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Piracy And The Rise Of Subscription Services: Are They Worth It?

Spotify Premium Subscription Service — *Screenshot of Spotify, a popular music subscription service*

Problematic piracy, answered by private corporations

Subscription services have become a popular way to access media content ranging from books, magazines, television, and films. Before analyzing what subscriptions might be worth your time and money, I wanted to give a little historical context for their popularity. For many content creators, the rise in subscription services was scary, as they were linked to declining revenue growth. But increased interest in subscription models was actually an answer to something that’s been seen as even more malicious by copyright holders: piracy.

In France, if you were caught pirating digital (i.e., downloading a film, book, magazine, etc. without consent from the copyright holder) material three times, the 2009 HADOPI law (French acronym for the policy) would restrict your access to the Internet. Suspension of Internet services, depending on the level of piracy, would vary from 2 months to one year. Opposition groups argued and protested the law, arguing that it restricts a human right to knowledge.

In recent years, France curtailed the targeting of individuals’ copyright infringements, in favor of prosecuting major corporations and hosts of pirated materials. Today, TorrentFreak, a popular news source about pirating, reported that the organization now had five years of data to share. HADOPI has given warnings to 3,249,481 people, which suggests that about 9% of French Internet users are participating in possible copyright infringement (French report, PDF). That’s a staggering number, and it’s likely greater because some people can circumvent basic detection of copyright infringement.

Anti-piracy groups like the Motion Picture Association of America (MPAA) have lobbied for greater Internet restrictions for infringers in the U.S. and around the world. The MPAA has suggested that if piracy were “properly” dealt with, revenue to the film industry would subsequently increase (researchers and scholars at the London School of Economics have suggested otherwise). It’s no surprise that the trade organization for content creators would like more control over copyright concerns. But the answer to their calls for action actually came from private companies starting subscription services.

What do subscription services offer?

They usually provide a simple, monthly fee that gives users access to everything. It’s like an all-you-can-eat buffet for digital content. Subscription services offer somewhat ancillary but important benefits to copyright holders and consumers, too: they manage and lessen the cost to enjoy content. It even attracts those who would otherwise be pirating content! Effectively, as Kevin Spacey suggested, when users are given an affordable product and given complete control over when they’d like to listen, watch, and read, piracy will naturally decline.

In this article, I wanted to analyze three popular subscription services: Amazon Kindle Unlimited, Netflix, and Spotify. Each offers a different selection of content and unlimited access for a fee.

If you join Netflix’s subscription service, you’ll gain access to thousands upon thousands of movies that can be instantly viewed. Similarly, Spotify provides “premium” users access to millions of songs, playlists, and radio without ads. Amazon Kindle Unlimited is the newest platform and offers frequent readers access to a tremendous library of ebooks for Kindle (or Kindle apps).

Should you pay for a subscription service?

I’m not going to answer that, as everyone’s preferences are different. Instead, I want to provide you with some straightforward questions to consider before purchasing any service.

How much does it cost?
Are there any student discounts and/or free trials?
Can I share my account with other people? Could I split the cost with someone?
How much will you use the service?
Are there other ways to get the content without the cost?

Amazon Kindle Unlimited (Link)

Cost: $9.99 per month
Access: 600,000 books
Student discounts and/or free trials: No student discounts. Yes, there is a 30-day free trial.
Sharing: There are no reports that you can share this subscription.
Usage: Are you reading all the time and traveling a lot? Then this really stands out as one of the best subscription services.
Review: It’s by far the greatest collection of books in an unlimited, checkout service. By paying for the subscription fee you also get unlimited audiobook listening, too. If you are reading and then hop in your car, you can continue the story at exactly the point you left it! That’s a pretty incredible benefit if you frequently travel. One caution: there’s no information about how many books you can checkout at once. My guess is it functions on a one-at-a-time checkout basis — meaning you’ll need to “return” the ebook before you can get another one.
Other ways: Libraries are free and increasingly offering ebooks for electronic checkout.

Netflix

Cost: $7.99 per month
Access: Netflix doesn’t publicly list all the films, but a popular site that catalogues the digital store says there are over 10,000 titles.
Student discounts and/or free trials: No student discounts. Yes, there is a 30-day free trial.
Sharing: You can share your account with up to 2 people when you upgrade to the $8.99 per month subscription model. This could effectively reduce the cost of Netflix in half.
Usage: For the frequent TV or movie buff, Netflix is an easy first choice. Watching a movie could not be simpler and the bandwidth is impressive. You can easily stream HD-quality content on multiple devices (i.e., tablets, smartphones, computers, and televisions).
Review: The instant, on-demand collection that Netflix has built is impressive. Although, keep in mind that they have stiff competition from Amazon’s Prime media service. Netflix is a steward in the media distribution industry. They noticed that accounts were frequently being shared between other people and didn’t stop the practice. Instead, Netflix instituted a reasonable sharing and account model to allow members to split the costs.
Other ways: Hulu, Crackle, and YouTube all offer vast media stores where you can find tons of free content.

