Looking back at 2019, we covered hundreds of subscription launches, mergers, subscription closures, financial triumphs and disasters, and much more. In this week’s Five on Friday, we’re going to take a look at the top five subscription stories of the year. Disney+ lands the mouse some serious cheddar; Apple tries to strike gold with subscriptions…but doesn’t find it; MoviePass finally fizzles out, broke and embarrassed; the government goes after subscription scammers; and the GateHouse/Gannett merger creates a newspaper powerhouse that will be hard to compete with in the next decade.

Disney+ Lands the Mouse Some Serious Cheddar

Disney+ has dominated the subscription streaming world since it launched last month, landing the mouse some serious cheddar. It feels like it’s been out for years at this point, from the rocky launch fraught with technical challenges to all of the Baby Yoda memes. However, the Mouse’s new streaming service will hit its two-month mark January 12, and it keeps growing.

Disney talked about the service initially in March of this year, so we had eight months of build-up and teasers from Mickey and friends. Disney+ drew fans in with the promise of being the exclusive home to Marvel, Star Wars and animated Disney classics that couldn’t be viewed anywhere else previously. Early rumors of Disney-Hulu-ESPN+ bundles heightened the anticipation.

The bundle concept was particularly attractive to cord cutters who could get more content at a deeply discounted price. Disney+ would offer their part with family-friendly content, as well as some more action-packed titles. Nothing on Disney+ would be R rated, however. Consumers who wanted a little more variety could access Hulu, allowing them to view thousands of shows and movies, non-family-friendly content included while ESPN+ gave sports fans access to live sports.

Disney also made waves when they acquired 21^st Century Fox, which allowed them to add titles like The Simpsons to Disney+. In this acquisition, FX shuttered their FX Plus subscription service, making more room for Disney+ in their budget to perhaps switch their preferred streaming platform.

Then came launch day. Disney+ was met with success, but at what cost? Many members couldn’t access the platform at all the first day. Variety says that it could have been the high demand. So many people signed up for the service and were so excited to get access to it that the platform crashed for many viewers who took to social media to express their discontent.

Since then, Disney+ has continued to grow. In fact, Decider reports that Disney’s new revenue stream has taken over 1 million subscribers from Netflix. Additional subscribers could fall off from there, with Apple TV+ launching in the same quarter. Mickey struck some golden cheddar, further piling the revenue on the Matterhorn of Money that Disney has created for themselves. It seems like everyone wants a piece of this cheese.

Apple Tries to Strike Gold with Subscriptions…Doesn’t Find It

Apple is trying to make a go of subscriptions, but they are slow out of the gate. As a frontrunner in the streaming music world, the company has enjoyed success with Apple Music, but their other offerings – News+, Apple Arcade and TV+ – don’t seem to be as attractive to prospective subscribers.

Apple has an advantage that they’re aren’t adequately leveraging. The company has at least 900 million phones worldwide, and not even a sizable fraction of those people are taking advantage of these services. Apple Music comes pre-installed on iPhones, which helps entice new users. As of June 2019, the service had 60 million subscribers, according to Statista. Spotify has almost four times that at 217 million with 100 million of those being paid subscribers. Podcasts were something that you could originally only access on Apple’s platform, but podcast creators everywhere are leaping to platforms like Luminary, Spotify and others that help boost listeners.

Apple has fallen flat with Apple News. They debuted Apple News last year. The service was something that was free to use, and users could pay to access titles they enjoyed and frequently got news from. They decided to try out the subscription trend, and tried to turn this into Apple News+, capitalizing on their acquisition of Texture. Apple News+ service had 200,000 premium subscribers for the paid version, but 85 million for the free-to-use version. There are 5 billion articles available to read each month from the service. The main difference between the paid and free versions is unlimited access. Subscribers willing to pay $9.99 a month can unlock everything, but paying separately for different news sources and magazines could cost significantly more.

Apple Arcade was another new service Apple launched this year. This service promises new and exclusive game without ads or in-app purchases. Forbes say this is Apple’s first real success for subscriptions, but it has been met with some critique. Apple is rolling out new games on a weekly basis, but we have yet to spend our money on the service. Games Industry reports that Apple would have to have 11.7 million subscribers paying for 11 months to equate to the amount of money that paid games have created since 2015.

Apple TV+ seems to be the victor here, and we are still reserving judgment on the success of the streaming service. The service offers exclusive, original content. Anyone who purchased an Apple device received a free year’s worth of Apple TV+. Those with the Apple Music Student Plan can also access the service. The service is $5 a month, which is on the lower end of Apple’s subscription offerings price-wise. However, it doesn’t seem like the streaming service is offering much as far as titles, only 12 so far, and the promise of Oprah coming soon. Much like their other offerings, Apple is ad free, and users can access them wherever they have an internet connection.

