Peloton’s New Fee Punishes Secondhand Buyers – This cannot be normalized!

Summary

In this episode, Lewis Rossman discusses the issue of ownership in the digital age, using the example of Peloton's treadmills. He criticizes the company's practice of charging a $95 activation fee for used equipment, arguing it's an unnecessary expense for consumers. Rossman emphasizes the importance of true ownership and the right to repair, suggesting alternatives to purchasing expensive fitness equipment. He also critiques Peloton's business model, pointing out the company's financial struggles and suggesting a more consumer-friendly approach to increasing revenue.

Takeaways

• 🏃 The host, Lewis Rossman, critiques the concept of ownership in the context of treadmills and connected fitness devices.
• 🤔 Lewis questions the necessity of buying a treadmill when outdoor exercise options are freely available.
• 📈 He discusses Peloton's 2024 shareholder letter, highlighting the company's financial struggles and net losses.
• 💸 Peloton introduces a $95 used equipment activation fee for US and Canadian customers, which Lewis views as an unfair practice.
• 🔗 Lewis argues that cloud-connected devices give companies too much control over consumer ownership and use.
• 💭 He criticizes the idea of paying a fee to use a device that has already been purchased, comparing it to other products where no such fee exists.
• 💡 Lewis suggests that Peloton could have increased the price of their treadmills to compensate for financial losses instead of charging activation fees.
• 📊 The host points out that the activation fee is unlikely to solve Peloton's financial problems, given the scale of their net losses.
• 🏋️‍♂️ Lewis advocates for free outdoor exercise as an alternative to purchasing expensive fitness equipment.
• 📹 The video concludes with a call to action for viewers to consider the true cost and value of fitness equipment and services.

Q & A

What is the main topic discussed in the video script?

The main topic discussed in the video script is the concept of ownership and the issues surrounding the usage and resale of Peloton treadmills, particularly the activation fee imposed on used equipment.

What is the host's opinion on buying a treadmill?

The host, Lewis Rossman, is against buying a treadmill, suggesting that most people who buy them end up not using them and they turn into clothes racks instead.

Why does the host suggest going for a run or swimming instead of buying a treadmill?

The host suggests going for a run or swimming as alternatives to buying a treadmill because these activities are free and do not require the purchase of equipment that might go unused.

What is the purpose of the $95 used equipment activation fee mentioned in the script?

The $95 used equipment activation fee is a one-time charge imposed by Peloton for users who purchase used equipment from the secondary market to ensure they receive the same onboarding experience as new customers.

How does the host feel about the activation fee for used Peloton equipment?

The host is critical of the activation fee, viewing it as an unnecessary charge that infringes on the concept of ownership and is a poor business decision by Peloton.

What does the host suggest as an alternative to charging an activation fee?

The host suggests that Peloton could instead increase the cost of the treadmill at the point of sale, which would be more acceptable to customers than charging a fee for used equipment.

What financial issues does Peloton seem to be facing according to the script?

The script indicates that Peloton is facing significant financial issues, with repeated mentions of net losses in the millions of dollars.

Why does the host believe that the $95 fee is not a solution to Peloton's financial problems?

The host believes that the $95 fee is not a solution because the scale of Peloton's financial issues is much larger than what the fee could address, and it alienates customers.

What is the host's stance on the right to repair and ownership?

The host is a strong advocate for the right to repair and ownership, arguing against practices that restrict the use of a product after it has been purchased.

How does the host feel about the executives' decision to impose the activation fee?

The host is critical of the executives' decision, calling it 'stupid' and suggesting that it is both an anti-ownership practice and a poor business strategy.

Outlines

00:00

🏃‍♂️ The Illusion of Treadmill Ownership

Lewis Rossman, the host of 'How You're Getting Effed', opens the episode by challenging the concept of ownership in the context of treadmills, suggesting that most people end up not using them and they turn into clothes racks. He criticizes the idea of needing a cloud connection for a perpetual license to use what you own. Rossman then discusses a 2024 shareholder letter from Peloton, a company that has introduced a $95 activation fee for used equipment in the US and Canada. This fee is seen as a way for the company to monetize secondary market sales, which they do not directly profit from. Rossman argues that this approach is not only anti-ownership but also a sign of poor business strategy, as it alienates customers and could have been avoided by simply increasing the product's initial cost.

05:03

💸 Peloton's Misguided Fee Strategy

In the second paragraph, Rossman continues his critique of Peloton's business practices, focusing on the company's financial struggles as evidenced by their repeated net losses. He suggests that the $95 activation fee for used equipment is a desperate attempt to generate revenue and will not solve the company's underlying issues. Rossman proposes an alternative strategy where Peloton could have increased the original price of the treadmill to cover costs without penalizing customers who sell or buy used equipment. He emphasizes the importance of not alienating customers with fees for something they've already purchased and encourages people to consider free outdoor alternatives for their fitness needs.

