Loyalty Tests

Subscription services aren’t an escape from shopping, they’re a surrender to brands

Full-text audio version of this essay.

The concept of subscriptions isn’t new, but thanks to the internet, any mundane purchase can seemingly be reinvented as a subscription service, from socks to baby food. Historically, subscriptions have tended to be about novelty: You needed to subscribe to newspapers because each day’s issue was different and its window of relevance was short. Newer subscription services, however, no longer emphasize novelty but ease of access, or escaping nuisances like ads. For less than the price of a single compact disc, Spotify subscribers can purchase a month’s worth of an effectively infinite library of music. (Of course, if we don’t pay the next month, then we have nothing.) The same principle applies to many “smart” internet-connected physical devices: Companies can manage consumers’ access to products they’ve already purchased by administering functionality via subscriptions. One can now subscribe to running shoes and cars, which allow (or require) customers to renew at regular intervals. The wide variety of subscription-based direct-to-consumer products (like Dollar Shave Club and countless others) replace discrete retail purchases with a recurring merchandise stream.

It is easy to see why companies prefer such arrangements. They resemble conventional “loyalty” programs, in which customers collect points and earn discounts, only now the purchases occur automatically and the loyalty occurs by default. Of course, calling those old points programs “loyalty” rather than bribery was always a kind of propaganda — a euphemism to obfuscate the transactionality of the exchange, as if finer feelings were involved in amassing frequent flyer miles. But the goal of such programs was ultimately to engender the sort of habitual buying that subscription services entail from the onset. Rather than buying à la carte in discrete transactions, consumers establish a regular rhythm of payments in exchange for better access, or the comfortable freedom from choice that a loyalty arrangement promises. Brands like Stitch Fix, Birchbox, and Blue Apron exemplify this, sending their subscribers regular shipments of clothing, cosmetic products, and meal kits. Streaming media platforms like Netflix and Spotify, meanwhile, offer unlimited access to vast libraries of content for a small monthly fee. Peloton’s subscribers get a wide variety of workout classes that supplement the stationary bike. But no subscription service is more ambitious than Amazon Prime, which provides members with lower prices and faster shipping across a seemingly universal selection of products, along with access to other Amazon services. With Prime, Amazon promises a subscription that uncomplicates shopping as a whole.

Newer subscription services no longer emphasize novelty but ease of access, or escaping nuisances like ads

Typically, companies present subscription deals as too good to refuse: They are priced low enough relative to their value that consumers hopefully won’t think twice about signing up. Built into the phrase “direct-to-consumer” as well is the old internet dream of bypassing retail intermediaries, a group that has historically exercised its own forms of coercion and extraction. But the appeal of subscriptions often hinges not on a better deal but on an escape from having to make deals. For many direct-to-consumer subscriptions, the absence of active purchasing decisions is the entire point. They replace more active forms of brand loyalty with a passive form in which the subscribed user is loyal to the point of effectively forgetting about it. The objective is no longer to earn rewards, or to experience oneself as a certain sort of person through one’s choices. Rather than falsely describing a transactional arrangement as a matter of loyalty, subscriptions impose a kind of loyalty without requiring a transaction at all.

The resulting platform lock-in — the “moat,” in business jargon — is a problem for competitors, while presumably customers are happy to be safely inside. But our loyalty — whether conscious or automated — provides companies with leverage to suppress would-be competitors, driving industry consolidation that diminishes alternatives. With subscriptions, consumers pre-commit their loyalty and subsequently reduce companies’ incentives to continue earning it. Rather than releasing us from traditional forms of brand loyalty, subscriptions further entrench it (or at least a simulation of it), at least until the company achieves monopoly, at which point our loyalty is no longer needed.

In his 1970 book Exit, Voice, and Loyalty, economist Albert Hirschman argued that people generally have two options when faced with the declining quality of organizations they’re affiliated with: They can use whatever leverage they have to try to improve it from within — what Hirschman calls “voice”; or they can leave — “exit.” At the level of citizenship, for example, the choices are emigration (exit) or activism (voice). At the level of commerce, one can shop somewhere else (exit) or complain to customer service (voice). Loyalty, as Hirschman understands it, is the key variable influencing which course people choose: It pushes people toward voice and away from exit.

