to pursue that model. The reward for such kinds of products should be that you gain trust for the next product launch that you also sell as a lump cost.
But I guess Pandora's Box was long opened on that.
A lot of software business models may have been overly influenced by interest rates the last few years.
At a low interest rate, the time value of capital is low - a company can defer revenue almost indefinitely with minimal cost. Hence, a subscription business like SalesForce can spend handsomely on onboarding, and expect to make money back over the course of 5-10 years. To a certain extent, the same applies to ad supported business models.
If interest rates are higher, then a lump sum upfront payment may be a better bet. This may effect how software is written as well as how it is purchased.
Or we'll just see a steady increase in subscription costs.
Right. Isn't this just the Pareto distribution at play, which seems to be in effect in all domains of creative human production? In any particular field, roughly 20% of individuals achieve 80% of the results or success in that field. The author hasn't demonstrated this is unique to writing. None of this is to say the author is incorrect about the current subscription model in writing being unsustainable (I don't know if it is or isn't, though I suspect it's not), just noting what I think is missing from their argument.
What's worse is that the author fails to acknowledge is that these writers have the opportunity to cater towards niches and global communities. There are vast, global audiences who would definitely pay for content and commentary from people who represent them and their interests.
Moreover, online creators don't always have one source of revenue. This practice is employed widely by YouTubers: they supplement their ad revenue with merch, patreon, Twitch streaming, and so on.
The average earnings on a single platform mean absolutely nothing.
> It is an idyllic, almost utopian, perspective. There is an imagined logic at play, entirely divorced from reality. In the world where Substack were an expeditious route to “more people” being able to “make a good and profitable career out of writing”, we would also live in a world where you bought your lamp chops from a butcher, your baguette from a bakery, your stilton from a cheesemonger and your wine from a vintner, rather than just everything from a supermarket.
What an incredibly odd quote. I do buy my lamb* chops from a butcher, bread from a bakery, cheese from a cheesemonger and I don't drink wine but I buy beer from a brewery. I don't live in an "idyllic utopia", this is normal.
Congratulations. It took you some time, but you finally figured what most of us have discovered a lot of time ago: we are rich by any objective standard when compared to most of the population
Huh? My butcher sells meat cheaper than the supermarket. The bakery is about the same price unless you only buy total garbage bread. Breweries sell their beer cheaper than supermarkets sell the same brand.
>This article does a bad job clearly stating what the author thinks the problem is (just vaguely gesturing at average wages without explaining why that should matter)
I mean, it should matter. if you can't make a profit off a subscription, you don't do business. Hence, the "end of the subscription era"
>This is not an indication that subscription doesn't work, just that it's going to end up looking like acting, music, and professional sports. Those are all real careers that have persisted for a very long time where the "average" wage is extremely low.
it was low but still livable. The bigger problem is that minimmum wage itself isn't a living wage anymore, and subcriptions aren't even close to meeting that anymore. This may not matter to hobbyists, but if you ever had hope of high quality content then you're going to end up in a desert. Or fixated on professional organizations who have negative incentive to properly deliver that content.
Some credits based system where you purchase hours or articles and if your account has a rebuy threshold, it auto charges you. The rebuy would be opt-in.
How is this not a thing yet? If I could pay a tiny amount per article on Medium that I currently can’t read, I totally would. Surely there’s a system for these micropayments? Why hasn’t it taken off?
"Markets can remain irrational longer than you can remain solvent."
While I think the author does a good job pointing out how unsustainable this business model is, predicting the end of the subscription model seems a large leap. Given that the author doesn't frame the discussion with a solid prediction, this article comes across as a "it doesn't make sense to me" rant with a little bit of embellishment to predict a downfall at some unstated time in the future.
Right. The fact that only a tiny few earn enough to live off hasn't stopped the music and book industries from existing well before subscriptions were a thing. The article is a collection of observations and numbers with no interesting conclusion.
As Nicholas Nassim Taleb would, maybe, speculatively, put it: highs school statistics teaching based on normal distributions claims another victim.
The writers constantly writes about averages. Digital economies almost always follow heavy tailed power law distributions for which the mean is a completely worthless statistic.
