Money & Business

Could More Recurring Fees Create Subscription Fatigue?

By / Oct 23, 2019 (eatcute/iStock/Getty Images Plus)

Various research suggests that subscription services lead to unconscious overspending by consumers and more selectivity about what they’re willing to pay for. Could subscription fatigue create problems for membership programs?

In an era when seemingly everything has a subscription attached, where does that leave membership?

That’s an issue that’s growing in prominence as a result of subscription services that seem to cross industries and interests. Everything from Netflix and Spotify to Birchbox and Dollar Shave Club has a subscription attached. And more, including Apple TV+ and Disney+, is already on the way.

The marketplace is getting so crowded that consumers, worried about their budgets, could become more careful about what they’re willing to pay for on a recurring basis.

And that could pose a challenge for membership programs.

A recent report from the digital network services firm Amdocs notes that when it comes to streaming services alone, 27 percent of the 1,000 U.S. consumers surveyed have a subscription spend of more than $100. And the momentum for switching is declining, with 59 percent saying they’re happy with what they have and just 22 percent of consumers saying that they’re willing to expand their offerings.

The data builds on a 2018 report from Fetch [registration] that found that most “mobile-first consumers” it surveyed subscribe to between two and five paid subscription services. Of the sectors it included, the survey found that video, music, and computer software are the most prevalent options.

Other sectors are seeing growing interest in subscriptions, too, according to the Fetch report. More than a quarter of respondents said they have considered grocery, fashion/grooming, and gaming subscription services. (One surprise: News is somewhat of a niche audience compared to other categories.)

Bundles, Lower Prices Desired

The streaming-focused Amdocs data [PDF] notes that competition among streaming services is driving prices down in that sector, with cost (37 percent) cited as a more common reason for switching than content offerings (22 percent).

And if people are looking to expand subscriptions, it’s by trying to bundle together multiple services into one, with the goal of making subscriptions easier to manage. Nearly 40 percent of respondents noted that they were looking for such an offering.

(For what it’s worth, some of this bundling is already happening—for example, you can now get free access to Hulu if you subscribe to Spotify.)

Getting Choosy

The Fetch report, meanwhile, found evidence that all that growth in paid subscription services could be creating subscription fatigue. More than three-quarters of respondents (77 percent) said the large number of services available makes it hard to decide what to subscribe to. And subscribers are even willing to have the costs of subscriptions subsidized.

“When the costs of subscribing to multiple paid services start adding up, mobile-first consumers are looking for cost-saving measures which include greater tolerance for some advertising vs. an ad-free experience,” the report states.

Overspending Without Realizing It

Another piece of research on the issue, from Waterstone Group, suggests that many consumers are struggling to keep track of what they’re spending on subscriptions. Eighty-four percent underestimated what they spend on subscriptions each month—many by $100 or more.

“When pressed for a quick answer, they dramatically underestimate the amount,” Waterstone states. “This is a boon for companies operating subscription models … and a bust for advocates of conscientious budgeting!”

Association members pay for more than products and content when they pay their annual dues—community, professional development, and advocacy on public policy issues are the less tangible “deliverables” that associations provide. But this research suggests that, if associations are to avoid becoming casualties of subscription fatigue themselves, their ability to clearly prove their value—whether through bundles or improved offerings—will become more important than ever.

Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. More »

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