As much as Apple has tried and succeeded in the past, they seem to have lost a bit of their magic on subscriptions. Perhaps they’ll strike gold in the new year.

The Rise and Fall of MoviePass

They say Rome wasn’t built in a day, and they were right. Unfortunately, MoviePass creators didn’t heed this wisdom. Maybe their service would have stayed afloat if they had focused on slow, steady momentum instead of their flash-in-the-pan handling of the now-defunct movie ticket subscription service.

MoviePass was the name on everyone’s lips in December of 2017. Going to the movies didn’t seem like such an outdated thing anymore. At launch, MoviePass subscribers paid one flat fee a month to see one movie a day every month. Sounds like a great deal, right? It turned out that deal was too good to be true, and MoviePass couldn’t sustain it, so they changed their business model and pricing again and again. They moved from a flat rate, to tiered pricing, back to a flat rate. We couldn’t keep up with how many times it changed. It was a train wreck, yet no one could look away. What would they do next?

There were other competitors that joined the race. Even movie theatre chains jumped on the subscription bandwagon. Those services never seemed like a more reasonable deal, but they had their limitations. Cinemark was the first to jump into the race, offering just one ticket per month, but offering special perks. Sinemia was another subscription company to join the race, but they didn’t make it either. AMC Theatres seems to be the only model that has been met with success, and they started 2019 with 600,000 subscribers. AMC is ending the year with an on-demand digital movie service for the home, giving them yet another revenue stream to diversify their income.

If you’re wondering what happened to MoviePass, it’s quite the tale. There is no climactic explosion at the end. In March, they over-reported $6.6M in their revenue. The service continually came back from the dead to charge customers that had cancelled months ago, much like a bad horror movie villain that wouldn’t die. They tried to start a movie production company and couldn’t even keep that alive either. Their parent company lost their NASDAQ listing, which was trading under a dollar per share.

The credits on MoviePass finally finished rolling in September of 2019. They ultimately decided to shut down because they couldn’t make enough money to make ends meet, multiple attempts to recapitalize failed, and customers lost faith after an endless string of misfires. Even at the end, MoviePass claimed they were just experiencing a service disruption, but it seems pretty clear this was the final curtain call for a good idea that was poorly executed.

Government Agencies Crack Down on Subscription Fraud

This year several government agencies said “no more” to companies attempting to defraud innocent subscribers. Here are a few highlights from 2019:

FTC Sues AH Media Group for fraudulent subscription practices: In September, the Federal Trade Commission got a preliminary injunction against AH Media Group for fraudulent subscription practices, including free trial offers and negative option subscriptions. The preliminary injunction prevents AH Media from misrepresenting their “free trial” offers, enrolling customers in subscriptions without permission, billing customers without permission, and making it difficult for customers to cancel their subscriptions or get refunds.

The FTC alleges the company defrauded U.S. consumers of more than $35 million through illegal credit and debit card charges. The FTC complaint charges AH Media with violating Section 5 of the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA) and the Electronic Fund Transfer Act. According to the FTC, the company sold beauty and weight loss products under at least eight different brands including AmaBella Allure, Adelina, Parisian Glow and Tone Fire Garcinia. The alleged subscription scam, executed through a series of shell companies, is believed to go back until at least April 2016.

The FTC alleges the defendants used deceptive websites to charge customers for the free trial and ongoing subscription plans. Customers were only required to pay shipping and handling of $4.99 or less. AH Media failed to clearly and conspicuously provide information about additional terms and conditions where they were easily accessible. After a two-week trial period, the company allegedly charged consumers approximately $90 for the trial product and enrolled them for subscription plans with additional charges. They also used upsell pages to get customers to buy a second product trial and related subscription.

In addition, AH Media made it challenging for unwitting subscribers to cancel their subscriptions. They were not able to do so online. Instead, they had to call a customer service number where they were put on hold. When customers tried to reverse the charges through their credit card companies, AH Media disputed the allegations through fraudulent versions of their websites.

Federal Judge in Oregon Orders Scammers to Pay $8.9 Million: In June, a federal judge in Oregon ordered two dozen companies and three individuals in a massive newspaper subscription scam to pay a judgment of $8.9 million. In the multi-million dollar scam, the companies – mostly located in Oregon – would solicit the renewal of newspaper subscriptions and collect payments without the publishers’ authorization.

U.S. Magistrate Judge Mark D. Clarke called for a “national permanent injunction” to stop the widespread fraud that began in 2010. According to The Oregonian, the fraud involves more than 375 newspapers across the country including the Wall Street Journal, the Denver Post and the New York Times.