The top 100 or whatever creators in any market are clearly making it work nicely. The rest of the chumps are merely trying the market. How the game works is: you invest person time/money to try something. If it catches (which it almost surely will not), you will do very very well. If it doesn't, you go do something else. It's akin to playing the lottery, but maybe with a bit higher odds at succeeding.
More people will never make a profitable career out of writing simply because there aren't any more readers to read all the stuff that's being written. If the top 1000 or so writers can approximately satisfy the reading needs of all the people in the world, the rest of the writers are not needed and they will not make any money no matter what monetization system is being utilized.
I don't think the comparison between the NYT and substacks or podcasts is apt, because the NYT is a NEWSpaper. Does it contain opinion columns? Yes, among countless other columns. But the fundamental purpose of the NYT is not just opinion. Whereas substacks and podcasts appear to be mostly opinion pieces. You don't often have news broken on them.
What substacks and podcasts have shown is that some "thought leaders" can make a massively lucrative living independent from the newspapers, and more than they could make with the newspapers. But none of this applies to writers of news. News writers still need the news organizations, and the subscribers of the newspapers, to support them.
The author talks about "writers" in general without making that crucial distinction. Hard news writing is mostly a thankless job. It rarely provides the opportunity to build a "personal brand" like opinion writing does, unless you're Woodward and Bernstein breaking Watergate. Even someone like Glenn Greenwald, who has broken some huge stories like Snowden, makes most of his money from spouting his opinions online rather than from breaking hard news.
Does the distinction matter as a business if opinions are making the most money? Hard news can simply be the way to draw in readers that are later sustained by opinions, so it's just a subsidy for the real money maker. Buzzfeed actually worked (works?) this way.
My intuition is that it's not possible to have an open platform like substack where the majority are making enough to live off. Imagine that was currently the case. People would see the platform as easy money and jump in. The quality of the median writer would drop, as would the median income, until the perception that it was easy money reduced enough to stop people joining.
> The quality of the median writer would drop, as would the median income, until the perception that it was easy money reduced enough to stop people joining.
Yes, yes, no. Folks' perception of Substack/ Youtube/ Twitch aren't shaped by looking at 100% of the producers, or even 50% of the producers: folks are overwhelmingly focused on the top 10% (and narrower), so their perception is shaped by the disproportionate success of the few.
To rephrase, the bottom 50% of the production group do not have 50% of the audience -- they may not even have 5% of the audience. Their lack of success isn't being seen broadly enough to shape folks' perceptions.
Also, millions of people buy lottery tickets when only a handful win more than $20.
There are plenty of markets like that. YouTube and twitch are very popular. It’s just that the top 0.0001% make a good living while the rest don’t make any money
Yes, but you're (1) still dependent on "The Algorithm". Popular channel Lesics saw its ads and views disappear overnight with no obvious reason. Hopefully the EU's DMA/DSA legislation will force some transparency there.(2) for most the ads are not enough and true income is made through Memberships and Patreon and swag in a store.
>for most the ads are not enough and true income is made through Memberships and Patreon and swag in a store.
you're close. Ads don't make money, ads do.
To clarify: Being sponsored directly by an ad can make you almost as much money as tha ads you get from the Youtube system. So all those RAID SHADOW LEGENDS ads you see from gaming youtubers? Yeah, odds are even the tiny (10k subscriber) channels can make a few hundred off of that pitch.
Patreon is decent, but it's another stream of income you need to put work into to really pay off with. Those who treat it as a donation box don't get too much. Swag is really nice but you need a decent following first. You probably already make a decent side hustle from YT ads alone by the time you consider merch.
It seems possible that at some point you'll see a hybrid between the NYT and substack models - basically a pre-selected bundle of some subset of a bunch of authors' work where you -also- have an option to subscribe to a particular author directly. I'm sure such things are already possible but the thing I'm thinking of is the bundles not being exclusive, so a piece that's available in 1+ bundles is still also available as part of the full subscription.
