All businesses will eventually turn into subscriptions
blog.viveksrinivasan.com
blog.viveksrinivasan.com
(Actually, there is a subscription-type business model for cars; it's called "leasing". And the only people who do it are people who can afford to be fleeced. It makes no sense at all for an ordinary car owner. I once had a car dealer try to sell me a lease deal when I was there to pick up a new car. His deal had a larger monthly payment than the loan I already had pre-approved from my credit union, and the residual after 3 years--what I would have to pay then to own the car outright--was more than the balance on the loan would be at that point. I asked the dealer how it could possibly make financial sense for me to take such a deal. He had no answer.)
If you plan to buy a car and own it for a long time then leasing is silly. If you plan to keep a car for no more than a few years then leasing is a pretty good option.
Except that they don't. The dealer is taking the depreciated car back at the end of the lease. The dealer isn't giving customers a gift by taking the vehicle back at a loss. The lease price covers the entire cost of depreciation over the term of the lease. The customer may avoid seeing the depreciation but they are most definitely paying for it.
Worse still, they are coving the most expensive part of total depreciation: the time between new to slightly-used. The people getting the real deal are those buying post-lease vehicles. By buying a slightly used vehicle they avoid the initial depreciation covered by the from-new lease.
If you don't plan to keep the car more than the few years you can get with a lease term, then yes, the comparison is different than the one I made, but what might tip the scales in favor of leasing isn't the depreciation cost but what options are (or aren't) available to you for terminating your old loan (which probably won't be paid off at that point) and getting a new one when you either trade in or sell your old car and buy a new one.
Another downside of leasing is that, since you don't own the car, there are probably going to be restrictions on how you can treat it and what you can do with it (for example, mileage restrictions). That gets back to the more general issue of the pros and cons of ownership vs. renting, which is relevant for subscription business models more generally.
Which is why there is a war on durable goods, such as trying to develop viable cloud gaming to replace people's gaming computers with subscription services.
Yes, and that war is not being fought to protect the interests of people generally. It's being fought to protect the interests of businesses that don't want to adapt to changing technology and market conditions. They would rather have planned obsolescence than recognize that some goods really don't need to be "upgraded" very frequently and see those resources allocated into new goods and services that would create more wealth. It would be better in the long run for everyone if that trend were reversed.
Edit to add: upgrading the graphics card nets another 2-3 years instead of replacing the entire machine. Which probably reduces the ceiling to closer to $40USD per month.
This may be market specific (I live in the UK) but I have leased Mercs and other premium vehicles paying less than 20% of the vehicles price at new for a 24 month lease. That's unbeatable value no matter how you look at it.
The advantage in this case over buying the car with the discount is you don't have to take on any risk on whether the car would sell 2 or 3 years later, nor have the money held up in the car. As interest rates are super low, it makes sense to use that money to invest in something else with higher returns.
It makes complete sense if you see the downsides of ownership outweighing the upsides. You just have to separate the thing, ownership of the thing, and the job that it does.
If you derive some value just from owning a car that’s fine, but if its job is to get you from A to B, renting and Uber can both be valid options over buying. The three options aren’t even mutually exclusive!
For some people, perhaps. But you give up a lot of flexibility when you give up ownership. It's not just a matter of "the job" the thing does; transportation is not a single "job", it's an enabler for many, many different "jobs". And if you don't own any means of transportation, your ability to do all those things is dependent on some other entity, probably a faceless corporation that does not care whether you can get from A to B or not, it only cares about whether it can make money. Or, in the case of public transportation, a government in which your personal interest is rounding error compared to the powerful interests that influence what the government does. It may seem to you that in your personal situation, services like renting and Uber, or public transportation, are there whenever you need them and trusting that that will always be the case seems like a good deal. But historically, deals like that have a way of going sideways when you least expect it and can least afford it. At the very least, it's a good idea to always have a plan B in mind.
If you pay a one time fee and the product is just not great quality but does technically work, well you're stuck with it until you buy a new one.
If you only pay when you buy something new, the seller has an incentive to make the object not last long because then you'll need to buy a new one. If you keep paying to rent it, they lose money every time they need to give you a new one because the old one breaks.
About the car lease, you're missing the point that you don't pay taxes on the amount of car you're not buying either. It's also offering you a service : you don't have to bother trying to sell the car yourself.
Also I would argue the biggest point is a ton of people live paycheck to paycheck and a small fee every month is a lot easier to do for them than a huge amount of money now.
Very popular with the youngest generation.
Its also a incredible resilient business model, as proven by the mobs various protection rackets.
