Heated Seats, BMW Subscriptions, And The Evolution Of Ownership In The Age Of Smart Matter

Why does the idea of a paying a monthly subscription fee to BMW to use the heated seats that are already in your car drive most people up the wall? At the same time, why doesn’t it anger Model 3 and Model Y drivers that Tesla won’t release Acceleration Boost, a software update that makes their cars faster, without a one-time fee of $2,000?

According to Particle CEO Zach Supalla, it’s about knowledge and perception.

“When we know how things are built, it leads to us having an opinion on how those things are paid for,” Supalla told me in a recent TechFirst podcast. “When we don’t know how things are built, then it gives the builder a little bit of flexibility in terms of being able to charge for something.”

Critically, the difference is whether we think we understand how things are built, not whether we actually do.

That’s why BMW’s subscription plan for heated seats created so much anger: we generally think we understand electrical coils, power passing through them, heat being generated. They’re in the car you paid for, they work, but without the extra subscription fee, they’re non-functional. The difference with Acceleration Boost — or Full Self Driving for that matter — it that it’s more complicated, less obvious, less clearly straightforward in our imaginations.

“I don’t have to be an engineer to know that there is a heater in there,” Supalla says. “So that makes me mad because it’s my car, it’s got the capability in it, and it feels wrong to charge me for something that I own.”

BMW wasn’t the first company to float subscription fees for extra capability.

Subscriptions have been hot ever since companies figured out locking a forever-paying customer in for life is better than a one-time sale, or a possible episodic series of sales. B2B software lead the charge during the software-as-service revolution, driving 40% year-over-year growth when they initially came out. App makers learned the lesson, and global subscription revenue for apps could total $243 billion this year.

We rent our music in Spotify and Apple Music, rent our entertainment with Netflix and Prime and Disney+, and rent our transportation with Lyft and Uber.

Is this the future of ownership?

As originally stated by Danish MP Ida Auken and famously quoted by the World Economic Forum, will we all “own nothing and be happy?”

Maybe.

Essentially it all comes back to the utility. Apple Music, Amazon Music, and Spotify offers huge utility because they provide more songs than we could ever listen to, and deliver those anytime, anywhere: not just where I happen to store a plastic disc. But there are some downsides. Songs go missing. Albums disappear as a competing service signs an exclusive deal. Artists re-release beloved songs in new versions because licensing deals expire, and the song you once knew and loved is suddenly different, and not always in a good way.

Overall though, the utility of ubiquity is hard to beat.

But ownership is legally complex.

“Once upon a time, the way that you got software was you bought a CD or a floppy disk or whatever, and it came with that software on it and you put it in your computer and you loaded it up,” Supalla says. “Now, that feels like ownership. But ownership’s complicated … you didn’t own it, you had a license to it. Music and media are kind of that way too … when you buy a record, there is a certain level of ownership that you have over that thing … you own the record, but you don’t own the music.”

Software, like music, isn’t something you own. But with software-as-a-service, the expectation is that because you are a regular paying customer — the quid, if you will — the company who makes the software will continually work to improve it over time: the pro quo.

That’s the utility for software, much like ubiquity is for music, and — to a lesser degree — the entertainment on Netflix and other streaming/connected/OTT/smart TV services.

The question is where each one of us draws the line.

What do you want to actually physically, legally, and totally own, and what are you happy to rent? For people who lease cars, a car subscription is essentially very close to what they already have. For those who rent by choice for flexibility or financial allocation reasons, the same is true for housing.

“While we are witnessing the end of ownership, we also see the rise of ‘usership,’ i.e., people are owning less but using more and more services,” says Salesforce chief digital evangelist Val Afshar.

I don’t want to rent my clothes. But for many others, using services like Rent The Runway means they can always have something new and different to wear and never fill up their closet. And in our era of smart objects and sharing economy and software-enhanced hardware, the line keeps moving.

“My expectation is that over time we do move to a model where more and more of the stuff that we own is not in fact owned, but is paid for as a service,” Supalla says. “I don’t think this will ever happen to cheap stuff, you know, like a toaster.”

This has risks, however.

If I subscribe to my phone, my laptop, and my tablet, what rights do I keep, and which do I give up? Only those provided by my technology service provider? Ultimately, that’s something to be negotiated in our evolving relationship with ownership, as farmers have learned in their efforts to win the right to repair the machinery they’ve bought.

Which brings up a good question: what happens when the company that rents us furniture or software or technology goes out of business?

“It’s tough to say that a company is required to provide ongoing service forever,” Supalla says.

But companies that want to employ subscriptions to maximize revenue might need to be regulated in new ways so that — like Pebble, when Fitbit bought the crowdfunded smartwatch vendor — they provide a way for former customers to keep using their products.

“That is something that more companies could do … maybe with the right pressure which could come from regulation,” Supalla says. “If you blink out of existence … your stuff keeps working.”

Get a transcript of our conversation, or subscribe to TechFirst.