(possibly combined with some or all of the options operating on a token model rather than a 'get exactly all of this' one)
Note that I'm only endorsing this so far as it seeming -possible- and not necessarily -good- or -successful-, and assuming somebody does try it your guess is at least as good as mine as to how it'll turn out.
https://setapp.com is one example of a service that does bundling, albeit by offering what seems to be the full features of many things for a single subscription price (instead of your thought of a subset of features). It's not clear to me whether all of the apps offered are subscription-based, though.
It's a model I'd be more willing to try than subscriptions to individual apps, although its OS and app offerings do not align with my interests.
My thought was to let you have e.g. a book review bundler that got only the review posts from mixed sources and say 1/3 of the review posts from ones that are all reviews ... both because that sort of subsetting works better here than it would for apps and because it means that it can make sense to subscribe to both a bundle and a contributor thereto, so neither channel is risking cannibalisation by recommending the other.
Depending on who was curating this I’d be up for it, and will now be quite surprised if Substack don’t make it happen at some point.
I think there’s a lot of value in being able to delegate to someone who knows a particular field the ability to say “hey, these are the people you should be paying attention to”. I could totally see this being used both from a “here’s people who think like I do” perspective, and others providing a more adversarial version with commentators from all sides of a field.
They could pretty much do it by having things like the 'for paying subscribers of X' attribute that work as 'also free on B' and 'also for paying subscribers of B' and the bundle could (at least initially) be pretty much just the current substack UI.
I'm sure if substack actually do something like this, they'll give it a little more thought than I just did, of course.
Correction: It's the end of the [unlimited] subscription era. All-you-can-eat is no longer sustainable. Long live subscriptions with monthly tokens that do not roll-over. For example, binge watch all you want, you can but up to 6 a month but you'll pay for > 6. Payment will always be required for Premium content or content augmented with AI.
Micropayments and tokens will gain more adoption but it'll be more like a Costco Membership.
Companies still love the fact that subscriptions give them longer lead time insight into consumer behavior. That part isn't going away anytime soon as investors love that data.
Perhaps the subscription model for banal writing or news that doesn't affect you is coming to end and but not the subscription model.
I mean, who needs to subscribe to a newspaper that is crammed with unactionable whitterings or the views of a single author?
Maybe if it was £1pa and the author managed to write something useful each month it might represent value for money, but the thought of paying any more for the opinion of a single person seems absurd.
There are so many different types of subscriptions that it’s unhelpful to bunch them together. The monthly box subscription was always a gimmick people were bound to get sick of. Then there’s stuff like a gym membership or Amazon prime or game pass. Some offer good value, some bad. I’d imagine the bad value ones - like monthly boxes of random crap you don’t need will indeed die off
Those boxes work when there is some inefficiency to exploit so you get good enough of apparent value. Like there is enough massively discounted stock. But as more of it is eaten or more players enter it will fail. And then you don't likely have big enough scale to get good value specially when you need to do curation, collating and shipping.
Amazon Prime is probably mostly workable model as long as you keep raisin price and making offering worse and including the actual costs in item costs. Or simply don't pay enough to where ever you get content.
While the piece is thought-provoking, I think that the author would do well to substantiate their claims. Even an interview with some hypothetical "side hustlers" to understand their motivations would be better than guessing why they are on the site.
It kind of seemed like they were saying "it is [or will soon be] unsustainable to try and make a living out of being a Substack writer," but I would want to know how many people enter the platform with that goal in the first place.
Twitch, YouTube, Soundcloud, good-old-fashioned blogging, I'm sure you could name several other pursuits that are in a similarly unprofitable position for the average content creator. I would wager most people don't start out trying to make a living on these platforms.
Maybe the point is that there are people who are just scraping by on these platforms who will soon have the rug pulled from under their feet when consumers wise up to how much money they're throwing away to subscriptions? That didn't come across too clearly to me, though.
