Relentlessly Pursuing Every Nickel and Dime

To say that it feels like we’re being led to slaughter would be overstating it on many levels. It does feel though like we’re being led to being bled a lot.

Apple 3.0 (via Apple News) ran part of a note Monday from Evercore analyst Amit Daryanani. He’s excited about Siri AI. Is that because of the technological marvel it is? Because of all of the wonderful things it will do for consumers? No, it’s because he and his “think Siri AI could create a sizable opportunity for AAPL [and] unlock new monetization paths…”

This is the kind of thinking that could lead to a bad customer experience. Want an example? I’ll give you an example.

A number of sites covering Apple, including 9to5Mac, ran stories Monday that had Apple Retail staff signing customers up for Apple services with recurring subscription payments without the customers realizing it was happening.

Not Seeking Salvation

I used to work in a call center for a major corporation. Though I’m sure the company made a lot of money on ads and content deals and other things that never even occurred to me, the company’s most well known and obvious revenue stream was getting customers to pay a monthly subscription fee for a service. People would call in, sometimes because they had questions - sometimes because they wanted to cancel. Working in billing, I would make a gentle attempt to keep them from cancelling. If they still wanted to cancel, I’d send them to cancellations, which internally was called SAVES. I’m pretty sure each letter stood for something, but it was really about saving the account on the call center side.

Obviously, the people in cancellations who stopped people from cancelling - the people in SAVES who saved more accounts - they were better rewarded. Got better bonuses. Given that structure, it was not uncommon to have people call in and say “I cancelled this four months ago! Why am I getting billed?!”

It was because four was the maximum number of free months SAVES could add to the account. Being judged on how many accounts they could save from cancelling, some unscrupulous SAVES consultants would tell the customer the account was cancelled, pile the account with free months, mark the account as retained, improve their stats, and make their bonus. I mean - it would fall apart for them eventually. But faced with losing pay and maybe even their jobs, some people will go ahead and push the “go ahead” button. Let the chips fall months down the road.

Unexpected Subscriptions for Unsuspecting Customers

Pulling myself back to today, it seems the most valuable company on the planet has been leaning on staff in its stores to sign people up for various services. 9to5Mac says repair technician “turned consumer rights advocate Louis Rossmann” has looked into the issue. “In a recent video," says the piece:

…[Rossman] claimed that some Apple store staff were signing up customers to trials of paid services subscriptions without their informed consent. Targets set by Apple are said to have encouraged the practice.

The report says:

Staff were instructed to show these offers to customers and were allegedly set a 40% sign-up target, which Apple tracked as a performance metric.

For reasons it’s difficult to not find suspect on Apple’s part, the offers were shown on the employee’s device, not the customer’s. 9to5Mac says a “store member told Rossman that some staff were hitting the Accept button without properly obtaining consent,” because of course they were. How could they not? A 40% target? A sales target to keep in good standing on a job that I don’t think we think of as a sales job.

I talked to some friends in Apple Retail about this story - none of whom would ever do such a thing. To be clear, most people wouldn’t. Still, some people are dishonest. Some people are desperate. Some people break bad because they’re desperate. Anyway - my friends were split on the whole metrics thing. Half feel like the emphasis on metrics has increased in the last year or so. The other half say - same ol’ same ol’ - there have always been metrics. There are just a few more now.

Apple had not responded to Rossman’s allegations when 9to5Mac posted it’s post, though it kind of sounds like it reacted. The piece has Rossman indicating in a follow-up video that Apple has stated explicitly to retail staff that the “Accept” button on trial subscriptions can only be pressed by the customer. Additionally, “internal systems indicate Apple is no longer grading staff on the signup metric,” according to the report.

Making A.I. Pay (Or Making People Pay for A.I.)

Anyway, Evercore analyst Amit Daryanani is excited because the most valuable company on the planet might finally be able to start making money. In the note he wrote, he wrote:

We think Siri AI could create a sizable opportunity for AAPL [and] unlock new monetization paths, but first needs to turn its existing capabilities into more reliable execution [and] useful outcomes.

Going through his debate points (one through five):

• Can Siri Close the Gap?

• Why AAPL Has the Right to Win

• Sizing the Opportunity

• Can AAPL Support the Compute?

• How Can AAPL Monetize Siri?

That last one is where you come in. Evercore “scenarios imply ~$21B of annualized subscription revs at ~125M paying accounts/$14 per month…” Apple’s gonna need your help on this one. Please, pitch in and do what you can.

Mr. Daryanani has an “Outperform” rating on Apple shares. His price target on the shares is $380.

Monetizing A.I. in Creator Studio

Evercore’s A-through-D was probably happy to read Monday that Apple’s already moving on A.I. monetization. A piece from 9to5Mac says heavy users of Apple Creator Studio’s Logic Pro can now “Buy More Usage.” That’s actually how it appears in the menu. “With Logic Pro’s latest update,” says 9to5Mac, “if you select Logic Pro from the menu bar, then ‘Intelligence Features’ and ‘Show Usage,’ there’s an option to ‘Buy More Usage.’”

It honestly sounds confusing. “The only option,” according to the piece, “is a $49.99 one-time purchase of an ‘intelligence usage pack.’” The report says:

• They don’t support Family Sharing and can be used only by the Apple Account you were using for iCloud when the purchase was made.

• Unused additional usage purchased with intelligence usage packs roll over from month to month and expire 12 months after purchase.

• Additional usage gets consumed for relevant features only after you’ve reached your monthly limit in any given month.

So it all sounds metered. It’s unclear though, at least from this article, whether the value changes as compute costs change. I mean, are you buying a forever stamp or you buying access to a variably priced commodity?  Put another way, will the $50 one spends be worth less if compute costs rise, which - let’s face it - they’re gonna?

Don’t worry, non-musical creatives - your chance to “Buy More Usage” is probably coming soon. “Right now the only app that lets you buy additional AI usage is Logic Pro,” according to 9to5Mac:

…but when the rest of the already-announced Apple Creator Studio updates debut this month, usage packs are expected to be available in Final Cut Pro, Pixelmator Pro, and the iWork suite as well.

yay.