In business terms, brands must prevent customers from exiting by making their voices seem meaningful, as though they are stakeholders in an institution rather than counterparties to an ephemeral transaction. Loyalty programs exist to help posit the idea of a brand community that consumers’ voices might impact. Subscription products take this a step further: They try to establish a relationship whose seriality means it is no longer transactional but emotional, a part of customers’ lives. This invites “voice” while effectively neutralizing it. If subscriptions work, they allow companies to consolidate market share and drive out competitors before loyalty wears thin, the impotence of voice becomes apparent, and customers head for the exit. If this approach succeeds, as examples like Amazon suggest, customers might find that when their loyalty finally fades, there’s nowhere else to go.

As subscriptions supplant purchases, products transform into “services,” and the need to actually own anything hypothetically diminishes. A 2016 article by the World Economic Forum’s Global Future Councils predicted that by 2030, “all products will have become services.” This obviously benefits the companies selling those services. No longer expected to offer novelty in exchange for subscriptions, just access, they can effectively sell the same product over and over again, collecting tolls for using the infrastructure they have staked out from users who have few if any alternatives.

Under other circumstances, this would feel like coercion. So how do subscriptions keep us feeling loyal rather than trapped? How do they make consumers feel like a part of something bigger than an economic transaction that is eventually slanted against them? One way is by framing a lack of ownership as a new kind of freedom.

Chenoe Hart has speculated that the growing efficiency of delivery networks and lending-based consumption arrangements might extend the post-ownership cloud logic of Spotify and Netflix to physical things: “The ability to request the express arrival of any object missing from your life with a minimum of effort could make it increasingly possible to live as though you already own everything. That is to say, ownership might become an irrelevant consideration in comparison to the availability of abundant options for short-term consumption like those already offered by media streaming services.” Our relationship to merchandise might then assume the same casualness as our relationship to the bevy of digital content readily available through streaming services.

This vision of a post-ownership society differs from Marie Kondo–style minimalism, which seeks to achieve domestic simplicity through decluttering. When all products are services, we don’t eliminate stuff, we merely forsake ownership — and in fact, we’re more likely to welcome such a future because it gives us access to even more physical stuff, just as streaming services have bolstered access to digital media, and Prime piles up Amazon packages at doorsteps. It’s also easier to give your home the Kondo treatment when you know you can instantly reorder anything you threw out as soon as you need it again.

For companies that offer subscription products, they are more than just simple revenue streams; they are vectors for cementing relationships with customers. While many apps and subscription products do offer a straightforward service in exchange for recurring payments, others seek to establish a beachhead or “touchpoint” in the subscriber’s life. As one example, tech industry analyst Ben Thompson writes that “Disney+ is not simply about earning subscription revenue; rather, it is a direct-to-consumer touchpoint for Disney’s entire business.” In other words, the ongoing relationship we establish with Disney by subscribing to Disney+ provides a voluntary inroad to targeted cross-promotion of the companies’ many other offerings — theme parks, merchandise, and more movies — and facilitates the individualized data gathering that makes such targeting more effective. If media paywalls are intended to deliver us from ad-based business models, these platform subscriptions actually expose us to a more powerful version of the same thing.

As companies evolve into platforms or ecosystems — as Disney and Amazon have endeavored to — the more they stand to gain from subscription relationships. This means that becoming a platform is the ultimate aspiration of every subscription service, as doing so maximizes the value of the locked-in users. By occupying an ever-larger share of subscriber’s lives and minds, by diversifying their array of products and maximizing the time spent consuming their media, such companies widen their moats and decrease the probability that their customers will ever imagine leaving, or that a competitor (whom they hope to ultimately eliminate) will successfully lure those customers away. This appetite for presence in consumers’ lives, once those consumers have become subscribers, is effectively unlimited. As Netflix CEO Reed Hastings has declared, the company’s only real competitor is sleep.

Loyalty, whether conscious or automated, provides companies with leverage to suppress would-be competitors, diminishing alternatives

Peloton also exemplifies this strategy. It extracts an even more powerful form of brand loyalty from its customers, based not on choice, convenience, or raw coercion but on an idea of community. Amanda Mull compares Peloton to “the structure and group-aspirational ethos characteristic of religion.” The product’s popularity, which has received an unsurprising boost from the pandemic, derives from its layering of social media network effects atop a stationary bike whose brand might otherwise be forgotten after a few months in its owner’s home.

But more than any other service, Amazon Prime embodies the platform subscription approach. Like Disney+, Prime is Amazon’s essential touchpoint — the gateway through which Amazon induces its customers to adopt more Amazon services in more areas of their lives. At $119, Prime’s annual membership fee may seem reasonable relative to the benefits that its “bundle” provides: lower prices at an increasingly literal “everything store,” free shipping, and access to Amazon’s media streaming services. Members are likely to feel as though they’ll easily make back the membership fee: The more you buy, the more you save. As this pattern is strengthened, so is Amazon’s market dominance.