In the context of software I’ll unapologetically defend the subscription model. I’m not maintaining your software forever (when the platform it’s on often has breaking changes version to version) without recurring revenue. If I have to only focus on B2B software to make that happen, so be it. Mobile platforms really forced the hands of developers here. Windows will happily run 30 year old software — you could actually “finish” software and move on to the next project. iOS and Android won’t run apps from 5 years ago. Their store policies constantly change and you have to frequently keep up with new agreements lest your store listing be removed. And of course your app will be downranked into oblivion on the store search if you’re not charging a fee — why would the App Store promote apps that don’t make money for the App Store owners, and why would they promote one-time payment apps over subscription apps?
> In the context of software I’ll unapologetically defend the subscription model. I’m not maintaining your software forever
So ... don't?
It's just one model for selling software. Another one is once-off purchases.
If you can find people to pay you a monthly fee for your application (whether phone, desktop or other), good on you! Someone else may decide to just charge that once-off fee, that you get over 12 months.
After all, even with a subscription model, you aren't going to maintain something forever unless a significant portion of your subscribers remain.
Even if someone is paying you to maintain something forever, be honest, how long will you take their $1.99/m? You need a large enough number of someone's to pay you monthly to maintain that software.
There's risks and trade-offs for both sales models. Charging a small monthly fee makes it easier to acquire users, but that ease means that someone else charging a small monthly fee is losing those users (and one day you'll be that someone else losing users too).
Charging a once-off fee means that you get your money upfront, you have no further costs for that product, and the customer gets no additional value over and above the value they got on day 1. The downside is that you'll make less money off a good product than with a subscription model.
> . Mobile platforms really forced the hands of developers here. Windows will happily run 30 year old software — you could actually “finish” software and move on to the next project. iOS and Android won’t run apps from 5 years ago. Their store policies constantly change and you have to frequently keep up with new agreements lest your store listing be removed. And of course your app will be downranked into oblivion on the store search if you’re not charging a fee — why would the App Store promote apps that don’t make money for the App Store owners, and why would they promote one-time payment apps over subscription apps?
It sounds to me like your biggest beef with once-off sales has to do with products that are mobile apps. Maybe you don't already know this, but mobile apps are the worst place to try to make money with creating software products. Mobile apps are complementary to some other product (your bank provides a free app, etc).
If you want to sell software, mobile apps are not the product with which to make money, because you can't count on being the lottery winner that manages to get 10% of whales on your app.
>Maybe you don't already know this, but mobile apps are the worst place to try to make money with creating software products. Mobile apps are complementary to some other product (your bank provides a free app, etc).
best place for games, though. You get a good "subscription" model and you get whales paying you hundreds before dropping off. Oh, and also you can use actual subscription items like Battle Passes on top of that.
But I guess that is a whole other conversation. I agree for any other software that the race to the bottom has long finished. it is extremely hard to monetize a premium app, even if you only charge $1.
The issue is that iOS and Android require constant updates to apps in the first place. That’s the insane state of affairs that needs to change.
That aside, I’m fine with paying a yearly subscription that is roughly 10% of the price I would be willing to pay for a one-time purchase, based on my average personal operational lifetime for an unchanged piece of software. The issue is subscriptions whose prices exceed that.
His graph should be labelled with "exerted effort" involved rather than "technical distribution". It's about the same amount of difficulty to distribute podcasts/books/music on the internet, but podcasts require the least amount of effort (connect microphones to pc, hit record in any basic audio recording app) whereas books require a sustained amount of effort across time as does music. Publishing a book also requires you to learn specialist software for publishing the book (although Vellum seems to have simplified this) and music requires you to master a DAW. Obviously narrative films and games require not only more effort but 99.99% of the time, a team to make.
I felt like this was a lot of water and not much substance
combine that with +47% being "almost doubling" and graph having one axis going "from easy to hard", while the other "from hard to easy"... and I get totally lost
Honestly, if the writer is saying "you can subscribe to 5-8 writers you love for the price of one NYT subscription and that's a terrible deal because it means the cost of writing has gone up" then I strongly disagree. That sounds like a fantastic deal, and I will gladly subscribe to stratechery and Molly White (whose letter is free btw) and Caitlin Kunkel and Byrne Hobart and Noahpinion and....
And still be paying less than a Times subscription with content tailored exactly to what I care about!!
