How do subscriptions fare in a recession?

Source: App Annie, State of Mobile 2020

The subscription model (‘subscription economy’ was a term apparently coined at least four years ago)is becoming de rigeur in many zones. App Annie’s recent State of Mobile report found that In App subscriptions contributed to 96% of spend in the top non-gaming apps. As an overall proportion of spend they rose from 18% in 2016 to 28% in 2019 (games, of course, still dominate.) It concluded in a recent post: “Clearly companies across industries need to not only be thinking about their mobile strategy, but also their subscription strategy, if they want to succeed in 2020.”

But is this a wise move?

The attention economy, as folk call it, depends on competing for a limited resource — our attention. But it will always be trumped by a resource that determines what can be done with that attention — money. If we have no job, then our attention tends to be focused elsewhere. If we have a job but not much money, or are afraid of losing that job, then our attention to other non-job issues is probably limited.

The other thing the attention economy relies on increasingly is the subscription model. Recurring fees are much more appealing to a company than a one-time cost, which is why everyone is heading that way. But the subscription model has an achilles heel: most services that used the subscription model in the old days were because of the way they were produced and delivered — electricity, water, telephone, gas, newspapers, cable. And most involved some lock-in: an annual or quarterly contract etc, which hid the overhead costs of connecting, delivering and disconnecting in the subscription. But to disrupt these entrenched subscription services OTT upstarts which didn’t have those costs like Netflix made it real easy to subscribe — and unsubscribe.

And here’s the rub. When subscription becomes a discretionary spend — something you can shed like a skin when the rain comes, then you find the weakness of the subscription model. This is why old guard subscription model players like the New York Times have transferred their approach to digital, knowing it’s better to alienate a few users by making unsubscribing disproportionately harder than subscribing, absorbing the hit of a few angry folk like me in order to keep the bulk of subscribers who couldn’t be bothered to jump through the hoops.

So when the Coronavirus Recession hits you, what are you going to shed? Discretionary spend is the first one to go, and that usual means monthly outgoings that just don’t seem to be as important as they were when you were coasting. Indeed, a lot subscription economy players, like Statista and others, only offer an annual subscription, although they price it per month to make it sound less. It’s cheaper, and more predictable, to charge per year.

I’m not convinced that software is a good candidate for subscription models. I understand its appeal, and I am as frustrated as them how the mobile appstore has reduced the amount that people are willing to pay for good software.

When Fantastical, a calendar on steroids for macOS and iOS from Flexibits, went from a one-time fee to a subscription model it split the community — especially those on iOS who suddenly had to pay 10 times what they were paying before. John Gruber argued $40 a year for a professional task app on all Mac platforms was a decent deal, arguing that those who don’t want to upgrade can still use the old version, and he’s probably right. But I haven’t upgraded and have instead shifted over to another calendar app, BusyCal, that is included in Setapp, another subscription model which bundles together multiple apps for $10 a month. In part that was because of the annoyance of finding certain features still available as menu items in Fantastical but blocked by popups:

Not the kind of productive experience I am looking for. Hobbling or crippling, as it’s sometimes called, is never a pretty look. You either have the functionality or you hide it.

A better route is to be flexible. Of course, there’s an upside to monthly subscriptions that are real easy to start and stop — when the sun shines, you can easily resubscribe. Indeed, the smartest subscription model in my book is the freemium one — where you can easily move between subscription levels depending on usage and how empty your pockets are. I recently canceled my paid Calendly subscription, downgrading to the free model and was told by a helpful customer service person that “you can certainly choose the monthly plan on your billing page and pay for only the months you need it for! That might work better for you.”

I would recommend any company moving to the subscription model to do this. Or to pursue the bundling model. Not to lock people in — where one subscription depends on another — but to make what might have been discretionary spend something that becomes necessary spend through a compelling use case. Setapp is that model (though sometimes I baulk and wonder if I’m paying over the odds). A lot of the apps I use on Setapp are ones that I would have not otherwise found — and I’m an inveterate hunter of new apps. By making the marginal cost of using them zero, I find they worm their way into my workflow.

