Spotify for dishwashers: what if we had a subscription for every good we used?

Libraries are great. You pay a reasonable fee (in some countries, it's free) to become a member, you borrow as many books as you like, you read them, and you return them after use. It keeps the cost of reading low, the products get used all the time instead of just once, and fewer copies can serve a large group of people. Genius!

Wouldn't it make sense to apply the same concept to everything else we consume, from cars to washing machines? Adopting this concept for ever more consumer goods could be smart for business, too: manufacturers would retain ownership of their products and simultaneously get regular revenue streams.?

Maybe this doesn't sound like the world you know; the world of Black Fridays, Cyber Mondays and 363 other days in which we are encouraged to buy more stuff. But the current setup is simply not sustainable.?

Earth Overshoot Day keeps arriving sooner every year: by 28 July, humanity had already used up all the natural resources that our planet can regenerate for an entire year. The world acts as if we have 1.75 Earths, when we have just the one. Humankind needs to consume less, produce less, and make whatever is produced last longer.

Everything-as-a-service

Businesses are starting to pay attention to this environmental dilemma, and changing their sales strategy to adapt to this reality. Dutch conglomerate Philips provides Amsterdam Schiphol Airport with "light as a service" and retains ownership of their lamps. German manufacturers Bosch and Miele, meanwhile, have rolled out subscription services for their? appliances, turning huge household investments into just another subscription, like a Spotify for dishwashers.

"The shift of ownership from consumers to producers is a big idea, and its time has come," Vojtech Vosecky, a circular economist based in Sweden, tells LinkedIn News Europe. “Shifting the ownership to producers allows for using fewer resources, producing less waste as well as providing higher quality services over time. The challenge is to scale the existing solutions, fast."

There are signs that the wheels are already set in motion. A report from Bain & Company notes that a "tectonic shift" is underway in manufacturing. The consulting firm predicts that most hardware will be sold "as part of bundled solutions including software and services" by the end of the decade. European manufacturers expect the percentage of business revenue from Equipment-as-a-Service (EaaS) sales to grow from 22% today to 39% in the next five years, according to Bain’s research.?

"I think the concept of Products-as-a-Service will begin to permeate all levels: from the everyday consumer and all the way up to industry," Laxmi Haigh, editorial and writing lead at Amsterdam-based ngo Circle Economy, writes in an email to LinkedIn News Europe.

"Equipment-as-a-Service in industries such as machinery shows that sharing can reach parts of the economy that have a pretty high environmental impact. It can take quite a few different forms in this arena, from leasing to selling a product combined with a related service, like the maintenance or upgradability of parts, for example."

This shift will also give manufacturers an incentive to build products that can stand the test of time. If a manufacturer remains the owner of the product it produces, suddenly its profits depend not on the quantity of goods sold, but their longevity.?

Will companies and consumers get on board?

The “products as a service” transition will require significant change, from both manufacturers and consumers. Producers would need to adjust to a subscription model where revenues are spread over time, rather than upfront at the point of sale. And consumers would need to shed the idea that what they own reflects who they are.?

Businesses are very good at adapting when their bottom line is involved. When Philips began to offer light as a service, they had to pay for the lamps as well as the electricity. The lightning giant designed circular bulbs that lasted 75% longer and used 50% less energy.?

The auto industry has also begun to embrace this kind of business evolution. The idea that every household needs to own a car (and oftentimes more than one) is fading. The share of private cars as a percentage of urban transport kilometres worldwide is expected to drop from today's 67% to 40% in 2040. Car manufacturers can read the signs and are already changing tack. BMW wants customers to pay a monthly fee for optional features, while Stellantis, General Motors and Ford are looking to make $20bn per year from software services by 2030.?

Carmakers like the idea of recurring revenues, and these services may help boost brand loyalty.?

But making this evolution stick will call for a fundamental reconsideration of what it means to be a consumer, notes Vosecky:

"Ownership is often about status and image, and rental can be perceived negatively. This is also the reason Product-as-a-Service models have had much more success in the business-to-business markets, rather than business-to-customers."

There are signs this cultural sticking point has begun to ease up. Younger generations prefer to spend their money on "experiences" such as concerts and travel instead of "possessions", like cars or watches. In Germany, the Netherlands and Finland, only a small group of people who don't own a car aspire to purchase one. As one Miele exec recently explained to The New York Times, people in their 20s don't care who owns the washing machine, they just need clean garments.?

Not every company can act as a library, but they can take lessons from them. Libraries have been around since the 7th century BC to demonstrate the value of sharing goods with a large number of people. And by turning the focus to circularity, the onus will be on producing better, more durable products instead of selling as many as possible.?

"Call it how you want: leasing economy, subscription economy, circular economy, but it is here," argues Vosecky. "Will we see more of it? Frankly, we don't have a choice. We need to get away from what has gotten into this mess in the first place. Every major corporation has plans to go circular, and retaining the ownership of whatever it is they are putting out there is at the core of that transition."

?? What do you think about the idea of turning consumers into "borrowers" rather than "owners"? Do you think manufacturers retaining ownership of goods could create more durable products? Will consumers welcome lower expenses for expensive goods or might they become overwhelmed by a subscription overload?

This article is part of?LinkedIn News Europe’s?Big Ideas 2023. What’s your prediction for the coming year? Share your thoughts with?.

• Reported by: Pieter Cranenbroek?
• Edited by:?Scott Olster, Jennifer Ryan, Lynn Chouman
• Creator Manager:?Sarah Ohlson