As long as the quality of the content was good I would alway pay for an ad-free version. But the quality has greatly diminished across the board and Ive stopped paying for any subscription.
New sites are the worst at this. They've pandered to their sub base at the expense of the average reader. I just find it funny that all the journalists finally got off Twitter and every story that's been hiding in plain site for the last decade is now in their Sunday edition ever week.
You wish. I am in the GPS based fleet management/tracking industry. Running even the most simple system like this is unimaginable to be cheaper than a subscription for a service until you have like 1k vehicles and ok with basically a pickaxe. People take more and more complex and convenient stuff as granted, so we'll have subscriptions and big corporations giving these away for free just to bleed each other out (Thanks though).
One of the things I hate about the media industry is the constant "we're dying" or "this is going to die."
Go to a local news conference that's supposedly about the future and it feels a lot like a funeral.
Some other way of doing things will come along. Help figure it out or get the fuck out of the way and stop trying to spread your shitty dark version of the future - because you have no idea what happens next.
given the motivation of those at top, that doesn't make me sigh in relief. The "other way of doing things" in the 2010's was ads everywhere and abuse of SEO to get people's eyes on what they want to see, not what's important. And that's not even going into the social media dark patterns.
Now we have tech CEO's owning newspapers... so maybe those social media dark patterns will seep in in the end regardless. I don't think dismissing these possibilities is any more helpful.
It’s a bit of an investor trick as recurring revenue is treated as orders of magnitude more important than moment to moment sales. This is for some good reasons but there’s also reason to think it’s overvalued as every industry has very different rates of subscriber churn.
As an aside: Hardware as a service is annoying and feels horrible, but is probably the only way to achieve the long lifetimes we need for consumer goods in a world where reviews are unreliable and we need to stop wasting resources on planned obsolescence.
I like constraint based planning. What is the constraint here on making money through subs? Human beings/consumers? Time the humans have to spend reading? Talent of the writer?
>What is the constraint here on making money through subs?
mostly consumers and disposable income, I imagine. you can only keep up with so much content, and if each content is a cost stream, you will be selective after a while. This is what's happening with the TV streaming wars as we speak.
as for disposable income; spending power has been on the downfall for decades now, and there's speculation of an upcoming recession. Both of those also start to make consumers focus less on spurious entertainment
I think he may have been confused by looking at the NYT online store [1]. They will sell you back issues for $7 for a weekday paper, or $12 for a Sunday paper. But the back issue price is marked up from the cover price. The newsstand price if you’re buying today’s newspaper in person somewhere is currently $4 for Mon-Sat and $6 on Sunday.
$4 is still quite the inflation. Maybe I'm just a boomer recalling the old days where you could throw in a few quarter at a kiosk and get today's paper.
Perhaps I'd feel better if I knew that 800% markup went to paying writers, but I've also become much more cynical in those 20 years.
The Sunday edition may be $7 at a newsstand; I'm pretty sure they M-Sa isn't near that (yet).
I checked home delivery to the Bronx and the regular price is $20/week ($1,040/year). There was a default offer of 50% off to bring it to $520 for the first year, but maybe he saw $845 the last time he looked. Regardless, it's very expensive.
I didn't know but I can't say I'm really shocked. It was at least a couple bucks years ago.
And newsstand prices for most periodicals have long been multiples of the subscription price. I'm always a bit surprised there's a big enough market for magazines at grocery stores and airports but impulse purchases I guess.
>Having ever little event in your life become a payment is true dystopia.
It's already here for decades; each time you use Google or Facebook, you are giving in your privacy for free use of those services. But casual users don't care about their privacy so the ad based business model for Web services will prevail for a very long time.
> each time you use Google or Facebook, you are giving in your privacy for free use of those services
You decide to use Google or Facebook once or infrequently. That’s the transaction cost. After that, it’s effortless.
Micropayments involve constant transaction costs. They don’t work. A defining pillar of luxury is freedom from transaction costs; excluding those who can pay from your market is garbage economics.
Clay Shirky basically called it a couple decades ago that there's a mental transaction cost to buying things.