Setapp helps this by taking  an interesting route, in that its appstore-like mothership is so baked into macOS that searching for an app installed on my computer via Spotlight or Alfred will include in the results apps that haven’t been installed but are part of Setapp. So if I’m looking for a photo editor, or screenshot taker, or calendar app, on my Mac the results will include those in Setapp that I haven’t installed.

This shoehorns productivity into the subscription model. It’s helping to make Setapp more useful by introducing me to new apps it is has in its portfolio — thus making all the apps in Setapp more recession-proof because the more Setapp apps I use, the less likely I’m going to cancel the subscription overall. (Yes, those apps I don’t install or use won’t get a cut, or will get a smaller cut, but the overall rising tide will help keep all the boats afloat. Or in a tweak of the analogy: all the apps in the Setapp boat, amid the buffeting recessional sea, rely on the size of the boat to keep them all afloat. Only if the boat sinks will they sink).

Bundling makes a lot of sense in disparate fields — I’ve been advising media clients to seek out bundling options with other subscription model companies which previously might have been regarded as competitors. Bundling should not be the cable TV model of putting the good stuff and crap together and forcing subscribers to pay for both, but to try to anticipate — if your customer data is good enough you shouldn’t have to guess — what else of value is in your customer’s discretionary bucket, and try to move both yours and those into a necessary one. A tech news site coupling with a tech research service, say. 

In the meantime, expect a lot of subscription-based approaches to suffer in the recession. I expect by the end of it the subscription model won’t be so appealing, or will require more creative thought processes to evolve. The key is in not treating the consumer as either stupid (that we don’t realise $5 a month adds up over a year) or lazy (that we won’t do what is necessary to cancel a subscription if we have to), but to take the freemium model seriously: make it really easy to reduce our payment when we need to, and really easy to go back when we’re feeling flush again. Just don’t cripple the quality of the service you have committed to deliver, even if it’s free, by ads beseeching us to pony up or by drawing arbitrary and punitive lines which make the free version more irritating than alluring.

Then just wait out the storm, as are we all, and hopefully you’ll remain useful enough in the free version to stay on our radar when the sun returns. 

The Phantom Threats We Face

This is a copy of my weekly Loose Wire Service column.

By Jeremy Wagstaff

We fear what we don’t know, even if it’s a guy in Shenzhen trying to make an honest living developing software that changes the background color of your mobile phone display.

Here’s what happened. I’ll save the lessons for the end of this piece.

A guy who prefers to go by the name Jackeey found a  niche for himself developing programs—usually called apps—for the Android cellphone operating system.

They were wallpaper applications—basically changing the background to the display.

That was until an online news site, VentureBeat, reported on July 28 that a security company, Lookout, had told a conference of security geeks that  that some downloadable applications to phones running the Android operating system would “collect a user’s browsing history, their text messages, the phone’s SIM card number and subscriber identification, voicemail phone number password” and send all this data to a website owned by someone in Shenzhen, China.

Yikes! Someone in China is listening to our conversations! Figuring out what we’re doing on our phone! Sending all this info to Shenzhen! Sound the alarum!

Word did indeed spread quickly. About 800 outlets covered the story, including mainstream publications like the Daily Telegraph and Fortune magazine: “Is your smart phone spying on you?” asked one TV station’s website.

Scary stuff.

Only it isn’t true. Firstly, VentureBeat had the story wrong: The applications in question only transmitted a portion of this data. No browsing history was transmitted, no text messages, no voicemail password.

VentureBeat corrected the story—sort of; the incorrect bits are crossed out, but there’s no big CORRECTION message across the top of the story—but the damage was done. Google suspended Jackeey’s apps. Everyone considered Jackeey evil and confirmed suspicions that a) Android was flakey on security and b) stuff from China was dodgy.

All kind of sad. Especially when you find that actually Jackeey himself is not exactly unreachable. A few keyword searches and his email address appears and, voila! he’s around to answer your questions. Very keen to, in fact, given the blogosphere has just ruined his life.

Here’s what he told me: He needed the user’s phone number and subscriber ID because people complained that when they change their phone they lose all their settings.

That’s it. That’s the only stuff that’s saved.

