Friday, September 5, 2014

Never, Never, Negative Option (XM Radio)


XM/Sirius Radio uses negative option billing techniques.  This is reason enough to say "NO" to satellite radio.

Most cars today come with satellite radios.  Is satellite radio a good deal?  Not really.  The standard pricing is about $200 a year, which is a lot of money.  They do offer come-ons all the time - $33.90 for six months, or $200 for two years.  The pricing is amazingly flexible.

The problem is, of course, they want your credit card number, and they want to do a "negative option" billing plan.   Simply stated, unless you cancel the plan before the end of the trial period, it renews at the horrifically prices "regular" rates.

And just like AOL in its dying days, cancelling is anything but easy.  You call up customer service, spend ten minutes explaining you want to cancel, and then they transfer you to a "cancellation specialist" who then harangues you for another ten minutes, before allowing you to cancel the plan.   If your call is dropped before the "cancellation specialist" says "Good Day" and gives you a confirmation number, well, the plan ain't cancelled.

In other words, it is a time-consuming pain-in-the-ass and the satellite radio people believe (and know) that many folks will just say "forgetaboutit" and allow these charges to continue on their credit card for years.

Yes, it is true, people do this.  While settling a relative's estate recently, we were chagrined to learn she had been paying for AOL service for the last two decades, even though she switched to cable modem back in the 1990's.   She just thought that you "needed" AOL to "get on the Internet".   Think about that monthly $19.95 and how much it would be worth over 20 years at 5% interest (Answer: $8,311.79).

Yet many people do things like this - sign up for subscription services and then don't understand what they are paying for or why.   A retired friend, living on Social Security, paid $9.99 a month for "Virus Protector" from the local cable company.  He could ill-afford it, but he thought the cost was trivial.  It wasn't.  Ten bucks buys a lot of food for someone living on Social Security!

I made the mistake of signing up for the service - paying $33.90 for six months service by money order (no credit card!).   I was disappointed with the service on a number of levels:

1.  The signal drops when you go into tunnels, parking garages, next to hills, or even under trees.  I live on an island covered with trees.  The signal drops a lot.

2.  The service covers one radio.  So if you want two radios, you have to pay twice or buy a fancy removable head-end radio to carry around the house or from car to car.   Not very practical.  If you get the service, you can stream music online, but for an additional fee.

3. The content sucks.   They play the same old songs over and over again, without a lot of variation.   It gets dull and repetitive and you find yourself listening to "off the air" radio or your iPod or even a CD (or USB stick) more than the XM radio.   A LOT of the stations are sports radio (no thanks) or talk radio (double no thanks).

I called to cancel the service.  My cell call was dropped, but I assumed it was cancelled.  It was not.  I got dunning notices via e-mail.  I called again and they said the first call didn't count, and now I owe them another $18.  If I don't pay, they will send it to a collection agency and try to ruin my credit rating.

Nice Folks.

Why do business with people like this?  People who screw their own customer base!   Why don't they just offer transparent pricing, instead of all these come-on offers and different pricing levels?   And why don't they offer auto-renewal as an OPTION and not as a negative-option deal?   And finally, if they are going to offer it as one price, why not renew at that price?  (They will, if you call and threaten to cancel every sic months, but who has time for that sort of crap?).

It is the same-old, same-old.   The "wear you down" technique, used to sell a product you really don't need (we did fine in this world before satellite radio) and probably don't want (the content sucks).

And that right there is the answer:  It is a failing business model and failing company.  One company already went bankrupt, which is why the two merged in the first place.  A second bankruptcy can't be far behind.

Why do I say this?  Because of smart phones.  Yea, I hate 'em.  But that doesn't mean I don't understand their impact in the world.   You can stream music on your smart phone in a number of different ways - as I have seen friends do.   You can take it anywhere, and even plug it into your car radio or home stereo.  And you don't need a line-of-site with a satellite in outer space. These are all things that XM can't do - and never will be able to do.

So, over time, more and more people will use their smart phones to listen to music (and already are, hello!) and fewer and fewer will feel the need to cough up $200 a year to hear "Brown-eyed Girl" played endlessly on "The 60's at 6!"

When a company starts to fail, like AOL did when the Internet made its business model obsolete, they try desperately to stay afloat by screwing their customers.  And negative-option is a favorite way to screw your customers.

"Oh, you cancelled your AOL service?  We never received notice of that!  Did you send a certified letter to our address?  Oh, not that address, the other one!"  - and so on and so on.   When AOL hit the skids, the stories about negative option were legion.

And today, Sirius/XM is following the same path - the path of a dying company with an outdated technology that no one wants or needs.

NOTE:  When you get a vehicle with an XM radio, it runs the radio for free, for about 60 days.   If you pay for six months at the $33.90 rate (by mailing in a money order, no checks, no credit cards!) and cancel on the 59th day, the radio then goes back to its original mode - providing free service for about 60 days.   If you really felt it was worth the hassle, you could play this, I suppose.  But it ain't worth the hassle, frankly.   All those phone calls and stress - there are more important things to do in life, quite frankly.   Never do business with a company that screws its customers.   The relationship will never, ever improve!

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