activation fee – Techdirt (original) (raw)

Peloton Combats Sagging Bike Sales By Making Them Less Valuable On The Secondary Market

from the great-plan dept

It’s no secret that Peloton, one of the corporate darlings of the pandemic, has since been viewed as a company in serious decline. While the company has had to contend with several IP disputes, it has also been subject to cybersecurity incidents and product safety recalls due to its treadmills occasionally deciding to eat human beings. Hardware sales have sagged significantly, leading to a precipitous drop in its stock value from its peak in 2020 when it was at 162persharetoitscurrentvalueofjustunder162 per share to its current value of just under 162persharetoitscurrentvalueofjustunder5 per share. Stock prices like that are not the way that corporate leadership keeps its jobs.

And, following something of the Cory Doctrow “enshittification” process for technology companies, Peloton has come up with a new way to attempt to extract more money from existing inventory while providing no additional value. And that way is by making its new hardware even less attractive by kneecapping the ability to sell used Peloton’s on the secondary market. How? Fees, of course!

Peloton will start charging people a one-time $95 “used equipment activation fee” for used bikes purchased from outside of Peloton and its official distribution partners. The fee will apply in the US and Canada. As pointed out by The Verge, Peloton confirmed in its fiscal Q4 2024 earnings call today that people who buy a used bike directly from Peloton or one of its third-party partners will not be subject to the fee.

During the call, Peloton’s interim CEO, Christopher Bruzzo, said that the activation fee “will be a source of incremental revenue and gross profit” and support Peloton’s “investments in improving the fitness experience for our members.”

Peloton also claimed in a letter to shareholders [PDF] that the fee is related to ensuring that the subscription customers that Peloton gains through used bike sales “receive the same high-quality onboarding experience.”

Now, just so there is no misunderstanding: this is bullshit. There is very little value on offer for this roughly $100 fee. Here is the total context in which Bruzzo made this statement.

Although these secondary market sales are not from Peloton-owned channels or any of our third-party distribution partners, we want to ensure these new Members receive the same high-quality onboarding experience Peloton is known for. With that in mind, we’re initiating a new, one-time 95USD/95 USD / 95USD/125 CAD used equipment activation fee in the US and Canada. For Peloton Bike and Bike+ purchasers, we offer a virtual custom fitting so Members can get the most out of their first ride. These subscribers also have access to a history summary on their pre-owned hardware. We’re also offering these new Members discounts on accessories such as bike shoes, bike mats and spare parts. We view the secondary market as an important channel and will continue to improve the member experience.

So the value for that activation fee is a fitting people may not want or need, a history summary on the bike from back when they were not using it, and discounts on accessories that are likely high margin products? This is the sort of incremental strategy designed to placate worried shareholders, not provide value to any segment of the customer base.

And it certainly can’t be designed to drive more purchases of new Peloton bikes. Because those bikes just got more risky to own and of slightly less value. Prior to this fee, part of the total cost of ownership included the ability to potentially sell the device in the future on the secondary market. Those secondary market bikes just got more expensive for anyone looking to buy them, as they will have to pay this fee to do so, making them less attractive.

Peloton gear is already known for being expensive (its Bike+, for example, is $2,500 as of this writing). The used market makes Peloton’s products more accessible and allows people to recoup some of their losses from unwanted equipment while also avoiding connected gym equipment becoming e-waste. A $95 fee takes away some of the savings people have been enjoying for years by opting for a secondhand Peloton.

The fee is also a standout from most the secondhand market (imagine paying Toyota a “reactivation fee” to drive a used car you purchased, or having to pay Lenovo a separate fee in order to use the refurbished laptop you just got).

I can also promise you that we will start seeing stories of people who bought used Peloton bikes not knowing about this fee and who are suddenly going to be very publicly angry with Peloton.

In the end, this just doesn’t seem like the sort of move you see from a healthy, innovating, thriving company. Which is why I imagine, no matter the short term happiness of the investor class regarding this move, it will do nothing to quell the rumors of Peloton’s forthcoming demise.

Filed Under: activation fee, enshittification, fees, secondary market
Companies: peloton

Washington Post Charges An 'Activation' Fee To Let You Pay Them To Get Around Their Paywall

from the how-nice dept

We’re still pretty skeptical about paywalls for most newspapers, because they really tend to limit the audience for your offering, and limit people sharing that content as well (which is pretty important for growing your audience these days). But, some newspapers have really embraced them, including the Washington Post, which lately has ramped up its paywall efforts. And, apparently with that, come sneaky fees. First noticed by an editor at the WSJ (another paywall site, though one that has been designed to be much more porous), Tim Hanrahan, it appears that the Washington Post now has an “activation fee” to subscribe to get around the paywall:

Of course, we’ve been reporting on how telcos and broadband providers have made an entire (large!) business out of sneaking in bogus extra fees for well over a decade. As we noted back then, many of these tack-on fees are really so that the service provider can advertise much lower fees than they’re actually charging. It certainly feels like misleading advertising, though the FTC doesn’t seem that interested in getting involved.

Of course, we also wondered, all the way back in 2004, when these kinds of bogus fees would start spreading to other businesses.

“Perhaps other companies should get into this game as well. Want a pizza pie? It’s just 3,butthere’sa3, but there’s a 3,butthere’sa3.50 “crust fee,” a 9.38“ovenfee,”a9.38 “oven fee,” a 9.38“ovenfee,”a4.50 “service fee,” and a $2.18 “cleanup fee.” Plus tax.”

Not too many other businesses have gone down that road… but I guess the Washington Post has decided to leap in head first.

Filed Under: activation fee, fees, journalism, paywall, sneaky fees
Companies: washington post