Spotify Premium

Cost: $9.99 per month
Access: Millions of songs, and offline access.
Student discounts and/or free trials: Yes, there is a student price of $4.99 per month. Yes, there is a 30-day free trial.
Sharing: Spotify explicitly states that you are not to share the service. If two users begin streaming at the same time, one user will be cut off. Spotify only allows one person at a time.
Usage: This is best music subscription service out there. Tons of companies have started their own, but Spotify leads the way. If you are listening to music everywhere you go and on multiple devices, no service is easier.
Review: It’s important to note that Spotify has a free, base level of usage. You can make playlists, listen to music, and start special Pandora-like radio stations at this ad-supported level. Once you pay for Premium, the ads are removed and you can save songs for offline use. This definitely comes in handy for the frequent air traveler or the ad averse.
Other ways: You can always keep the free level or use YouTube to listen to nearly any song.

For a price, the content world opens up and becomes an amazing buffet of entertainment. Over the years, premium services have become more affordable. But frankly, there’s still more progress before the prices are easily affordable for everyone across platforms. To enjoy the benefits of each platform to the fullest, you’d be spending about $30 per month. While not an exorbitant sum, this may not fit within a tightly constructed, frugal budget. The choice is yours, but it’s never been easier to go without pirating copyrighted material. That’s progress.

How Amazon Prime Membership Helps Me Go Without A Car

By Frugaling 9 Comments

Amazon.com Boxes Prime Shipping — *Photo: Carl Malamud/Flickr*

Two weeks without a car. What a crazy feeling! Every day I’ve experienced a sort of dull, phantom-car syndrome where I imagine driving somewhere, and then realize I don’t have a car. But each time, I feel comfortable with the decision I made to sell the car. Now, the trick is learning to live with less.

Oddly enough, it doesn’t feel like I’m compromising anything. I’m saving money, investing, and beginning to budget for a strong financial future. I think many people fear that not having a car will be restrictive, but it’s only been freeing for me.

Today, I wanted to highlight two essential Amazon products that I’m now using without a car.

1. Amazon Prime Membership

A few years ago I joined Amazon Prime with a student discount. It was under $70 for a year of two-day shipping, Kindle library books, and TV shows. I took advantage of a 6-month promotional trial, too. It was amazing. But after a couple years, I decided to cancel my membership.

With a car, it just made more sense to go to the local store. Since then, Amazon’s prices have been falling. And without a car, the whole cost curve changes. I’m willing to spend a little bit more on products to save a lot of time and money on auto payments.

There are some products that Amazon excels at delivering. For instance, on my bike, it’s not possible to bring home bulk supplies of toilet paper and towels. I’d be stuck buying 4 rolls at a time, at exorbitant prices. Instead, I order a 40 pack online. It’s delivered straight to my door within two days, too. Amazon is still offering a 6-month trial for free and it’s the best deal out there.

Here’s what I like:

Reliable service and amazing customer support
Two-day shipping for any amount of items
Free access to TV shows and movies (no need for a Netflix membership!)
A wealth of Kindle Library books that can be checked out for free
Bulk items delivered at comparable cost to local stores

2. Amazon Store Card

Amazon beefed up the benefits to their store card, and I decided to apply for it. The Amazon Store Card is only for use on their website. While it offers special financing deals for certain expensive products, that’s not how I’m using it. See, if you don’t use the financing offers, it acts like a rewards credit card.

At the end of every statement month, I receive a 4% credit on all my Amazon purchases. And when I say credit, I don’t mean a gift card. It’s cash back. Now, I’m saving 4% off every purchase and combining that feature with Amazon’s incredible Prime shipping benefits. It makes going car-less effortless.

Here’s what I like:

Easy to apply for and get the credit card, as it doesn’t require especially high credit rating
Offers an immediate $20 credit on your next purchase
Provides a 4 percent discount on all purchases, as a statement credit
Automatic monthly payments can be setup for hassle-free service

How Much Can Bloggers Make?

By Frugaling 21 Comments

To publish or not to publish, that is the question

I debated whether I should publish this article for two months. I talked to friends, family, acquaintances — all have given me different responses. I tweeted to fellow personal finance bloggers, too. Everyone had a different answer.

Frankly, I’m nervous to share this article. Unlike my weaker points and budgetary failures, this article is a highlight. It was easier for me to write and confess my student loan debt to you all, but successes are more difficult to share — ironically.

After much consternation, I decided I’d finally publish an answer to a big question I’ve been getting: “How much can bloggers make?” Or, more specifically sometimes: “How much did you make, Sam?”