Between 2010 and 2015, consumers paid subscription fees for nearly 40,900 newspaper subscriptions – and at rates higher than the publishers would have charged themselves. Consumers who did not receive their newspapers were offered different publications as a substitute. Others paid for the same publication multiple times, and some tried unsuccessfully canceling their payments. The judgment will be paid to the Federal Trade Commission who will reimburse consumers who were scammed.

New York Attorney General Wins $16 Million in Newspaper and Magazine Subscription Scam: In a related case, earlier this month, New York Attorney General Letitia James won more than $16 million in restitution, penalties and legal costs in a magazine and newspaper subscription scam lawsuit. James represented more than 68,000 New York residents who had been scammed by a network of New York and Oregon companies, some operating under the name Orbital Publishing Group, Inc., who fraudulently solicited magazine and newspaper subscriptions. The New York State Supreme Court ruled in favor of the plaintiffs and permanently barred the fraudulent network of companies from mailing unauthorized and deceptive subscription offers going forward.

The New York attorney general’s office filed the lawsuit in 2015, alleging the New York and Oregon-based companies had been defrauding customers for three years. Consumers received fraudulent magazine and newspaper offers that appeared to come directly from popular publications including The Washington Post, The Wall Street Journal, The New York Times, Consumer Reports, National Geographic, The New Yorker, Forbes, The Economist, Entertainment Weekly, Newsweek, Smithsonian, Time, The Nation and others. However, the publishers never authorized solicitation by the Orbital Publishing Group on their behalf. The publishers sent “cease and desist” letters, but the fraud network ignored their requests.

Orbital’s fraudulent subscription offers were based on supposedly deep discounts, but in actuality, they were charging more than double standard subscription rates and keeping the difference for themselves. The attorney general’s office alleges that the publishing network failed to “clearly, conspicuously, understandably and readably” identify expiration dates on the offers, which is required by New York law, so subscribers renewed subscriptions that were still active.

FTC Sues Match.com for Deceptive and Unfair Business Practices: In September, the FTC sued Match Group, Inc. for five deceptive or unfair business practices to get people to subscribe to their service and to stay subscribed. The Dallas-based company owns Match.com, Tinder, OKCupid, PlentyOfFish, Meetic and dozens of other dating sites. The FTC alleges that Match – who controls approximately 25% of the online dating market – tricked hundreds of thousands of consumers into subscribing to Match.com and making cancellation difficult.

Match drew users in by letting them create a free profile, including photos and personal information. However, those nonsubscribers weren’t able to respond to messages from potential matches unless they upgraded to a paid subscription for a duration of one, three, six or 12 months. The FTC believes Match would email nonpaying members to say they had received likes, favorites, emails or instant messages, and they had to subscribe in order to read them.

The FTC specifically called out Match’s “You caught his eye…” notices. Millions of contacts previously flagged as fraudulent sent these notices to free users. If free users subscribed to read those messages before Match completed their fraud review, they likely would have encountered scammers, and they were stuck with a subscription they may not otherwise have paid for. Match put consumers at risk, in exchange for subscription payments.

These are only a few of the instances in which government agencies attempted to stop subscription fraud this year. This trend will continue. As always, we recommend that subscription companies are fully transparent with prospective and current subscribers. All terms and conditions should be available clearly and conspicuously online and via mobile apps, if a company uses them, particularly cancellation procedures and free trials. While deceptive business practices may initially lead to higher conversions, they will ultimately cost fraudsters far more than they gained in incremental revenue.

GateHouse-Gannett Mega Merger Creates Nation’s Largest Newspaper Chain in $1.2 Billion Deal

In November, the boards of GateHouse parent New Media Investment Group and Gannett approved the mega merger, creating the largest newspaper chain in the nation in a $1.2 billion cash-stock deal. Now complete, the new combined company goes by the Gannett name and its assets include 260 daily newspapers and hundreds of weeklies. Based on comScore stats, the companies estimate their reach will be 145 million unique monthly visitors.

While journalism proponents fear the worst, the merged companies are looking at annual efficiencies of $300 million. This will include some of the conglomerate’s 24,000 staffers. Just weeks after the merger’s completion, Gannett named its new leadership team – and its first round of layoffs. Poynter’s Rick Edmonds estimates that there will be just under 1,000 layoffs.

Prior to combining forces, GateHouse and Gannett had been known for layoffs, slashing newsroom and other newspaper employees to try to right their respective ships. The cuts will have to continue and operational efficiencies will have to be found to hit projected annual savings of $300 million. But what will happen to journalism, the important checks and balances a democracy requires, and local and regional coverage? The new Gannett may become a lean business machine but how much will journalism – and journalists – have to suffer to make it happen?

We are curious to see what the new year will bring for Gannett, particularly in light of McClatchy’s dire financial situation. Are they ripe for a takeover? Will journalism continue to suffer under new leadership? The last decade has certainly taken its toll on the industry, but the next decade could either save it or destroy it.