I am waiting all this to crumble under its own weight. The concept of ownership will not go away. It takes time the masses to realize, but eventually they will realize the truth. And will buy nothing. This ultimately will bring people down to earth and they will revolt. The picture planned by Davos elites and most powerful corporations has one big flaw. There is no way to save corrupt system by pretending that countries can do something for their citizens by some "social" agenda and continue to increase taxation and regulation over small businesses and regular people. Corporations are not paying at all.
https://itep.org/55-profitable-corporations-zero-corporate-t...
https://www.brookings.edu/techstream/the-lying-flat-movement...
The problem isn't a mythical fixed demand in the labor market, demand is entirely up to the people making up that economy. The real problem is that people desire to supply more work than they demand, which then inevitably has to be redistributed through income sharing, usually known as charity or welfare.
Supplying more work than we demand has become a cultural phenomenon. People insist on working hard even if they have no use for that hard work themselves. Saving (the act of demanding less than you supply) has become sacred and is considered morally good. It's like people don't believe in the market anymore. The interest rate tells you how much you should save or spend. You are supposed to save and spend according to the interest rate which is determined by the availability of solvent borrowers who need slack capacity in the economy (supplying more than you demand), not according to your morals. For some absurd reason people want the central bank to get out of the way of their manipulative morals that distort the market.
It's not just the government that distorts markets, the entirety of reality distorts them. Getting rid of governments just gives rise to other forms of distortion like outdated moral frameworks.
Also what power would you have in a Communist country?
People sometimes erroneously assume that money equals power. That may be true in the west, but a more accurate statement is that money is a good proxy for power. Absent that, power moves to another useful resource that can be bartered for power.
In the old country, people were getting paid regardless so 'everyone had work' and money was a secondary consideration. As local currency became less of a good proxy for power, it immediately became about relationships ( can you ensure make this bureaucrat assign this job/flat/whatever to me? ).
And as always, some people do get power and since it was communism, quite a lot of it. Not to search very far, police had tremendous amount of power.
Communism is just a name we gave to the system. People are the same everywhere.
The whole system is built on the lowest rung holding the most stress without so much as a burp. When that burp inevitably comes, the whole thing could come crashing down.
Once the dollar is worthless and Europe collapse on its debts and corruption, the Chinese Communist party will own the world - if they don't already (think of the WHO not recognising Taiwan, the ties and donations of various government officials with China).
We're going from socialist governments who still pretend to give a crap about citizens' freedom to a full blown regime who "disappears" people, censor even more than our big tech overlords and create Nazi style concentration camps.
Unless South America or Africa somehow step up their game in terms of security and quality of life, there won't be a place to run to.
Maybe creating safe bubbles for relatively wealthy individuals in unsafe countries could be a solution.
The factual things are: The secret services operatives highjacked the political process and subverted the economy to become Big Capitalists. Practically speaking, there is no political candidate without connections with criminal underground or ex secret service overlords.
In my humble opinion, the aftermath of the Cold War is manifested trough "The Deep States" operatives from the both sides. They exchanged know-how and now are creating unified model, a hybrid between the worst from communistic "experiments" of the past - surveillance and citizen control under "the common good" mantra, planned economy, hidden class of elites, with the worst from unregulated capitalism - the monopolies and corrupt political process.
The problem is that Western world has never seen the results of communistic regimes. They think that socialism is libertarian and are willing to fall in the same ideological trap that we have lived trough in the past.
Yes, I am for Great Reset, but in different terms. Tax the wealthiest multinationals and regulate capitalism towards free market stimulus. Capitalism implemented without lobbyist protections and with precise regulations is the most beneficial form for societies longterm.
But this will not happen. Call me a pessimist, or even nihilist but I cannot remove my realistic way of thinking, or close my eyes on my past experiences. The world is global and interconnected now. One policy implemented in Australia will come to life in some form or direct implementation in other "democratic" country.
In summary I see the world moving towards totalitarian reality pushed by common good agenda, protecting the wealthiest families trough surveillance, automation and total digital control. It will be Technologically advanced Middle Ages.
The only hope that I have is that "implementing the Great Reset" will be not effective from an economy stand point. People on the Eastern side of the world have lived in capitalistic society to little ( 30 years ). If you tell them that "they will not own nothing" they will revolt and kill the messenger on the spot.
EU planned economy (just like communistic Comecon, https://wikiless.org/wiki/Comecon?lang=en) actually will bring back the shadow economy in every Eastern Europe country.
On a first glance this will be bad. But actually this will force administration to adapt and create more realistic scenarios than this medieval billionaires dream.
In theory you may be getting at something, I'm a minimalist myself. But despite flowery marketing rhetoric, the driving forces behind this trend are anything but enlightened, libratory, or benign.
