Ethics in the subscription business

Last year, Netflix announced a new policy for inactive accounts and how the company will deal with such accounts’ cancellations. I wrote about it then and hailed it as a great move – a ‘right thing to do’ move that seems right only because no one else seems to be doing something so basic and common-sensical.

The rest of the world of subscription is built differently – it seems to be constructed in a way that depends on users

  1. not realizing that they have to consciously ask for cancellation
  2. forgetting to cancel
  3. not finding a simple enough way to cancel

In essence, subscription plans seem to be built by increasing friction for users away from cancellation. Keep users farther away from cancellation, the longer the subscription goes.

There are enough stories from hell about how users are lured and retained in subscription plans.

A famous one involves LinkedIn that offers a 30-day free premium version provided you share your credit card details with them when you sign up.

There are variations to this story where some process involves LinkedIn charging you for one more month vs. one more year (the promo link from their website for ‘one-month free premium purportedly disables monthly recurring subscription and assumes annual recurring subscription). To be fair to LinkedIn, a lot of people have had their cards charged, found it later by chance, desperately tried reaching LinkedIn customer care and many have got a refund too.

But the point is this: LinkedIn asks for your card details while you subscribe for the free trial.

To be completely fair to LinkedIn, they also clearly mention at the time of signing that you will be charged from a particular date, 30 days from the date of signing up for the free trial.

They also clearly mention that you will sent an email reminder 7 days before your card will start getting charged monthly.

There are detours to this story where people have said that the email LinkedIn sends goes to Gmail’s ‘Social’ folder which is generally a garbage dump that most Gmail users don’t care to open or see often.

Once again, to be fair to LinkedIn, they have taken this into account and somewhat helpfully listed the email subject lines you may search in your email inbox to see if you had missed the email.

Long story short:
Step 1: Sign up for a trial
Step 2: Enter credit card/recurring payment mode details while signing up
Step 3: Wait for them to remind you before trial period ends
Step 4: Take an affirmative action – stay subscribed or cancel it.

Digression: This post is not about a free trial where the vendor does not ask for your payment details; that is, a truly free trial. In that case, the vendor would ask you at the end of the free trial to enter your payment details for the first time, thereby offering you a chance to affirmatively inform them that you ARE interested in continuing the service.

So, is this is the right way to do the subscription business? We would all assume so because we haven’t seen anything better.

The small detail that’s missing here is called ‘opt-in’.

The email that is sent to you 7 days prior to the starting of the paid subscription period should contain an opt-in action, not an opt-out action.

That is, it should have (opt-in),
“If you want to continue this subscription as a paid one, please click here to give us your consent to start charging your card. If you do not take any action, we will assume that you are not interested in this subscription, and we will cancel your subscription.”

It should not have (opt-out),
“As per our terms shared when you signed up for the free trial, we will start charging your card from <date>. If you do not take any action, we will assume that you are interested in this subscription and start charging you.”

The implied customer consent while signing up for a free trial is always for the period of the free trial regardless of what the vendor adds in terms of additional points (free only for X period, we will start charging from X onwards, etc.).

The vendor needs to get an explicit consent before the start of a paid subscription. But, considering that so many subscription businesses are built entirely around this, I presume there is some legalese that protects vendors from using opt-out instead of opt-in.

Legalese or not, it sure helps in business planning – opt-in would lead vendors to assume that the opt-in email would be the end of that revenue pipe, whereas opt-out would help them to assume that such an email would be the start of that revenue pipe!

But, given so many subscription vendors use only opt-out under the garb of removing friction in transactions (in other words, “seamless subscription experience”), using opt-in would seem like the odd choice to make, even though it is the right choice to make by the users.

It would mean that the vendor is confident enough about their product offering that they plan for users affirmatively choosing to continue the subscription.

Are you aware of any one vendor/subscription service that uses opt-in communication after the free period? I don’t know any, so I’m asking.

I came across two instances of subscription services moving from free to paid, and here is my experience.

In December 2020, I signed up for a free month of Zee5 OTT via a promo email from ACT Broadband.

Here is the text message I received from ACT.

It clearly says that I would be charged (this is called operator billing, since I’m not sharing any credit card details; the fee would be added to my monthly ACT bill) from a particular date.

Does ACT have the policy of informing users a week before the start of the paid subscription period? No.

I figured earlier this week that I have not seen Zee5 since January 2021 in the assumption that after the first month I won’t have access to it anyway. But ACT has been charging me Rs.99 for it every month and it is mentioned in their monthly bill too. I had to call ACT to cancel this unwanted subscription.

The second experience involves Apple’s Apple TV+. I purchased a Mac machine in the middle of last year and received a 12-months free Apple TV+ subscription. Since the free period ends in July 2021, Apple sent me an email reminding me of the start of the paid subscription period (the same amount as Zee5 via ACT – Rs.99 per month!) and included a link that can help me with the cancellation.

I have set a reminder on my phone to ensure that I cancel the Apple TV+ subscription a day before the date of renewal.

Now, between ACT and Apple TV+, the former seems mildly unethical, even though it is totally par for the course and very, very common.

In comparison, Apple seems more ethical because this is how every subscription service is managed, even though they is still using opt-out method and not the opt-in method (“we will assume that you do not want to continue if you don’t agree to the start of the paid period by clicking on this link”).

I await the vendor/service that uses opt-out so that the rest of the opt-in brigade realizes that their more ethical method still falls short.



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