Needless to say he is somewhat miffed that no one tried to contact him before making the report public; nor had most of the bloggers and journalists who dissed his applications.

“I am just an Android developer,” he said. “I love wallpapers and I use different wallpaper every day. All I want is to make the greatest Android apps.”

Now of course he could be lying through his teeth, but I see no evidence in the Lookout report or anything that has appeared subsequently that seems to suggest the developer has done anything underhand. (The developer has posted some screenshots of his app’s download page which show that they do not request permission to access text message content, nor of browsing history.)

In fact, he seemed to be doing a pretty good job: His apps had been downloaded several million times. He declined to give his name, but acknowledged that he was behind both apps provided under the name Jackeey, and under the name iceskysl@1sters.

The story sort of ends happily. After investigating them Google has reinstated the apps to their app store and will issue a statement sometime soon. It told Jackeey in an email that “Our investigation has concluded that there’s no obvious malicious code in your apps, though the implementation accesses data that it doesn’t need to.”

VentureBeat hasn’t written an apology but they have acknowledged that: “The controversy grew in part because we incorrectly reported in our initial post that the app also sent your text messages and browser history to the website.”

For his part Jackeey is redesigning his apps to take into account Google’s suggestions. He points out that to do so will require him to have users set up an account and enter a password, which some users may be reluctant to do. And the Google suggestion is not entirely secure either.

Obviously this is all very unsatisfactory, in several ways.

Firstly, the journalism was a tad sloppy. No attempt was made to contact the developer of the app for comment before publishing—how would you feel if it was your livelihood on the line?—and the correction was no real correction at all.

Secondly, the internet doesn’t have a way to propagate corrections, so all the other websites that happily picked up the story didn’t update theirs to reflect the correction.

Thirdly, Google maybe should have contacted Jackeey before suspending the apps. It would have been kinder, and, given they’ve not found anything suspicious, the right thing to do.

Fourthly, us. We don’t come out of this well. We are somehow more ready to believe a story that includes a) security issues (which we don’t understand well) and b) China, where we’re perhaps used to hearing stories that fit a certain formula. Suspicious?

And lastly, perhaps we should look a little harder at the source of these reports.  We seem very quick to attribute suspicious behavior to someone we don’t know much about, in some scary far-off place, but less to those we do closer to home: Lookout’s main business, after all, is prominently displayed on their homepage: an application to, in its words, “protect yourself from mobile viruses and malware. Stop hackers in their tracks.”

So spare a thought for Jackeey. If you do a keyword search for him, the first hit is the story “’Suspicious’ Android wallpaper app nabs user data”, and links to 863 related articles. Below—a week after the hoo-ha, and after Google has sort of put things right–are headlines like: “Jackeey Wallpaper for Android steals your personal info”, “Your Rotten App, Jackeey Wallpaper” and “Jackeey steeling [sic] info on Android devices”.

In other words, anyone who checks out Jackeey’s wares on Google will find they don’t, well, check out.

I got back in touch with Jackeey to see how he’s holding up, a week after the storm broke. I’m in some pain, he says, “because mass negative press said that I steal users’ text messages, contacts and even passwords.” People have removed his applications from their phone, and people have been blasting him by email and instant messaging, calling him “thief”, “evil person” and other epithets.

“I am afraid that it will destroy my reputation and affect my livelihood forever,” he says.

I’m not surprised. We owe to folk like Jackeey to make apps for our phones, so we should treat him a little better.

Finger Painting, Angling and Tuning the Cello: the New Computing

I’m not overwhelmed by Nokia’s new appstore, Ovi, but using it does help remind one of what the real revolution in computing is (I have been talking a lot about revolutions lately, but there are basically three: the information revolution, the computing revolution, and the mobile revolution, which I’ll address later.)

The computing revolution is this: a small device, about the size of your hand, which is called a phone, but isn’t, really. It’s what Nokia can only dream of: a device so smart that even ordinary people can use it. It’s called the iPhone, and listening to some friends talk about it the other night brought home just how great an impact it has wrought, and will have.

