As platforms raise membership fees, addicted consumers face heavy burden

Social Affairs

Published: 25 Apr. 2024, 18:18

As platforms raise membership fees, addicted consumers face heavy burden

An image created by artificial intelligence system DALL·E after a request to make an image of an office worker watching a streaming platform like Netflix during their commute. [JOONGANG ILBO]

“It is a burden to think I have to pay over 500,000 won ($362) a year for subscription services, but I don’t know how to cut back on the cost, as I’m already so used to the convenience of their services.”

Lee Young-ju, a 35-year-old office worker who asked to be called by a pseudonym, is addicted to online platforms like Netflix and YouTube during her long commute to and from work, like many other Korean office workers.

Lee commutes between her home in Hwaseong, Gyeonggi, and her office in Seoul for two hours and thirty minutes a day. She gets on the bus around 7 a.m. and heads to her office in Seocho District, southern Seoul.

The first thing that Lee does when she gets on the bus is to open her YouTube app.

Lee spends her hour-long commute listening to music, catching up on sleep or watching YouTube shorts.

Lee also listens to music on YouTube while she works in her office.

After she gets off work, she usually watches Netflix on the bus on her way home.

When watching her favorite dating show, “I Am Solo,” time flies by, and before she knows it, it's her turn to get off the bus.

Before going to bed, she uses e-commerce platform Coupang’s Rocket Fresh service, which delivers groceries by 6 a.m. the next day.

She looks through the closing sales list daily, searching for bargain-priced products.

Lee is currently subscribed to five services — YouTube Premium, Netflix, Tving, Naver Plus Membership and Coupang WOW membership.

Starting this August, Lee’s monthly subscription payment will be 43,790 won as Coupang is set to raise its membership fee the same month.

In other words, Lee will be paying 525,480 won per year.

“Each service has its own benefit, and their monthly fees aren’t that burdensome when seen separately,” Lee said. “But I didn’t realize I subscribed to five services as I just added them individually.”

Coupang is set to raise its WOW membership fee in August. [COUPANG]

Since the end of last year, online platforms have started raising the fees for their subscription services, putting more pressure on consumers who are increasingly addicted to such platforms.

New terms such as “streamflation,” a portmanteau of stream and inflation, were even created to refer to rising streaming platform costs.

On Monday, the domestic streaming platform Tving announced it would increase its yearly membership payment by 20 percent starting next month.

As a result, the existing basic subscription plan of 94,800 won will rise to 114,000 won.

YouTube raised the monthly prices of its Premium subscription service for Android users from 10,450 won to 14,900 won last December.

The price is slightly higher for iPhone users, as the commission fee system differs from Android’s.

iPhone users must pay 19,500 won a month or 234,000 won a year.

Netflix made a similar move around the same time.

The company removed its 9,500-won basic plan and released a 13,500-won and 17,000-won plan.

Disney+ eliminated its single 9,900-won plan and divided it into a 9,900-won and a 13,900-won plan. However, users must use the 13,900-won plan to receive the same service as the original.

Some millennial and Gen-Z consumers use loopholes and other hidden methods to lower their subscription burden.

One method is using a VPN app that changes one’s IP address to a country with a cheaper payment plan, such as Turkey.

Using this method, also called “digital immigration,” app users pay between 1,000 won and 6,000 won for the YouTube Premium subscription service.

Some people, so-called cherry pickers, search for complimentary services or cheaper ways to use streaming platforms.

On X, formerly known as Twitter, users post tips, such as, “Tving is free for a month if you sign up for a 4,990-won Naver Plus Membership. You can cancel it after a month,” and “Naver membership is giving out a three-month plan free of charge, following the Coupang Wow membership price rise.”

Streaming platforms started raising their subscription payments from the end of last year, putting more pressure on consumers. [JOONGANG ILBO]

Streaming platform account-sharing sites, such as Pickle+ and Linkid, are successfully operating due to the current situation.

These sites run under a party system, where a party leader creates and shares a Netflix account, and the site matches party members who will watch the streaming platform together.

Once matched, users can use Netflix for less than 5,500 won under the plan with ads.

The sites also have a “scam” reporting system where users can report scammers who cancel their accounts right after they receive money. The victims can then receive a refund.

Some use illegal video-sharing sites to see SPOTV, a channel that exclusively broadcasts sports matches inside and outside Korea, for free.

SPOTV’s basic plan costs 9,900 won per month, and its premium plan costs 19,900 won.

Most of these illegal sites provide real-time SPOTV broadcasts with low definition by advertising illicit gambling on sports sites.

In other words, users gain access to the channel’s video when they click on the gambling advertisement banner.

Experts say that such loopholes and illegal methods were driven by the damage that the consumers experienced due to the platform's one-sided price increase.

In a report released by digital marketing company Nasmedia last month, 2,000 survey respondents said they watch videos an average of 3 to 4.5 hours a day.

Of the respondents, 80.7 percent said they currently use a streaming service.

YouTube stood at No.1 with 94.4 percent as the most watched online video service, followed by Netflix with 60 percent.

Coupang was the most subscribed service for paid memberships on shopping platforms at 72.2 percent, followed by Naver with 47.6 percent.

“Companies suddenly increasing their plan prices after making the users subordinated or even addicted to their service hinders consumer choice,” said Prof. Kim Si-wuel at Konkuk University’s Department of Consumer Information Science. “Some regulations against platforms, such as a price increase guideline, are needed to prevent consumer harm.”

BY LEE BO-RAM, KIM JI-YE [kim.jiye@joongang.co.kr]