Keywords

💡Ownership

Ownership refers to the legal right to possess or control something. In the context of the video, it highlights the issue of consumers not having full control over products they purchase, particularly when it comes to the activation and use of cloud-connected devices. The script mentions the concept of 'you will not repair what you own' and 'you will not be able to use what you own without connecting it to a cloud computer,' emphasizing the limitations imposed on consumers by companies that control access to their products post-purchase.

💡Treadmill

A treadmill is a piece of exercise equipment designed for walking or running in place. The video uses the treadmill as a metaphor for the broader issue of ownership and the 'right to repair' movement. The host suggests that people often buy treadmills with the intention of using them but end up not using them, turning them into 'clothes racks.' This serves as a cautionary tale against purchasing products that may not serve their intended purpose and contribute to the discussion on the value and utility of ownership.

💡Peloton

Peloton is a company known for its internet-connected exercise equipment and subscription fitness classes. In the script, Peloton is criticized for its business practices, specifically for introducing a $95 activation fee for used equipment. This fee is seen as a way for the company to monetize the resale of its products, which the host argues is an anti-ownership practice that negatively affects consumers' ability to fully own and use the products they purchase.

💡Cloud-connected devices

Cloud-connected devices are smart products that rely on internet connectivity to function fully, often requiring access to a company's servers. The video discusses the downside of such devices, where the company can control or restrict the use of the product post-purchase, as seen with the Peloton activation fee. This highlights the potential loss of control and autonomy for consumers over the products they own.

💡Right to Repair

The 'Right to Repair' is a movement advocating for consumers' ability to repair their purchased products without restrictions imposed by manufacturers. The video touches on this concept by criticizing Peloton's activation fee for used equipment, which is seen as a barrier to the right to repair, as it forces consumers to pay additional fees to use a product they have already purchased.

💡Activation fee

An activation fee is a one-time charge required to activate or use a product or service. In the video, Peloton's introduction of a $95 activation fee for used equipment is critiqued as a money-making tactic that infringes on the consumer's ownership rights. The host argues that this fee is unreasonable and a sign of poor business practices.

💡Financials

Financials refer to the financial data and reports of a company, including profits, losses, and other financial health indicators. The script mentions Peloton's financials, pointing out the company's net losses as a reason for its introduction of the activation fee. The host suggests that the fee is a desperate attempt to address financial issues rather than a sustainable business solution.

💡Consumer psychology

Consumer psychology is the study of consumers' behavior and the psychological processes behind their purchasing decisions. The video uses the example of charging $175 for a mattress with $100 shipping versus $300 with free shipping to illustrate how consumer psychology can be manipulated. The host argues that Peloton could have used similar tactics to address its financial issues without resorting to the activation fee.

💡Nickel and diming

Nickel and diming refers to the practice of charging small additional fees for a product or service. The video criticizes Peloton's activation fee as a form of nickel and diming, where the company is seen as trying to extract extra money from consumers in a way that is perceived as unfair and irritating.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The script suggests that if Peloton had attributed the activation fee to factors like inflation or increased costs of raw materials, it might have been more acceptable to consumers, as it would align with the broader economic context.

💡Exercise alternatives

The video promotes alternative forms of exercise to using a treadmill, such as running outside or swimming in a lake. These alternatives are presented as cost-effective and accessible ways to stay fit without the need to purchase expensive equipment, reinforcing the theme of questioning the value of certain purchases and advocating for natural and free ways to maintain health and fitness.

Highlights

Introduction to the concept of ownership with treadmills and the common issue of them becoming clothes racks after purchase.

Critique of the idea that people buy treadmills with the belief they will exercise more indoors, which often leads to the treadmill being underutilized.

Discussion of a 2024 shareholder letter from Peloton, a publicly-traded company, and the issues it raises regarding ownership and activation fees.

Peloton's introduction of a $95 used equipment activation fee in the US and Canada for secondary market sales.

Concerns about the implications of cloud-connected devices and the potential for companies to control access post-sale.

The importance of the ability to connect to Peloton's server for access to workout programs, which is a significant part of what customers are buying.

Critique of the $45 monthly cost for workout programs and the broader issue of the right to repair and ownership.

Argument against the practice of charging a fee for the transfer of a device from one person to another for activation purposes.

Analysis of Peloton's financials, showing significant net losses, and the ineffectiveness of the $95 fee as a solution.

Suggestion that Peloton's financial problems are more significant than the activation fee can address.

Proposal to increase the cost of the treadmill to generate more revenue instead of imposing an activation fee.

Discussion of consumer psychology and the difference between perceived value and actual cost in product pricing.

Critique of Peloton's executive decisions and the potential negative impact on customer relations.

Advice to consumers to opt for free outdoor exercise alternatives instead of purchasing expensive equipment.

Conclusion emphasizing the importance of free outdoor exercise and the unnecessary costs associated with certain fitness equipment.

