"Enduring by Listening to 1 Minute of Songs"... 20s and 30s Reducing Subscription Fees in the 'High Inflation Era'

Music and Video Subscription Fees Climb One After Another on Google's In-App Payment System
Some Users Cancel Services Due to Subscription Fee Burden

As consumers tighten their belts due to high inflation, there is also a trend of canceling subscription services. [Image source=Yonhap News]

[Asia Economy Reporter Yoon Seul-gi] As the economic recession outlook deepens and high inflation persists, more consumers are tightening their belts. In particular, some are canceling subscription services to reduce fixed monthly expenses, focusing on essential spending rather than everyday conveniences.

Recently, A, a worker in their 20s, canceled their music streaming service subscription. A said, "My salary remains the same, but expenses keep increasing, so I'm worried," adding, "I thought about ways to reduce fixed expenses and decided to cut down on subscription services with recurring payments." They continued, "I originally subscribed to three services?Netflix, Coupang, and Naver Vibe?and calculated that these cost about 30,000 won. Since I only listen to music for about an hour during my commute, I decided to cancel the Vibe subscription. If I want to listen to music, I use YouTube or one-minute previews."

A also commented on subscription services, saying, "They are convenient, but the monthly costs are burdensome. The prices of the services I used have been rising one after another, so I was already concerned. Since these are not essential like food, they are easier to cut back on."

According to industry sources on the 28th, music streaming services such as Melon and Genie Music recently raised their subscription fees. Melon increased its fees by about 10% from the end of last month, and Genie Music raised prices by approximately 5-6% depending on the product. Another music streaming service, Flo, raised prices by about 13-14% per subscription starting in April. Around the same time, Vibe also increased subscription prices by about 16% on its Android app.

The price hikes in subscription services are largely due to Google's decision to apply commissions on in-app payments (payments made within apps). From June, Google began charging app developers up to a 30% commission on in-app payments and prohibited external payment methods such as outlinks. Platforms facing increased commission burdens raised their prices, affecting not only music subscription services but also online video services (OTT) like Wavve and TVING, which also increased their service fees.

Some subscription services raised prices regardless of the in-app payment commission increase. Netflix, the market leader in the domestic OTT market, raised its premium subscription fee by 17.2% at the end of last year. Coupang increased the price of its paid membership plan, which offers both shopping and video services, from 2,900 won to 4,990 won (including existing members) in June, a rise of about 72%.

Netflix logo at the 'Hell' experience zone set up at COEX in Gangnam-gu, Seoul. The photo is not related to the specific content of the article. [Image source=Yonhap News]

As a result, consumer burdens are growing. Particularly among the 20s and 30s generations, who are familiar with subscription services, dissatisfaction with subscription fee increases is noticeable. According to a survey conducted last September by Consumer Insight, a shopping research specialist, involving 2,000 consumers on subscription experiences and weekly product purchase behavior tracking, the subscription service usage rates for people in their 20s and 30s were 75% and 65%, respectively, higher than those in their 40s (56%) and 50s and above (55%).

Consumers with thinner wallets due to high inflation are responding by reducing "less essential" subscription services. Kim, a 25-year-old job seeker, eventually canceled their Netflix subscription after more than a year. Kim said, "I used to watch Netflix original dramas like Stranger Things, Squid Game, and All of Us Are Dead, but recently there hasn't been much worth watching, and since drama summaries are uploaded on YouTube, I watch those instead. The summaries are actually more entertaining, so I don't feel the need for a paid subscription. Saving about 10,000 won a month is quite a bit for someone preparing for employment."

Regarding this, Professor Lee Eun-hee of Inha University's Department of Consumer Studies explained, "Both the economy and consumption are psychological, and especially with the anticipated economic downturn, consumer sentiment has become very subdued. Since there are platforms that can replace subscription services, consumer churn is expected to continue."