You are used to forking over money once to buy a TV set, smartphone, computer or smart speaker and that’s it.
But we are approaching new territory in which manufacturers may charge ongoing fees for software in technology that had previously been free. This is a crossing of the subscription Rubicon.
Amazon plans to introduce a remodeled version of Alexa next month with artificial intelligence features and charge you up to $10 a month for it. It would be first time in Alexa’s 10-year history that you will be asked to pay directly for the voice assistant. (Amazon founder Jeff Bezos owns The Washington Post.)
Samsung executives have said they could consider a subscription fee for AI capabilities in smartphones that cost up to $1,900.
And Apple’s half-baked AI features for the newest iPhone operating system? Apple is contemplating charging for them down the road, Bloomberg News has reported. (Apple said Monday that its newest iPhone operating system will be free. The company declined to comment further.)
Paying for the internet features in your devices isn’t new, but it’s been mostly limited to lesser used gadgets or optional add-ons such as the Oura health-tracking ring, Samsung TV set art (really), car safety services and iCloud storage.
What’s changing is the willingness of companies to charge you for features that are fairly essential to gadgets used by many millions of people. You might not like it, but it’s coming.
Why more gadgets charge you a subscription fee
There’s a cliché in the technology industry: Hardware is hard.
It costs a lot of money to develop a new phone, video camera or face computer before it hits store shelves. And if the device is unpopular or the company can’t persuade you to pay enough for it, the company might be toast.
But what if you paid for the product and a monthly fee, maybe forever? That changes the financial equation for companies — and you. Some examples:
- The $170 Hatch alarm clock offers a $4.99 monthly subscription. There’s a home kitchen sous vide cooker with a subscription app. Printer ink is sold as a subscription. (It’s bad.)
- If you buy Peloton home exercise equipment, you are probably also paying a subscription for the company’s online fitness classes. Tesla is among the car companies with subscription fees for driver assistance features.
- If you rent or buy a new Snoo baby bassinet for $1,695, you don’t pay extra for features such as sleep tracking and modes for car rides and weaning. But if you resell or pass along the device, the new parent may need to pay $19.99 a month for those add-on features. (Basic features still work without a subscription fee.)
“There are a lot of benefits of the subscription model when you do it really well for customers, but the bar is really high,” said Amy Konary, who founded a subscription think tank at Zuora. The company’s software helps companies with subscription billing and strategy.
Konary said it can feel predatory to be asked for a subscription fee for features you’ve previously used for free, or to use the basics with products you paid for, including cars, smartphones and smart speakers.
But, she said, people tend to be more receptive to subscriptions if you feel like you are getting something new and valuable for your monthly fee.
Konary used her car as an example. Basic digital maps and navigation don’t cost extra, and customers expect that as a basic. Satellite maps with enhanced navigation features do require a subscription.
An alternative idea to subscriptions
Companies hope that AI is like the enhanced mapping Konary described: Something you will find so much more useful than the basics that you will be willing to pay for it. We’ll see.
Samsung has committed not to charge for AI features in its smartphones until after 2025. The Post has reported that a “Classic Alexa” version will remain free even when Amazon starts charging for an AI Alexa.
Large consumer device manufacturers and carmakers have generally kept issuing new and more helpful basic software features for their products at no extra cost. It’s new territory if they make more software upgrades such as AI features or car cruise control available only with a subscription.
An intriguing idea came up in a consumer survey conducted for Zuora’s Subscribed Institute. The majority of respondents said that if they had to pay for AI features, they preferred to pay only for what they used, and not a monthly subscription fee.
Imagine paying a couple bucks every time you asked AI Alexa to help with homework, and not $5 a month no matter whether you used it zero times a day or 20.
If you’re old enough, you’ve experienced this pricing approach for your technology devices. It’s how people used to pay for each long-distance phone call or cellphone text message.
Now we just pay a monthly subscription fee for all that.