Commentary by Randall Rothenberg


Customers Abused by Unfair Upgrade Practice

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Business models can be a terrible thing: unpredictable, confounding, vexatious -- not just for the marketer
but for the consumer as well.

To grasp the horrifying complexities, and to understand how ever-present and "real world" the issue is, consider two of my personal fave raves in the infotainment arena, Vindigo and TiVo, both of which have perplexed me in recent weeks.

Vindigo, which I first plugged in this space some two years ago, is an innovative, interactive lifestyle and entertainment guide headquartered in your palmtop. Like a Zagat's book, Vindigo guides a consumer to restaurants (or bars, stores, etc.). Unlike a paper guidebook, Vindigo is instantly searchable by preference, street corner or specialty -- and (best yet) it was originally offered free. Want to know the highest-rated sushi joint nearest to E. 61st and Lex? Vindigo will tell you. And (this is the beauty part) because it updates on the PalmPilot each time a user hotsyncs -- and presumably sends user-preference data back to the home port -- it enables the kind of customized, opt-in advertising marketers have dreamed of for years.

Fee-based service
Two weeks ago, Vindigo

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sent me an e-mail. The company plans to curtail free access in order to start charging users for a subscription to the database of local information. I balked. The accessibility and searchability of Vindigo are wonderful. But in a city enriched by New York Magazine, The New Yorker and Time Out, is Vindigo really worth an additional $24.95 a year?

A similar calculation crossed my math-deficient mind recently when I received an upgrade pitch from TiVo, the personal-video-recorder pioneer.

PVRs combine megastorage of TV programming with the ability to pause live TV. Because they boast continually updated, searchable program guides, the devices actually make it possible to customize TV viewing. When I bought my first TiVo, almost three years ago, I spent $300 for a box with 30 hours of storage capacity, and spent another $200 for a lifetime subscription to the online program guide. It was worth every cent. Everyone I know who has tried a PVR finds it impossible to transition back to "normal" TV.

I learned recently, through an e-mail pitch, that TiVo has finally developed a machine with 60 hours of capacity. Imagine my consternation when I discovered that buying this machine would require purchasing another "lifetime" subscription. TiVo's rationale is that subscriptions belong to the machine, not the user.

Bait and switch
On the surface, my issues with TiVo and Vindigo appear similar. Both companies seem to be applying a form of bait and switch to get consumers to trade up from one product to another. But on closer inspection, the distinctions become clear. With Vindigo, I never paid a dime -- therefore I was never a customer. I was but a lucky freeloader, and now I'm being asked to ante up for my pleasure.

TiVo, however, is abusing my loyalty. I paid 500 bucks to become a subscriber to a service. To improve the usability of that same service, I'm being asked to ante up again. Imagine if Ad Age, after its recent redesign, told you that you had to resubscribe. If that happened to you, wouldn't you consider it an invitation to sample?

A fine line
My point is this: There's a thin line between teasing and abuse. Vindigo has stayed on the right side of that line. TiVo has strayed. In a world of rapidly shifting customer loyalty, that's a dangerous game to play.

Randall Rothenberg, an author and longtime journalist, is chief marketing officer at consultancy Booz Allen Hamilton.

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