I guess it's sufficiently indirect sometimes that it works. "Hmm. Is it worth it to turn on this light given that it's going to cost me $X cents to have light for the next hour?"
But $1/song only lasted as long as that was the only legal model relative to buying a disc. And 5 cents for an article wouldn't work either.
I'm hearing about this for so long, yet never seen it anywhere. When financebros talk about micro-anything, they usually mean something like few hundred or thousand dollars. For me, micro means cents or even less.
I've also wondered why no one ever tried to make a true "penny arcade". The problem is that it cost companies some money to process transactions, and credit card companies hate tiny transactions to begin with. This effectively means that it becomes hard to charge less than a dollar, and nearly impossible to charge less than $0.50.
The only true way around this is a token model. You make a large payment, but you use it for proprietary tokens that you can then "shop" around with for goods that you normally couldn't pay $0.50 for otherwise.
But it's not a very popular model. I imagine the issue comes from the fact that many consumers will simply buy 1-2 key things and then never come back. So in comes a subscription model, where they can use those 1-2 key things to cover the cost of the other 90 niche items. It may even create a new cult following out of some niche if there's no additional resistance to consuming a niche item.
My reasoning is that power users prefer subscription because they use the service more often or matter a fact very often. Casual users would perhaps prefer micropayments so for example you would rather pay a few bucks to watch one movie that interests you than go for $15 Netflix subscription just to watch that one movie.
Another interesting category is books; some publishers allow you to purchase certain chapters that interest you but the price of those chapters is obnoxious[0]. 30 euros for one chapter?!
I think the content producers and publishers need to embrace micropayments first and then demand will follow.
>The only true way around this is a token model. You make a large payment, but you use it for proprietary tokens that you can then "shop" around with for goods that you normally couldn't pay $0.50 for otherwise.
I had the same idea; for example you would deposit $5 and then use it for micropayments like 1, 5 or 50 cents.
Like somebody already mentioned, Steam does it already in a sense that you can for example buy skins for 50 cents.
Btw one of the ideas of Satoshi's Bitcoin was micropayments where you could pay for instance one thousand of a cent for some service. So called "cryptocoins" can very much be the future of payments and micropayments in particular.
>I imagine the issue comes from the fact that many consumers will simply buy 1-2 key things and then never come back.
That's why companies like subscriptions, they provide them with forward recurring revenue.
There was a comment on HN a year or mor ago, someone was making good money selling cheap and cheerful $1 (ish) games on Steam.. Steam of course banned micropayments that low.
Minimum normal price is 0.99 and minimum transaction price is 0.49. All things considered they are reasonable limits as those might be actual singular payment transactions.
This is probably a victim of DHH posting about their Once business model. Literally everything is a subscription now. Video, music, games. Enterprise software. It's just like your pg&e.
Consumers like it enough. This is just as fruitful as fighting a commodity.
Ads are annoying, and virtually nothing is valuable enough to bother paying to read a single article for. I subscribe to a number of substacks by writers I know produce reliably good content all the time, but random articles on HN ain't it chief.
Implied contracts aren't a thing. If someone sends me some trash along with the content I requested, I'm absolutely free to configure my own device to ignore the trash and only display the useful content.
I've never seen paywalls neither on Medium nor on Substack, but I've seen plenty of annoyances like Substack's "hey, did you know this is a mailing list, subscribe to it" in-your-face modal and Medium's "sign up blah blah" thing that takes up half my viewport area.
If you need to pay for subscription to read about how subscription is ending, that's sort of amusing. Anyway, this article isn't paywalled and can be read without subscription.
I am completely unconvinced. The fact that the "average/median" income from these models is low is completely unsurprisng. We should expect that the vast majority of the income would go to the very top performers. This is not an indication that subscription doesn't work, just that it's going to end up looking like acting, music, and professional sports. Those are all real careers that have persisted for a very long time where the "average" wage is extremely low.
This article does a bad job clearly stating what the author thinks the problem is (just vaguely gesturing at average wages without explaining why that should matter), doesn't suggest an alternative at all and instead seems to snidely be sniping at non-mainstream journalists and creators.
I am deeply unimpressed.