Today, the FTC dropped a pretty cool announcement: a finalized “click-to-cancel” rule, which requires companies to make it as easy for you to cancel subscriptions and memberships as it is to sign up for them. The rule goes into effect 180 days from now, and covers a wide range of subscriptions, including gym memberships, streaming services, and magazine subscriptions.
The goal is commendable, of course — to simplify cancellations amid a growing number of consumer complaints about companies that make it difficult to end subscriptions. In fact, complaints about “negative option” practices, where people are automatically charged unless they opt out, have been rising steadily, with 70 complaints per day so far this year. (Surprised there aren’t more, actually.)
Why This Matters:
For streaming platforms and publishers—both print and digital—the new rule could bring some challenges. Streaming services, which are increasingly all in on ad-supported models as subscriber growth slows, may face more pressure on subs revenue if cancellations get easier. Many platforms have already seen subscriber numbers plateau, and this rule could make things worse.
For online and print publishers that rely heavily on subscriptions, the “click-to-cancel” rule could also lead to higher churn as consumers take advantage of a streamlined cancellation process. Subscription revenue has become a key pillar for many publishers, and this rule may force them to rethink retention strategies. Pete Buttigieg, in a tweet promoting the rule, called it “infuriating” that canceling a subscription, including from a magazine, is so much harder than the signup.
With potential subscriber declines coming, both industries may need to lean more on advertising to fill the gap. Think about Netflix, for example, who is set to unveil Q3 earnings tomorrow. Subscriber shrinkage and the value of ad-supported tiers will be key pieces of that report.
Experts React:
Here’s FTC head Lina Knan on the rule:
Our Take:
In theory, making it easier to cancel subscriptions sounds like a win for consumers—and for gym memberships, it probably is. But for streaming services and news publishers… is it? Easier cancellations could lead to a wave of subscriber churn, leaving companies scrambling to make up the revenue shortfall. Ads cometh!