One was talking about working with someone who, during a long car drive, would take his iPhone and look like he was about to throw it away. Then he would stop, his hand mid air, and then he would look at the screen. And then do it again. At first my friend thought he was having some sort of seizure, or was just really upset about something.

Then he realized he was angling. With his iPhone. (I can’t find the app right now.)

My other friend has a tuner in his, so he can tune his cello. “It’s geeky I know, but when I come home at the end of the day I can be up and playing quickly,” he said. Just point the device at the cello, hit a string and the iPhone display will indicate whether it’s in tune.

Both of these are great examples of how computing fulfills its promise by giving the user something they actually want, when they want it and in a form that fits their environment. What’s more, it’s easy enough for them to buy, install and use that they’re actually using it.

Which gives you some idea of how far behind the likes of Nokia are, and how long users have been waiting for this revolution to happen.

Then there’s the New Yorker cover, all drawn on the iPhone:

Colombo’s phone drawing is very much in the tradition of a certain kind of New Yorker cover, and he doesn’t see the fact that it’s a virtual finger painting as such a big deal. “Imagine twenty years ago, writing about these people who are sending these letters on their computer.” But watching the video playback has made him aware that how he draws a picture can tell a story, and he’s hoping to build suspense as he builds up layers of color and shape.

What I like about his story is that a) he has all the tools he needs in his pocket, just like the angler and the cello guy and b) he talked about not feeling too exposed—the painter, painting in a public place–because everyone assumed he was just checking email. This is a significant mini revolution in itself; a few years back, pre-Palm, someone poking around on a small screen in a public place might have seemed weird, but now the idea of what we do in social spaces has changed entirely.

(Now someone standing on a corner reading a paper or watching the world go by is viewed with suspicion.)

I’m no shill for Apple, but I think there’s a compound shift taking place here: by keeping the design elegant, making it easy for developers and users, the iPhone has captured the imagination of both. These guys may not be angling and tuning in a few years’ time, but already significant rivers have been crossed.

Now users have access to functions and features that they may not have considered the terrain of computing, but which now are part of their lives.

Computing will never be the same.

The Failure of the Open Field

It’s great that Apple has created a new platform with the iPhone and the App Store. But it’s also a ripping indictment of the personal computer industry—and cellphone industry—thus far. And not to be too nice to Apple: The beautiful stuff we’re seeing with the iPhone is mainly about pastime—not about productivity (or creativity.)

Here’s what Apple has done right: It’s created a beautiful device that works and seduces. It’s created a single environment and process for people to be able to buy, download and install applications. And then it’s set some standards so things don’t get out of hand.

This is something that should have been done years ago. Microsoft had oh so long to come up with a way for third-party developers to produce good applications and have them certified and delivered in a way that makes it easy for consumers to install them (and the developers to make a decent living from them.) Instead we have a world where increasingly users are reluctant to download apps because even the best of them come front-loaded with crapware and configuration changing tweaks.

Nokia and the other big cellphone players had a decade to get their act together: To make phones connect seamlessly with computers, and for third party developers to come up with applications that made their devices compelling. I hate installing anything on my N95 because I know it’s a nightmare. Why bother?

Now Apple have done what needed to be done. They’ve done well and they deserve to take over the market for these reasons alone. Now the iPhone has become an extraordinary device capable of some spine-tingling stuff. Computers, finally, are tapping into the creativity of individual developers. And at a price point that’s not free, but for most people is as cheap as makes no difference.

I doubt Microsoft will get it. I doubt Nokia will get it. That makes me sad. But I also have a deeper regret. That, because it’s Apple, I don’t think we’ll now see the really full potential of software ideas and development, because Apple is still a very closed-in world. That is part of the reason for its success. Making everything a single pipe tends either succeeds spectacularly or fails dismally.

But it also caps its potential. By acknowledging this success we’ve also admitted that the online chaos that we thought would work, would somehow organize itself, has not worked. Try to find a decent application for WIndows XP. Or for your N95. Try to browse and just see what’s out there, and experiment. You’re brave if you do. Apple’s walled garden approach is a roaring success because we’ve failed to make the unmown field work. And we had long enough.

From the Desk of David Pogue – So Many iPhone Apps, So Little Time – NYTimes.com