Even as I type these words, I’m debating whether I’ll push the publish button. It’s really challenging to share this number. I’m proud and embarrassed in a weird way.

Well, here goes nothing! Today, I’m going to share with you how much I made over the first year of Frugaling, and what led to that success. My goal is to both inspire those who are thinking about starting a blog, but also to provide info about where the greatest revenue can be made. I know of quite a few people right now who want to get paid to write or need some push to start blogging.

This one’s for you.

A trickle became a torrent of funds

I started with Google AdSense

I began Frugaling on May 4, 2013. Motivated out of a desperate need to share my story with others and begin my journey back to zero debt, I wrote my first article. These first few months I only had Google AdSense. I stared at $15-20 a month and thought this was pointless, but that quickly doubled, and doubled again.

For those who’ve never heard of the platform, it’s an easy and very popular way to start making revenue. Google handles the advertisers — all you do is publish them. Easy as can be. Nobody becomes rich from AdSense, though (hardly anyone at least). It’s an entirely automated and algorithmic ad network that pairs relevant advertisements with consumers. While creepy sometimes, the ad network is the best in the industry — for everyone involved in the money making process.

I looked up affiliate opportunities

As a member of the personal finance blogging community, I was fortunate to be exposed to various money-making experts. Many had done well adding affiliate programs to their sites. Affiliate programs usually host a bunch of companies that are looking to give publishers a small commission for products sold. Let’s say you run an apparel website and link to Macy’s, you can count on a certain amount of revenue kicked back to you in the referral process. Or, if you blog, it can help to advertise your web host.

I decided to throw my hat in the ring and joined a top-notch network called LinkOffers. Two months after being approved to hawk some bank-affiliated products, I looked at my account and noticed a strange number: $500 in sales. It was early in the summer and the number shocked me. I was making ridiculous amounts of money! Over the ensuing months, I received an atmospheric amount of affiliate commissions (I’ll address monetary specifics in the proceeding section).

I partnered and linked to Amazon.com

I timed articles to important holidays, your recommended books, and/or tax season. Most bloggers seem to struggle to make much money with Amazon’s affiliate program. I found it to be incredible.

You can link to nearly everything in the Amazon store and make a commission on that item and anything else that’s purchased during that visit. This primary and secondary commission style is very generous. For instance, if someone buys the product you advertised and a new Macbook Air, get ready for a kickback of $40 or more. These purchases added up quickly. One article netted me over $200 in two months.

Flappy Bird-style wealth creation is definitely scary

Flappy Bird Money Wealth Success — *Flappy Bird was a hugely popular, viral success. The creator was making $50,000 per day when he pulled it from the Apple App Store.*

The Apple Store was slammed earlier this year with millions of downloads of one app with a ridiculously simple premise and name: Flappy Bird. The creator was a mysterious and private individual based in Vietnam. Not much was known about him until Rolling Stone magazine tracked him down and got one of the best interviews yet. Rolling Stone reported that:

By February, it was topping the charts in more than 100 countries and had been downloaded more than 50 million times. Nguyen was earning an estimated $50,000 a day. Not even Mark Zuckerberg became rich so fast.

This level of attention and wealth prompted Nguyen to take down the app and buck the demand for his work. Within a couple days of his decision to remove the app, it vanished. Many criticized his decision and questioned why anyone making $50k a day would optionally take down their application. Frankly, I could relate on a tenth of the scale.

In December, January, and February I saw earnings that blew my mind. Every day I checked my earnings, I was looking at another couple hundred dollars. I was closing in or crossing $5,000 per month. I was scared about whether the affiliate company would actually pay me. Every month — before I got paid — I’d get nervous. I’d think, “Are my earnings going to be revoked? Am I actually going to get paid that much?” Month after month would pass, and the earnings would clear — right into my bank account. It was like magic.

Average these earnings over 12 months, and I’d be making over $60,000 per year. Meanwhile, I’m a full-time graduate student working 65+ hours a week. With all my earnings combined (regular work, too), I was nearing a six-figure salary. My debt was disappearing and life was looking up in a crazy way.

The earnings eventually slowed. The bulk of the money was earned. I paid off a $25,000 student loan and stopped taking out loans for school entirely. Suddenly, I was paying in cash for the deficits in my graduate assistantship budget.

Marketing and advertising affects everyone

You’ve now read nearly the entirety of this article, but I still haven’t shared how much a blogger can make. Or, more specifically, how much I made in my first year. Before I say that value, I want to mention one thing: advertising tends to taint perspectives.

As a personal finance writer, there’s a wealth of advertising opportunities. It’s a direct consequence of the powerful financial services sector. Trillions of dollars are managed within financial companies, and consumer credit products are just one of the many revenue sources they have. It can be easy to be swept up with the possibilities and ignore the initial purpose for starting a blog.

