Subscriptions suck – part one
So, I’ve been thinking a lot about subscriptions lately and how much I just don’t like them, in my life or as the basis of a connected car business model. I figured out that our household currently has 13 subscriptions – for landline, newspaper (old school, huh?), 3 cell phones, Internet, Weight Watchers (ha! lot of good that one is doing for me), 3 magazine subscriptions, school lunch, Xbox Live, and Madison Reed hair color (and my hair looks fabulous – thanks David!)
This doesn’t could traditional “classic” subscriptions, the ones that if you stop paying have large negative consequences such as utilities, health insurance, car insurance, and life insurance.
Or the weekly fees we pay for 2 vehicles in the form of gas. I think it would be horrible if we had to stop paying our weekly fee for our gardener and house cleaner, but admitting that makes me sound shallow.
We use my brother in law’s Netflix account, so that is not counted here. I now buy packages of classes at Dailey Method and my yoga studio, but I used to subscribe to those. I’m not sure how to classify our iTunes match, is that a subscription? And I’m going to leave off any “business related” subscriptions.
Because we HATE subscriptions, we actively pair them down. But, we’ve had subscriptions for everything from fresh fruits and vegetable delivery, athletic clubs, business networking sites, video games, cable television, and XM radio. I would guess, that on average, The Avary Household has fewer subscriptions than the majority of households.
Honestly, when I rationally think about it, I don’t mind subscriptions when they offer me real value and make my life easier. We loved our week veggie box delivery and it worked for that stage of our lives. I am really psyched that my hair dye gets delivered, just in time, without me having to run out to the store.
Specifically, a subscription is “…the action of making or agreeing to make an advance payment in order to receive or participate in something…”
Nevertheless, given how few subscriptions we actually have, even I could not stomach the thought of signing up for a subscription that grants me the privilege to unlock my car door remotely, send me emergency services, give me access to mobile phone apps in my car, give me vehicle status reports, or start my engine from 500 feet away. Who in their right mind would pay a fee for any of those things? Shouldn’t those features just come with the car?
Subscribers to traditional telematics services are few and far in between. They are like me and simply do not find value in the telematics services being offered. The vast majority of people get the included trial when they buy their car and then never, ever renew. That alone should be indication enough to OEMs that the business model is a failure.
But some money is better than no money, I suppose.
Some OEMs think that some people will pay for remote services. But classic remote services such as remote door lock/unlock, remote engine start, cabin preconditioning, EV functions are essentially no more than glorified features extending your key FOB to your smartphone. And you need a subscription for this for what reason? It should just come with the car!
Core safety and security features like automatic collision notification are really just a smart, connected airbag. And you don’t need a third party operator to intervene. Do it like the EU’s eCall and have the call go directly to the PSAP. It actually will work. Furthermore, airbag deployment is actually a rare event so build the price of the service into the price of the vehicle. Charge each vehicle a tiny amount to cover the cost for the few that use it. Automatic Collision Notification is a public good since it saves lives. Consider it a small “tax” for everyone to be safer. Oh, and rebrand it from ACN to next generation airbag, please.
Stolen vehicle tracking is likewise an infrequent event. Recovering the asset, ie. the vehicle, is valuable to the lending institution and the owner. Since stolen vehicle location tracking and ACN are easily forecastable, you can also extend a small tax on all cars to cover the few that use it. Heck, I bet you could even monetize the service by charging a small fee to the lending institution that could use to for skip tracing as well. My point, no subscription needed.
I am not suggesting that there are no real operational costs to connected vehicle programs. Even for small amounts of data transmitted, when multiplied over millions of vehicles, that small number becomes quite large. What I am suggesting is that there is not enough value in these services to justify a subscription.
Some folks out there think that connecting mobile phones and accessing those apps are worth the subscription. But with GM announcing they are throwing in the towel on their app program in favor of Apple’s CarPlay and Google’s Android Auto, this ideal is thankfully short lived. And I bet we can expect many, many more OEMs to follow GM’s lead.
Streaming entertainment and data heavy applications over a tethered cell phone makes perfect sense. Let the person who most uses the feature pay directly for the costs to deliver the feature.
Clearly any connected vehicle program relying on customer payments is doomed to failure. But it sucks even more than just failure. The OEM has taken very valuable hardware and software that it could use to make better and safer cars, and stranded it behind an unnecessary payment wall.
And they are doing this because of a cruel lie….the lie of monthly minimums and access fees charged by the retail wireless network operators. AT&T and Verizon are going after the connected vehicle market hard. And while I do not have any insider information to share here, I think GM’s Wifi offering is proof enough that retail wireless companies are likely subsidizing OEM telematics programs with the promise of the (illusory) shared revenue, bounty, whatever. The retail carriers need $100+ ARPUs a month to justify their investments in LTE. They need each and every customer to have multiple subscriptions.
The business needs of the retail wireless operator simply are at odds with the business needs of the OEM and the interests of the vehicle owner. It seems really obvious.
But bowing to the retail operators doesn’t just totally suck for the vehicle owner, who can at least choose to not subscribe, it really sucks for the OEM in the big picture – making better cars safer. I will dig into this scenario in my next blog…stay tuned.