No longer science fiction.
this post was submitted on 23 Mar 2025
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It's because the hot idea in business right now is rental models for everything.
If your business plan doesn't have a way to lock customers in and force them to keep paying forever, then no investor is going to look at it.
Software is subscription, infrastructure is subscription. Hell, your own data is probably subscription based these days. Buy a car? Bet your ass it has at least 1 subscription service in it.
One of the driving forces behind this phenomena is that business types value having that reoccurring revenue on the books more than "normal" revenue. If you have two companies with identical revenue but one of them gets it from customers locked in on a subscription, that company will be valued significantly higher. If you're an exec or a big investor who owns a lot of stock in a company then you're effectively incentivized to push the company towards that subscription based reoccurring revenue model because it will boost the stock price and make you richer.
I was talking about this with my friend the other day. I was looking for car insurance right. I went to Geico and I was just about ready to lock in to a plan for 1000$. I had a question I needed answered so I went to support. What I got was a worthless chatbot that ended up costing Geico my business. I was so displeased I ended up going to progressive.
But that begs the question: do Geico executives make more money off the increased stock valuation that comes from implementing a chatbot despite losing my real, cash business?
Easy to measure (support manpower costs) vs hard to measure (business lost due to bad support).
Good engineering (and old fashioned business practices) would try to better measure the hard to measure stuff (for example using surveys).
Modern MBA business practices just uses the easy to measure stuff as guidelines and doesn't even try to measure the rest, possibly because "if we don't officially know it then I can't be blamed for it".
Mind you, maybe they're right since most consumers get shafted and still keep on coming back for more.
I understand some of it tbh. Not the cars. A car is one and done, you manufacture it and you don't NEED to spend much more after the fact to keep the happy new owner happy. There's no way servers cost as much to run as they want for their cloud services (e.g remote start via app, unlock via app, etc). Sure there are R&D costs and they're pretty big, but those usually end when a model comes out, so you can divide it by total cars sold to get how much it is per one car. Before Tesla, cars didn't really get software updates unless there were major issues.
But I'm starting to understand why the software industry adopted the service model. Having worked for multiple companies doing B2B SaaS... The customers just keep asking for new things. Does a meal planning app need to be a subscription service? Probably not. But anything that keeps on adding new features costs a lot of money. Software engineers aren't cheap.
Of course my view may be skewed because it's B2B, not software anyone would just download off an app store or website. At my different jobs we've had billion dollar companies come and say "we love what you're doing, we want to keep using it, but you have to do X, Y and Z or our workflow just won't work and we can't use it efficiently".
Also in the world of consumer facing software, nobody wants a big upfront payment, but people are more willing to stomach a small monthly subscription. We could do away with proprietary software altogether, but oftentimes what happens with open source software is that due to lack of funding, devs don't have enough time to work on things, and they lag behind proprietary offerings. Large software suites like Adobe Premiere are never "finished" and thus neither are the open source alternatives. But Adobe has a ton more engineering resources to throw at improving their product than most open source projects.
TL;DR: Software engineering is expensive. People working open source projects are often doing it in their spare time after the work that actually pays their bills. If you want free and open source software to be competitive to paid subscription software, you gotta set up recurring donations and convince other people to do the same. At least it'll be forkable, voluntary and democratic, unlike with proprietary software companies.
The problem with the subscription model is that it doesn't incentivize making improvements. If I buy a piece of software, I'm not going to buy the new version unless they make significant improvements. With a subscription model I have to continue paying for it even if they make no improvements to the software.
This is a problem of poor sales and marketing. The sales people should simply charge the customer for the changes that are asked for. Of course neither the sales people nor the customer understand the cost (they think it's just pushing one button). Sales people tend to have too much influence in a company (like they bring in the money, not the product, and developers are a cost) and they'll say yes to anything the customer asks for even if the customer may not even care all that much. But hey if this company is offering free software development services, why not take advantage of it?
A service model might make sense in some cases, but oftentimes it does not. Most definitely not in the consumer market, but we see that everywhere now.
Especially with software, it's a weird world.
Back in the 80's and 90's, they were making actual improvements to things like spreadsheets and word processors. Remember when spell check was a separate program you ran after the fact?
I'd say MS Office hit the point of perfectly usable, needs no improvement somewhere around 2003. Even by then, the vast majority of users weren't aware of or cared about the features they were adding and would soon start strongly wishing Microsoft would quit fucking around with the UI every few years.
Their business model relied on people buying new versions every so often, and then they made a version that was everything anyone would need...so now what? Demand that they just keep paying for it.
Just thinking out loud, I'm wondering if there's not a mix of two innovations - the big innovation such as whole new software or hardware to do something that wasn't possible to do before or at least not in that way and small innovation, i.e. incremental improvements.
In Tech, companies usually start with one big innovation (consumer OS for Microsoft, web search with automated crawling for Google, universal discussion forum for Facebook and so on) and after that mostly do smaller innovations on it. Whilst they often have a couple more big innovations in them (for example Android OS for Google and Office for Microsoft) they seem to eventually run out of such innovations or maybe just become too much "play it safe" when it comes to them so don't really do the break-through big innovations anymore.
I believe corporatisation destroys the environment in a company for big innovation (certainly it matches my own experience in working in all sizes of company) - it's a lot easier, ntaural and safer for a big company with a large infrastructure, big costs and an internal preponderance of well-entrenched managers who have their own internal fiefs and spend their time on internal company politics, to keep on milking the existing cow than to try and come up with something completely different and the very mindset of the company changes from "try crazy ideas" of the small, poor and desperate startup to the relying on steady and safe income streams that more appeals to the bean counters that take over those companies when they get big enough.
Under a sales model, you need a steady stream of small innovation on the core product to keep the steady and safe income stream going - people need to be convinced to buy the latest and greatest version of the product so it general need to offer something more than the last one, and although marketting can be used to convince people to buy a new version which has little more than the last one (look at iPhones of late), as the product matures there is less and less small innovation on it that's actually usefull so there is less and appeal for consumers to get the latest version and that income stream falls over time.
Both subscription models and paid-by-advertising upend that need for even small innovation - a company doesn't need to regularly make a new and improved version of their original big innovation, they just need to keep on getting the steady stream of revenue from their existing product. I would say that this appeals even more to bean counters that the small innovation cycle since it's even more predictable, hence you see big companies shifting to it even in things were it makes no sense for the product itself.
I think this is a much bigger thing than people realize. Like it's all great to say "I would pay much more for a one time payment", but when it actually comes down to it most people won't.
Look at something like Plex, they offer both a subscription as well as a one time purchase. But in 2023 (the newest data I could find) the subscriptions make up 84% of Plex's entire revenue stream. And the plex lifetime subscription really isn't that bad either, it's only $120 and it's supposed to go up to only (I know how y'all feel about it being "only", I don't care) $250 at the end of April. It's really not that expensive for a lifetime cost.
Even before subscriptions became normalised cars had a support cost, parts and servicing, especially for genuine or genuine reconditioned parts.
Strictly speaking, you can avoid the dealers and the part costs by working with mechanics, wreckers or aftermarket manufacturers but those have extra costs and voided warranties.
Parts sales are a major income stream for manufacturers, especially as they need to compete on car sales, but once you're locked in on that car they mark up the prices on the parts long term.
Though admittedly enshittification means worse and more expensive parts and legal threats to aftermarket manufacturers.