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[Digital Simplicity] Consumers face dilemma of subscription economy


What is called a “subscription economy” is not so far removed from the everyday life of ordinary Koreans. A growing number of Korean consumers, especially those in their 20s, are embracing this new model that favors subscriptions over ownership.

For digital services and software, this makes sense. Netflix is a case in point. Korean viewers, who once preferred downloading video files from online hard drive service operators, are signing up for the global video streaming platform. They watch as many films, drama series and animated features as they want on mobile devices and TV sets, paying a fixed amount in fees on a monthly basis.

The advantages are not limited to consumers. Netflix, Amazon, Apple and many other global companies are increasingly jumping onto the subscription bandwagon as an effective tool to retain customers for a longer period of time and maintain revenue at a steady pace.

The subscription business model is also in sync with the digital economy in which goods and services are mostly in the digital format as opposed to the physical, tangible form that dominated the “product economy,” which is now regarded as an outdated model.

As digital products often require regular updates, a subscription model bolsters the upkeep needed to keep software and services up-to-date and compatible with the latest operating systems or other steadily changing infrastructure.

So is it a win-win relationship for both consumers and companies? For the most part, yes. But the pace of shift toward subscription-based digital business might be way too fast, or sometimes embarrassing, for many consumers.

The foremost issue is the surging list of PC and mobile software products that are only intermittently used, and yet require consumers to pay a hefty fee on a monthly, quarterly or yearly basis, instead of a one-off payment for full ownership.

For instance, I recently agonized over a spiffy piece of software that I faithfully believe would enhance my painting ability dramatically. In order to create a masterful digital painting through the renowned program, however, I have to fork over extra money on a monthly basis. The problem is that despite my conviction about the software’s excellence and its potential to boost my artistic aspiration, I know I would use the program only when I have plenty of free time and get fully motivated -- in other words, a usage pattern categorized as “not so often” that cannot justify such a monthly subscription fee.

A closer look into my overall digital subscription details reveals a bigger problem: There are already too many subscription-based software packages and services, and I don’t want to succumb to the strange new world in which we, as consumers, are forced to pledge long-term loyalty and monthly payments for new software and services, including those which are rarely updated or infrequently used.

For music services, many Koreans have signed up for Melon, Apple Music or other subscription-based services. Spotify is rumored to be launching here later this year, so the temptation for digital music lovers could intensify further.

For films, drama and animation series, Netflix is competing with local contenders such as Watcha, Wavve (previously Pooq) and Tiving, among other streaming service providers. And let’s not forget YouTube’s Premium, a simple ad-free service that is gaining ground among those who are tired of watching ads to be able to see a new 90-second clip on their favorite cat channel.

For digital book buffs, Ridibooks, Kyobo and Millie’s Library offer monthly subscription plans that allow users to read from a fairly large pool of old and new titles. Amazon’s Kindle service also markets similar unlimited reading options for English and Japanese ebooks as long as subscribers pay the extra fees. Amazon’s Audible audiobook service has long been a subscription-based business model, even though members can purchase single titles separately from their monthly plan.

I confess that I have been paying for a host of subscription services. Although I have pointed out the dilemma and financial burden for consumers regarding the expanding category of subscription products, the trend appears unlikely to change any time soon, unless there is a drastic upheaval in the digital business ecosystem. This is a sad reality for those who prefer a single one-time purchase for a software license.

By Yang Sung-jin (insight@heraldcorp.com)  


Yang Sung-jin is the multimedia editor of The Korea Herald. -- Ed.
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