The Free-Trial Trap

How much of the subscription economy relies on people forgetting to cancel?

Latest Jun 6, 2024 0 41 Add to Reading List

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Free trials are convenient for consumers—and expedient for companies. But how much of the subscription business relies on people simply forgetting to cancel?

First, here are three new stories from The Atlantic:

“Impossible to Get Out”

Do you have long-forgotten free trials turned memberships languishing in your credit-card statements? If you, like so many others, can say yes, the thriving subscription economy has you to thank.

One can subscribe to almost anything right now—meat boxes, razor refills, a membership to Pret a Manger (and, well, this magazine)—a reality of our world at least since subscription mania began raging in the mid-aughts. As subscriptions proliferated, so, it seems, did the free trials that lure us in—and sometimes trap us.

A free trial makes intuitive sense and, when executed fairly, can benefit both companies and consumers. Many products are “experience goods,” Neale Mahoney, a Stanford University economist, told me in an email, and we can figure out whether we like them only by trying them. Consider the free ice-cream sample—you don’t want to go in on a cone if you don’t know that you like the flavor. But “the obvious problem,” Mahoney noted, is that—unlike with ice cream—“virtually all free trials roll over into paid subscriptions.” When that moment comes, many shoppers simply forget that they’ve signed up. One 2022 survey found that about 40 percent of consumers have stayed subscribed to a service they don’t use because they forgot about it. The problem is so widespread that a cottage industry of services designed to help consumers keep track of and cancel subscriptions has popped up (of course, these services often charge a monthly recurring fee).

Getting inadvertently mired in paid subscriptions can turn costly. In fact, according to research that Mahoney has done on the role of inattention in subscriptions, the subscription economy is bolstered by just that. “For some subscription services, inattention raises revenue by a factor of three,” Mahoney told me, adding that “it’s hard to imagine these subscriptions being commercially viable if consumers were paying attention each month.”

Trials can be an easy win for companies: By giving someone a free or low-cost trial, brands can get consumers into their ecosystem—sending them emails, learning about their preferences, and getting them in the habit of using a product. Investors love it when companies set up subscription models, because unlike with one-off purchases, which can bounce around from day to day, companies can use subscription models to plan ahead, Daniel McCarthy, a professor at Emory University’s business school, told me in an email.

But when a shopper decides to quit a service, the system doesn’t always treat them fairly. If forgetfulness is a common barrier to escaping the free-trial trap, a much more sinister one is the fact that some companies make canceling really hard. If you have ever been diverted to a bunch of new pages asking you if you’re sure you wish to cancel, you know what I mean. Such tactics—“Please don’t leave us!”—can veer into manipulation. This dynamic, Sidney Fussell reported in The Atlantic in 2019, is known in some circles as the “roach motel. Easy to get in, nearly impossible to get out.” Some people are drawn into the roach motel because they are overly confident that their future self will remember to cancel, Fussell notes—and that getting out of a subscription when the time comes will be simple enough.

The government is trying to crack down on companies’ manipulative behavior: Last year, the Federal Trade Commission proposed a new “click to cancel” provision, which would require corporations to make the process of canceling a service as easy as signing up for it. (Perhaps predictably, trade groups have pushed back on the plan.) Mahoney told me that companies could also be fairer to consumers by, for example, sending them reminders about recurring charges, especially if their accounts are sitting unused.

Back in 2022, Amanda Mull warned in The Atlantic that we might soon reach a subscription breaking point: “No one is sure how many subscriptions the average household will bear before it snaps and starts canceling things, but we might be about to find out.” It seems we are not quite there yet. Two years later, subscriptions are still everywhere—my sunscreen purveyor just tried to prompt me to subscribe—and so are the tantalizing trials that come with them.

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A repeating silhouette of a human face in the colors of the Indian flag — Illustration by Matteo Giuseppe Pani

The Near Future of Deepfakes Just Got Way Clearer

By Nilesh Christopher

Throughout this election cycle—which ended yesterday in a victory for Modi’s Bharatiya Janata Party after six weeks of voting and more than 640 million ballots cast—Indians have been bombarded with synthetic media. The country has endured voice clones, convincing fake videos of dead politicians endorsing candidates, automated phone calls addressing voters by name, and AI-generated songs and memes lionizing candidates and ridiculing opponents. But for all the concern over how generative AI and deepfakes are a looming “atomic bomb” that will warp reality and alter voter preferences, India foreshadows a different, stranger future.

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