Take My Bills, Please!

There was a telling moment in the recent agenda conference, a prominent gathering of high-tech execs not bankrupt or in handcuffs. Moderator James Fallows, whose day job consists partially of writing big-think articles for The Atlantic Monthly, was interviewing Rob Glaser, the CEO of Real Networks. Glaser's company boasts one of the biggest subscription enrollments on the Web: he'd come to Phoenix, Ariz. (these things are often held at balmy desert resorts ringed by golf co), to boast of 850,000 paying--that's right, paying--consumers of the entertainment and sports programming he sells. Fallows noted that despite selling subscriptions for more than 100 years, his magazine's financial state is perpetually precarious. And, Glaser asked, "does Atlantic get $120 a year for subscriptions?"

Glaser's point was clear: these days a business person's heaven is a few hundred thousand--or, better yet, a few million--customers sending you fat monthly contributions. Especially when you're selling something that (unlike a publication printed on dead trees) is almost as cheap to send to a zillion people as it is to distribute to a few dozen. No wonder that one of the mantras at Agenda--which, in the midst of a very rough patch in the industry, was severely depopulated--was Subscriptions and Services. The idea is to train consumers to embrace the concept of a monthly fee for things they now buy outright, things they now get free and things that they don't yet know they need.

The great model for this, of course, is cable TV. I am old enough to remember (warning: codger-like rant impending) when simply buying a TV set and plugging it in would bring you all the riches of the video experience. Then cable began its march, moving from a means of extending broadcast signals to backwater rural areas, to a source of original programming that the traditional networks couldn't or didn't offer (uncut movies, whole seasons of hockey games and, eventually, "The Sopranos"). At first, cynics sniffed at the idea--there was almost something unpatriotic about having to pay for TV. Nonetheless, now the vast majority of Americans pay out 30, 40, 50 bucks a month for their cable or dish fees, with shockingly little outrage.

With that in mind, both the computer and the entertainment businesses are busily planning for the day when people don't own things, but subscribe to them. Applications like word processors will cross the line from products to services: your steady fees will ensure that you have the latest version and maybe even some tech support. Microsoft envisions even Windows itself as being marketed in this way: just pay the monthly Bill bill. In the music world, subscriptions are the potential breakthrough that will satisfy Internet customers while blunting piracy: instead of buying CDs, you'll send a check to the labels and get access to their entire catalogs. (The day the music dies is when your payment's overdue.) Then there's Real Networks, which Glaser is trying to position as an aggregator of premium Net content--the HBO of Web media. (For example, Real carries all major-league baseball games.)

The flaw in the subscription theory is that sooner or later consumers may simply run out of money. I get dizzy thinking what I'm billed for on a monthly basis. Besides cable TV--with prices inflated by premium networks--there's the local telephone bill, the long-distance bill and the astronomical bill for mobile-phone service. (Everyone in the family, of course, needs a handset.) There's the cable modem and ISP bills, along with the personal video recorder, satellite radio and Rhapsody streaming-music bills. Where does it stop?

Perhaps the balk point might come when they try to sell us on Web Services, Internet-based applications that let computers and Web sites talk to each other to presumably make things easier for people. Though everyone in the software industry is high on this concept, Micro-soft is ahead of the rest, proposing something originally called Hailstorm. (It now goes by the name .Net My Services. Makes you want it even more, huh?) The idea is to automate much of the annoying, phone-tag detritus of modern life. Examples include calendars that sync with the schedules of people you're meeting, or travel planners that notify you automatically if your plane is going to be late (and maybe reschedule the car service). Microsoft has oodles of detailed "scenarios" in which its services will help you--but will people shell out $30 a month for them?

Even if they do, won't that fee be a sitting duck during a tough financial patch, when a consumer looks for ways to trim down the budget? Hey, to save a couple of hundred bucks a year, maybe you'll make your own damn calls to the airport to see if Flight 980 is running late. Troubled software and entertainment companies may see subscriptions as their savior, but the future in this case doesn't add up.