Buy or Subscribe: How to Pay the Least for the Media You Love the Most
To buy a subscription or to pay per download: That is the question.
Monthly subscriptions provide you unlimited access to a service for a flat fee, but is it truly the right deal for you? For example, you may sign up for an unlimited DVD-only Netflix plan, only to find your DVD sitting untouched and gathering dust for a whole month on the counter.
Here is the ultimate guide to determining whether a subscription or a pay-per-use plan is the best for you.
When deciding whether to subscribe to a music streaming service or pay per download, here are the two main criteria to use.
Frequency of Use
Take a look at iTunes: $1.29 seems cheap for one song, until you start doing the math.
Let's say you're a big fan of The Strokes, and you are happy to buy every single record that they release. That's a total of 118 songs on iTunes ranging from $0.99 to $1.29. For simplicity let's say that each song costs $1. That's $118 for getting your daily fix of The Strokes.
If you have more bands that you like so much as to buy every single one of their records, then you can see how a music subscription service, such as Spotify or Pandora, will save you money. For example, a Spotify Unlimited subscription costs $4.99 per month, a total of $59.88 per year, and lets you listen to every record from The Strokes and every other band that you like on your desktop. You don't listen to just one band, do you?
On the other hand, if you barely listen to music, then you are better off using the free version of a service and just paying per song. For example, you could subscribe to the free version of Spotify, Pandora, iHeartRadio, or Rdio to discover music, and just pay to download songs that you really like.
Keep in mind that the free versions often have plenty of ads. Users of the free version of Spotify report to hearing ads as often as every three of four songs. The only way to get rid of ads is to upgrade to the paid version (e.g. switching from the free to paid version costs you $4.99 per month for Pandora and $9.99 per month for Google All Access) or pay per download.
Some services have bigger catalogues than others. While iTunes has a catalogue of over 26 million songs and Google All Access has "millions," Pandora has over 900,000 songs, slim in comparison. This means that even if you are saving by using the free version of Pandora, you might end up listening to the same songs over and over.
While some services boast impressive catalogues, they may still not be the right fit for you. For example, if Garth Brooks, Tool, and Def Leppard are your favorite musicians, then iTunes is not a good place to shop because none of them sell their music there.
If you are a hardcore fan of Thom Yorke and like to keep up on his newest releases, then a Spotify subscription is no good. He has been very vocal on his criticism of Spotify, so you cannot find there any of the material from his band Atoms for Peace.
How to Choose
When it is a better deal to pay per song download:
You don't listen to music that often and you put a premium on getting exactly the songs that you want.
If you prefer getting the most bang for your buck and are fine with not having the latest music. For example, on Google Play Music, you can buy entire albums starting at $3.99, but they may not be from this decade.
When you are OK with a smaller library of songs, but that you really, really enjoy.
Savings tip: Buying a whole album often provides savings, for example buying individual tracks from Carlos Santana's Corazón (Deluxe Version) costs $1.29 on iTunes, but getting the entire 15 tracks costs only $11.99.
When it is a better deal to get a paid subscription:
You listen to a lot of music throughout the day and want to have access to a vast catalogue, you are better off with a monthly subscription for unlimited listening to Spotify or Google All Access.
You prefer to have music available on any computer or mobile phone, since subscription services offer more flexibility than pay-per-download ones.
When you cannot stand having ads on top of your music, but still want access to a large library of music.
To do an apples to apples comparison of music subscription services, make sure to read the fine print. While a Pandora $4.99 monthly subscription is cheaper than a $9.99 Spotify Premium one, Pandora limits you to six skips per hour.
Savings tip: A paid subscription allows you to know exactly how much you are spending in music. For example, a Rdio monthly subscription costs $9.99, so you can already budget in advance an annual expense of $119.88.
When selecting pay-per-download or streaming, frequency of use and available catalogue are also important criteria to consider. But you also need to consider convenience of use.
Frequency of Use
Let's imagine that you watch a movie per week at home — four movies a month — and run some numbers.
At $1.25 per DVD on Redbox, you would spend $5 per month.
On Amazon Prime, you would pay $99 per year,or $8.25 per month.
On Amazon Instant Video, it depends on whether you buy or rent, and whether you want HD or SD. On the low end, renting four SD movies per month is about $11.96. On the high end, buying four HD movies is about $55.96.
On Netflix, you would spend $7.99 per month for online streaming only, and an additional $7.99 for DVD-by-mail service. Not including the additional $2/month for Blu-ray discs. That's a potential $17.98 per month!
iTunes works similarly to Amazon Instant Video. You can rent or buy in HD or SD, but prices are higher. Renting four SD movies starts at $15.96 and buying four HD movies can be as high as $79.96.