No. "16th century Germany also saw subscription-based, handwritten news. Those who subscribed to these publications were generally low-level government officials and also merchants."
https://en.wikipedia.org/wiki/History_of_newspaper_publishin...
That is just newspapers. The concept of a per-month or per-year rate for access a service has been a thing since at least ancient Rome.
Isn’t this just because random memory speed has never really been the limiting factor for a lot of things?
If you store your numbers sequentially in memory, you can bulk download them and it isn't so bad. But let's say you used a linked list where everything is store in a different memory location... you're basically gonna take 100 longer to iterate over a linked list than an array and that's entirely because of ram speed. Same thing if you're storing Integer objects into an arraylist in Java or something similar since your array contains pointers and you have to check a new ram location for every number. Facebook wrote their own version of a C++ string to reduce heap use because of this.
What I'm saying is you can often get around it for stuff that matters, but a lot of code that wasn't written with that in mind is definitely limited by ram speed. And let's be honest, most people who are not programming in C or C++ don't think about RAM data locality.
Oh and you can't swap parts between them or even fix them without professional equipment and training.
So you are right quantity will expand as much as the energy supply allows it to, but we are seeing the limits of energy so maybe don't invest too heavily in 200W machines?
I'm pretty deeply sunk cost in ARM and Atom servers, and I'm considering going "more in" but hesitating because of thermodynamics, basically 100W (including EVERYTHING, router, modem, switches etc.) is the most you can operate with enough lead-acid backup to survive power cuts before things get ugly!
It might not apply to every field, but it is wrong to say that everything will turn into subscriptions.
Micro transactions work right now but maybe tomorrow it is subscription based gaming again.
That's... a very enticing option. How's the quality?
And the second point, for games using a subscription service isn't cheaper. Fortnite is free to play, most people doesn't pay much so spending all your time in Fortnite and not using those subscriptions is the cheapest option for entertainment.
There is still demand for non microtransaction games, yes, but that part of the market is still tiny. Microsoft gamepass is them trying to capture a chunk of that part, but likely it will never compete with the microtransaction games.
The article talks about a situation where there is more supply than demand. We can turn this around and say there is a scarcity of "demand slots", where a demand slots is the willingness of a consumer to make a single purchase.
Demand slots are limited, but at least they are "sustainable": If you have a middle class with stable jobs and disposable income, you'll have a fresh supply of demand slots each month for businesses to consume.
Subscriptions are not sustainable: There is only a limited number of subscriptions a household with constant income can take. The number of "subscription slots" has a hard limit given by the number of people employed and overall wage levels. They don't renew unless there is significant wage growth.
So if businesses want to switch from one-time purchases to subscription models to keep up growth, this new growth will hit limits even sooner.
For consumers, it will be a situation where you can either choose to be financially irresponsible - or to subject yourself to a barrage of nag-screens and intentionally worsened service each day, as every company and product you interact will try to upsell you. Also prepare to renounce and abstain from things a lot more consciously as you do today, as you'll constantly have to evaluate which functions of daily life you currently need an which you can tolerate giving up for the moment.
"Personal responsibility" is all well and good, but the term rings hollow when half of the economy depends on you making irresponsible decisions.
If a company is getting a recurring payment they can afford to spend a lot more acquiring a customer because they can compare that with a yearly / lifetime cost.
If you’re selling a one off you can’t justify any more than that in your marketing.
It becomes an arms race and the subscription companies win out because they get more money from more customers and ultimately use that to make a better product.
It’s happened like that with iPhone apps. Remember when you could buy a gif editing app and it didn’t come with an annual subscription? I miss those days.
I imagine in 100 years, people will look back at articles like this as evidence of the strange time when people didn't own things. But eventually - so will go the article - the disadvantages outweighed the advantages and a new business model (or the recurrence of an old model) came to prevail. Until it too passed.
Same as buying stuff on loan. You can buy a car or home with almost zero down payment and keep paying the amount over next 20 years. It is essentially paying for usage. You can call it subscription.
Outrageously, I find that even education/training also moved to subscription model. You keep taking the same exam every few years and keep paying them.
Except in America? That's a hell of a caveat.
Putting that aside, as an American who lives overseas, it all depends on what things you want to get and in many cases, how fast you want them, how much you're you're willing to pay. Things you take for granted in one place can be very difficult to get in another.
I will admit that I am biased, because I hate the trend Tesla started with making cars more like trial software and I absolutely despite Musk for his role in that, but based on what I saw in my MBA classes, he is certainly not a lone voice.
In other words, attempts will be made, but its hardly unavoidable version of the future. I sure as fuck am not paying extra for DRM'd lights in my car.
Why not get a burger, already got a subscription.