I got swept up by it. I was deeply affected by it. It changed how I speak. It swayed my opinions.

After you see this value, I hope you take great care with your site and visitors. Please don’t let this inspire you to morph into a credit-card-hawking-affiliate-driven-market-maven. The personal finance world needs personality and reality. Credit products aren’t right for everyone.

Still want to know how much I made?

I made about $35,000 in my first year of blogging.

Related post: Make An Extra $10,000 In 6 Months!

Account For Depreciation, Save Your Budget

By Frugaling 7 Comments

Broken Computer Flickr Creative Commons Tech Devices — *Photo: flickr/youngthousands*

The 21st century doesn’t seem to prevent technology from aging rapidly and becoming obsolete after a couple years. A couple of my devices recently died, and I’m on the cusp of another big tech failure. I just don’t have the money to replace anything. This could spell trouble for my precariously balanced budget.

My devices are failing me

Three months ago, my Amazon Kindle broke. I traveled the globe with that device and read hundreds of books over its lifespan. After four years of heavy use, the screen died and the internal motherboard stopped working properly. It probably didn’t help that I spilled a glass of orange juice in the keyboard of this device (watch out for this theme). Rather than simply throw it away, I auctioned it off on eBay and recouped about $25. Not bad considering it was broken and about four years old.

Amazon’s Kindle costs about $120.

I just chucked my Apple headphones in the trash. After nearly two years of intense use and travel, they’re broken. I don’t go a day without listening to music on my iPhone, and most of the time I used those headphones. I had tried extending the life by using electrical tape and trying to reseal certain areas on the headphones. For a while, that worked. Unfortunately, they worsened. They’ve been answering/ending phone calls automatically and starting/stopping music at random. Not a pleasant surprise when you begin answering phone calls to telemarketers.

Apple’s in-ear “earpods” cost about $30.

What if my computer breaks?

I bought my 13″ Macbook Air in mid 2011. It’s my favorite computer I’ve ever owned, and I’ve avoided an upgrade. While I still yearn for a newer model, I can’t afford to buy one right now.

Like my other devices, it gets exposed to some serious travel and abuse. After about a year of owning the laptop, I spilled a full glass of chocolate silk in the keyboard (notice the theme?). It fried the top assembly. I brought it to a repair store to try and save it — the cost was about $400 to fix. I remember looking at that price and thinking, “I could buy a brand new Windows laptop at that cost.” I decided to go ahead with the repair, as the system could be saved.

Now, about three years old, my trusty laptop is starting to slow down. I can tell that the cooling fans aren’t working properly. This is likely damaging important processor components and could threaten my data. It’s a recipe for disaster. At some point, my laptop will likely overheat and fry itself. Until then, I work on nearly everything in the cloud and save frequently.

Apple’s Macbook Air costs about $1000.

Account for losses, use depreciation schedules

When you purchase a computer, like a new car, it immediately loses a bit of value. Over time, the depreciation continues. The Internal Revenue Service (IRS) has specific tax depreciation rules that can be used for the following:

Most types of tangible property (except, land), such as buildings, machinery, vehicles, furniture, and equipment are depreciable. Likewise, certain intangible property, such as patents, copyrights, and computer software is depreciable.

These properties can be deducted from income schedules, but are only to be used by businesses. You cannot deduct for physical product depreciation as an individual. Luckily for me, my computer is primarily a business tool — seeing as I use it to write.

Modified Accelerated Cost Recovery System MACRS — Screenshot of a Modified Accelerated Cost Recovery System calculator

Irrespective of whether you can claim a tax deduction, it’s important to learn to account for depreciation in vehicles, electronics, and intangibles (i.e., software). But this is where calculations get sort of complicated. Essentially, depreciation is a governmental science that averages your losses on a product, which is based on your cost basis (the original price paid). If I bought my computer in 2011 for $1000, then the depreciation expense that can be deducted from my taxes is $58. That’s a loose estimate from this calculator.

Even if you don’t claim business tax deductions, calculating depreciation through this method and then including the $58 loss in your budget for 2014 is very important. If I had properly accounted for the further losses of my headphones, the Kindle, and my Macbook Air, I would be in a better financial situation.

Eventually, things fall apart. It’s a known truth. After losing my Kindle and headphones to failure, I looked at about $125 in losses. If my computer goes, too, I’m in trouble. In the future, I’ll be looking to account for depreciation to avoid budgetary surprises that could leave me reeling.

Also, I’ve learned that I need to keep liquids away from keyboards.

Piracy And The Rise Of Subscription Services: Are They Worth It?

Problematic piracy, answered by private corporations

What do subscription services offer?