This means that when you pay per download you have to be really careful because your movie watching can become really expensive really fast, especially when buying HD movies.
Make sure to check the available catalogue from the service that you choose before you commit to subscribe to it. At $99 per year, Amazon Prime seems like a great deal, until you realize that you have less than half of the movies that you can watch or Netflix or iTunes.
If you can clock over 20 movies per week, then you need a big catalogue and a Netflix subscription might be the better option. While Amazon offers plenty of great classics, such as "The Graduate" and "Breakfast at Tiffany's," it is very thin on recent titles.
Why would you pay for a streaming service that has nothing for you to watch?
Convenience of Use
From a pure economical point of view, $5 per month on Redbox is the better deal for four movies. However, this doesn't take into consideration several factors, such as driving distance to the nearest kiosk, wait time in line, and deadline to return DVDs. With purely streaming services, you don't have to worry about any of those factors.
On the other hand, something that iTunes, Netflix, and Amazon clearly lack are promo codes. If you subscribe to the SMS or email alerts from Redbox, you will often receive promo codes that can take from $0.25 to $1.25 per movie rental. If you are a bargain hunter, you might prefer to rent a movie only when you can get it for free. (See also: Never Pay for a Redbox Rental Again)
How to Choose
Pay per movie:
If you prefer to own movies to watch over and over, then paying per movie is the only choice.
When you can find promo codes and rent very few movies, paying per movie can provide substantial savings.
Savings tip: Choose HD movies only when truly necessary. The higher resolution of the HD version of "Avatar" may go unnoticed by your toddler or older auntie.
Get a paid subscription:
Frequent movie watchers should only go with subscription services.
If you want to watch as many HD movies as possible, then a subscription service for unlimited viewing is more economical.
Savings tip: Working parents that have very little time and have children at home are better off with a subscription service. The convenience of not having to do anything extra to get their kids a movie is priceless.
TV Shows and Series
When it comes to paying per TV show or paying for a subscription, available catalogue, and equipment and service are the main criteria for comparison.
A very detailed TV show library comparison shows that you can slice the pie in any way that you want. If you take a look at the 250 most popular TV shows according to IMDB on Netflix, Amazon, Hulu Plus, Google and iTunes, you'll learn that:
Amazon Prime has less than half the streaming selection of Netflix.
Amazon and Netflix show more TV episodes than than Hulu Plus, but Hulu Plus offers more current episodes.
Netflix is the king of exclusive TV shows.
iTunes and Amazon Instant Video offer the most TV shows for purchase.
Make sure to check the available catalogue from the service that you choose before you commit to using it. Strategic alliances, such as HBO choosing Amazon over Netlfix for streaming HBO shows, could affect your decision in choosing one service over another. If you want to stream the last season of Entourage, you are limited to Amazon, Vudu and iTunes.
Something that should be clear is that paying per TV show is an expensive proposition. Unlike watching a movie, you need several episodes to truly enjoy a TV show. My suggestion is to pick your top 10 TV shows and evaluate all the services based on how many of those shows they offer.
Available Equipment and Service
You shouldn't pay for what you already have.
If you already have a cable subscription, you may already have a box that allows to watch TV shows on demand or record them at no additional price. Make sure to check if you have already have access to those shows before paying extra at Amazon, Netflix, iTunes, or Hulu. Also, already having cable with HBO gives you access to shows that you cannot find anywhere else (e.g. current season of "Game of Thrones").
On the other hand, also evaluate if it makes sense to keep your cable subscription. The typical cost for cable plus HBO is about $100 per month. In order to for it to be worth it, you'll need to be watching 6-8 shows a week. If you only follow one TV series per month, you could get an entire season in HD for less than $40 on Amazon Instant Video (e.g. 10 episodes of Game of Thrones Season 1). While there is a waiting period for the season to become available, from a purely economical perspective, cable doesn't make sense then anymore. (See also: How Everyone Can Cut Cable and Still Watch the Shows They Love)
Still, even at a single season for a TV show, a monthly streaming subscription is still cheaper than paying per episode.
How to Decide Between PPV and Subscription?
The key to determining which one is the better deal is to be more aware of your habits.
Specifically, you need to:
Determine your entertainment needs. Remember to consider frequency of use, available catalogue, convenience of use, and available equipment and service, as needed.
Find the service that best matches those needs at the lower cost possible. Before fully committing to a subscription service, give it a test run with a free trial when available.
Frequently check for available discounts and promo codes.
Reevaluate every few months to ensure that your choice is still the better deal. If not, then evaluate all available options and find the superior one. This is a competitive market at the moment. Catalogues are always changing, as are pricing models and promotions.
By following these steps, you will find out what type of service is the better deal for you.
Do you prefer subscription or pay per use services, and what are your favorites?