Viewed from this perspective, brand loyalty appears less as a path that we’ve chosen amid a variety of options and more an alibi for coercive platform lock-in. Loyalty to Netflix or Amazon doesn’t arise organically as much as it is foisted upon us, ingrained via marketing after we’ve already subscribed in order to conceal our imminent lack of realistic alternatives. If a sincere feeling of loyalty does eventually emerge, it could just be Stockholm syndrome.

The military strategist John Boyd once said that we can either “be somebody” or “do something.” Subscription products nudge their customers to embrace the former: Rather than doing something — making purchases and moving on — customers “become somebody” specific, like loyal Amazon Prime customers. Unlike platinum status on an airline, which requires significant effort to attain, Prime is egalitarian, available to anyone willing to pay for indefinite access to the Amazon universe. By conferring preferred status, the Prime subscription reframes an otherwise transactional relationship as an identity, something more than the sum of its parts. Amazon proudly proclaims its “customer obsession” as a corporate value. By marketing this attitude, Amazon implies that being its customer, not just buying its products, is how we must engage with the company. To shop on Amazon’s website without a Prime membership is to receive constant reminders of the deals and services that your non-status is denying you — a problem easily rectified by becoming that someone right now for just $119. If you order paper towels and move on without deepening the relationship, the several extra dollars you pay for the privilege will serve as one more reminder. Considering Amazon’s forays into industries like education and health care, Prime might one day conceivably amount to a subscription for all of life. As subscriptions seek to pervade consumers’ lives and build moats around them, perhaps we should view the retail middlemen of old as less of an inconvenience than a protective layer between us and large corporations.

If a sincere feeling of loyalty does eventually emerge, it could just be Stockholm syndrome

FAANG was once just shorthand for several of the world’s most valuable tech companies (Facebook, Apple, Amazon, Netflix, and Google). Now it seems to describe a continent,  demarcated by digital corporate ownership rather than national boundaries — what Benjamin Bratton called the “nomos of the cloud.” In The Stack (2015) he writes, “Network edges and lines produce interiors and exteriors, and so networks are not just superimposed on a given territory, they also produce a real territory by striating it.” As the largest tech platforms consolidate their dominance of more and more areas of our lives, we don’t just use them, we actually inhabit them, and while we may feel as though the emergence of this territory implies the development of our voice within it, that is an illusion. Platforms are the new public space, and subscriptions are the tax we pay to occupy it.

This is almost enough to make one nostalgic for transactionality. As the economic relationships that govern our lives are less bounded in time and space, it becomes more appealing to slip through the cracks, to make purchases with no strings attached, to buy a pair of shoes or a desk lamp from someone who doesn’t know who we are and move along without leaving a data trail or entering into a permanent brand relationship.

We are accustomed to understanding transactional as a negative quality — a mark of the dissolution of community and its replacement by more rationalized, impersonal, and contractual relationships. But the emergence of ersatz marketing-based communities should remind us of the other side of transactionality: the sense of freedom produced by the anonymous economic interactions that modern urbanization originally made possible. Sociologist Georg Simmel identified anonymity as an essential urban characteristic, liberating inhabitants from the claustrophobia of close-knit communities: In “The Metropolis and Mental Life” (1903) he describes how such communities’ insularity and parochialism are “rendered mild by reciprocal interactions and interconnections,” as “the individual gains a freedom of movement far beyond the first jealous delimitation.” The transactionality of the modern city, in other words, provided relief from more oppressive conditions.

Simmel’s categories derive from those of another German sociologist, Ferdinand Tönnies, who differentiated between community (“Gemeinschaft”) and society (“Gesellschaft”). While the modern and more transactional Gesellschaft almost completely pervades the contemporary world, nostalgia for the close ties of Gemeinschaft abounds; people seem to continually seek a version of that elusive community, often without being able to define what it is. But brands would like to supply us with a definition. They want us to believe we can turn back the clock, and that they can help to immerse us in the tribal Gemeinschaft relations that we fail to find elsewhere. (Marketing guru Seth Godin has even written a book called Tribes about this idea.)

But in the subscription business model, with its spurious fusion of community and transactionality, we get the worst of both worlds: Gesellschaft masquerading as Gemeinschaft, a purely economic relationship, with all the means-ends rationality of capitalist society but none of the city’s liberating anonymity and mobility. No exit, no voice, just monetized loyalty.

Drew Austin writes about technology and urbanism on the blog Kneeling Bus.