November 9, 2021

FTC Issues Major Warning to Deceptive Subscription Behaviors

For years, I have wanted to subscribe to The Wall Street Journal. I visit the site often enough because they do legitimately good business reporting. But I’ve never actually signed up because I’ve heard the horror stories of unsubscribing. Essentially, you have to call to cancel (or set your state to California).

Knowing that I might have to call if I ever want to cancel prevents me from ever signing up.

Fortunately, the Federal Trade Commission appears to be taking steps to make this sort of scenario a thing of the past. According to the press release:

The FTC’s policy statement puts companies on notice that they will face legal action if their sign-up process fails to provide clear, up-front information, obtain consumers’ informed consent, and make cancellation easy.

The FTC has brought cases challenging a variety of illegal subscription practices. It has sued companies that hid important payment information, or even the fact that consumers would be charged at all, behind hyperlinks, hover-overs or in inconspicuous places or buried on pages beyond the initial offer page. It has sued companies that made consumers wait on hold or listen to lengthy ads before they could cancel. It has sued companies that converted free trials to paid subscriptions before the free trial ended. And, recently, the FTC sued a company that failed to disclose that widely advertised, material benefits of the subscription were no longer available.

So, what does this mean? In essence, there are three core parts of this.

First, the subscription has to be as clear as possible for the consumer. That means that the price, term, and frequency all need to be spelled out in easy-to-understand language. Just as importantly, it needs to explain upfront how cancellation occurs. Oftentimes, we want to sign up for something, but we need to understand how we can break up too.

Second, we need to get explicit permission from the consumer that they want to sign up for a subscription. Sometimes, products are priced at a flat fee plus a subscription. To charge that subscription, the consumer needs to give consent.

Third and my favorite… Cancellation needs to be as easy as signing up. As publishers, we spend a ton of time trying to make it easy to sign up. We remove friction. We’ll need to do the same thing on the other side, making it easy to unsubscribe. That means, if you can sign up online, you need to be able to cancel online. Sorry, WSJ.

For many publishers that make it easy to unsubscribe, this isn’t that big of a deal. Maybe we modify our calls to action a little bit to make sure that we’re being as transparent as possible. But by and large, many of the newer digital media companies have baked in cancellation tech.

But for legacy media companies—and especially those that built their own subscription technology—making it easier for a user to unsubscribe is going to hit hard. How many people have wanted to unsubscribe from your product over the past few years, but didn’t because it was just too annoying to cancel?

Here’s the truth, though… This isn’t new. Some states have already started passing their own respective laws against these deceptive practices. According to a piece on JDSupra:

In addition to federal law and the new FTC policy statement, there are a number of states that have additional requirements for negative option marketing, including new autorenewal laws in California, Colorado, Delaware and Illinois enacted so far in 2021.  California has been particularly active with its enforcement of negative options over the past several years, including the creation of its California Autorenewal Task Force.

What makes this particularly complicated for some of these media companies is that the FTC doesn’t stipulate a deadline. All it says is that it is ramping up enforcement. Could that be in a few months? A year? Maybe it never really hits your publication.

It may hurt business, but it might be worth the exercise to clean things up. Make it easy to unsubscribe. And then build a product that people want to pay for rather than being forced to pay for because leaving just annoys them too much. Maybe then, I’ll start signing up for some of these publications I want to read.

The Atlantic reveals its newsletter plan

We’ve known its coming, but last week, The Atlantic revealed its plan for its new newsletter offering. According to an Axios story:

The company is hoping that new writers will attract more subscribers, which are key to The Atlantic’s goal of becoming profitable next year, CEO Nick Thompson told Axios.

For the newsletters The Atlantic is importing, existing subscribers will automatically start receiving new Atlantic newsletters, and will get a year-long subscription to The Atlantic for free. After that, they’ll need to pay for an Atlantic subscription to access those newsletters.

Newsletter writers that are importing their lists will not get access to the new subscriber emails that have joined the Atlantic once they leave.

These are important details because they start to show a path for media companies that are thinking about bringing these independent writers back in from the cold. The ultimate goal for The Atlantic is to get more people to become paying subscribers of The Atlantic. That’s it. This isn’t to be confused with other stand-alone offerings that other media companies might offer.

The Atlantic is trying to make the bundle stronger. Not only does a subscriber get The Atlantic, but you also get your favorite writers on a variety of topics including technology, international affairs, etc. It’s the same strategy The New York Times is taking with its subscriber-only newsletters—personalities worth subscribing to, plus everything else.

What’s interesting here is that The Atlantic is basically giving itself a full year to convert all of these existing subscribers. If we use Charlie Warzel, who is shutting down his Substack to join The Atlantic, as an example:

I apologize that this process means you’re probably going to get a couple of extra emails from The Atlantic (I’m really sorry to spam but it’s for a good reason. Your email will port right over so you can continue being a part of this community/experiment). But there’s also great news: Anyone on my current email list — free or paying— will be getting a free year-long subscription to The Atlantic. Your subscription to The Atlantic begins at the start of December. For technical reasons outside of my control, you’ll be getting some messaging emails until then.

This is a smart strategy. Many people found Warzel interesting and worth paying for. What is the likelihood that they will decide to continue paying for him and The Atlantic in one year? My guess is pretty likely. More importantly, it gives The Atlantic a ton of opportunities to introduce other content from the publication to Warzel’s audience to improve retention.

So, what the writer gets is a home base and some stability to their lives. What The Atlantic gets is more product to add to its bundle and new touchpoints to get a subscriber to convert. If we believe that bundles are returning after a few years of unbundling (which I do), then these sorts of scenarios should play out more often.

Is this the right way to do it?

Honestly, it depends. Some writers are going to be more entrepreneurial and want more upside. Being a part of a bundle versus being a partner with a media company will call different types of writers.

For example, Andrew Rosen, the writer of Parqor, recently moved his newsletter over to “The Information’s new newsletter network.” Unlike The Atlantic, this newsletter is treated as an entirely separate product. It adds a level of complexity to audience development, but also makes it possible to go more niche. The Information has another newsletter in the network called The Electric, which is all about electric vehicles and batteries. Update: After publication, I learned that The Electric is a separate publication from The Information versus Parqor, which is part of the newsletter network.

As we move forward, I expect to see more of these writers look to rejoin media companies. Being on your own is a lot of work. The ideal scenario would likely be a greater upside for their work. That’s a good outcome for leaving a media company, trying something on your own, and then rejoining a media company. Whether media companies can really figure out how to make this work is another story.

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