Final thoughts on the absurdity of charging fees for the use of products that have already been purchased.

Transcripts

hey everybody how's it going hope you're

having a lovely day welcome to today's

episode of how you're getting effed I'm

your host Lewis Rossman in today's

episode of you will not repair what you

own you will not be able to use what you

own without connecting it to a cloud

computer you will not be able to use

what you own at all because the

activation server has been turned off on

your Perpetual license we're going to be

talking about the concept of ownership

with treadmills you know that thing that

after you buy it 3 weeks later it turns

into a clothes rack that thing this is

yet another reason that you shouldn't

buy a treadmill and if you want to

exercise simply go for a run around the

block go swimming in a lake do anything

other than buy a that you know in your

heart of hearts you're not going to use

the reason 99% of people buy treadmills

is because they believe that they will

go exercise if they are able to run

inside without going outside however if

you are at the point in your life where

you are not willing to walk outside of

your house to do exercise most likely

your treadmill that you purchase is

going to become a clothes rack just how

I know I have owned a treadmill before

never used it every single person I know

that buys a treadmill never uses it they

become clothes racks all of them now

today we're going to be going over a

quarter for 2024 shareholder letter from

pellaton themselves they are a publicly

traded company so they do release a

letter to shareholders and there's some

funny content in here that I think is

very important to go over in this video

if I figure out how to actually be a

proper video releaser and all that stuff

on YouTube and actually have it show up

so it says over here although these

secondary market sales are not from

pellaton owned channels or any of our

own distribution Partners we want to

ensure these new members receive the

same high quality onboarding experience

that pelaton is known for with that in

mind we were initiating a new onetime

$95 us used equipment activation fee in

the US and Canadia they're talking about

the secondary Market continuing to

deliver a steady stream of paid

connected fitnesses but they're also

saying they're not buying it from us and

because they're not buying it from us

we're not getting as much money out of

these users as we'd

want since this thing connects to the

internet to make it work that means if

you want to make it work they always

have the ability to [ __ ] with you that

is what happens with Cloud connect Ed

devices as long as a cloud connected

device is not connecting to your own

server sucks to suck now a big part of

pelaton a big part of what it is you're

buying here is the ability to actually

connect to their server and get access

to all their workout programs routines

and everything else and these programs

typically cost somewhere around I think

like $45 a month so I could hear people

saying Louis if you're willing to spend

over $500 a year then what's the point

of complaining about an I shut the [ __ ]

up you little sip I'm so sick and tired

of those people I genuinely am they make

the world a worst place they are the

reason progress has moved backwards

rather than forwards when it comes to

Freedom right to repair and ownership in

general we have not accepted that when

you transfer a device from one person to

another that you have to give the

company a fee simply to be able to use

that device if I sell my Shore RMC bt2

over here which is the best Bluetooth

adapter on Earth for mmcx headphones to

somebody else I don't have to pay Shore

nor does the person that bought it have

to pay sure in order for that thing to

work if I sell one of these Amazon hard

drives that that Chris got that doesn't

work to somebody else uh assuming that

they don't shoot me first I don't you

know they don't have to give money to

Itachi or Toshiba in order for it to

work it's not a thing if these axium M3

speakers in front of me if I sell them

to somebody else the transaction is

between

myself and the person I sold it to

that's it nobody else is supposed to be

involved in that transaction now if you

want to take a look over here it becomes

very very obvious really quickly why it

is they're doing this and let me tell

you that this is not going to fix the

problem if you look at their financials

over here you will see if you want to

get an idea why they're doing this and

why in my opinion this $95 is really

pissing into the ocean with regards to

this company's problems let's just hit

contrl F in this document and search for

the words net loss I'm not even going to

read what they all are because at this

point when the numbers are this large it

doesn't even matter net loss 30 million

551 million 67.3 milon 241 million net

loss 241.7 million 167.5 million 30.5

million 30 .5 million 2418 million

551.071 billion and it goes on and on

and on charging your customers a $95 fee

after they've sold the product something

tells me you guys have bigger problems

to deal with personally I don't believe

that this is going to solve peleton

problems when you look at the number of

users of patons you look at how many

people are selling them and you look at

the $95 fee this is again and as I said

pissing into the ocean here if you

charge somebody $175 for a mattress and

$100 for shipping that is a ripoff if

you charge somebody $300 for matches and

free shipping well that's a deal that is

consumer psychology and unfortunately

that is the case even when somebody is

not getting screwed here you are

actively trying to screw them you are

saying upfront in this thing you know

you're out of money you need to make

more money here's a way to try and make

more money for me I'm not even as

bothered at this anti- ownership bull

crap as I am at the stupidity of the

executives of this company if you need

to make more money again $175 plus 100

shipping ripoff 300 free shipping it's a

deal this treadmill costs over $11,000

if you need to make more money if

something's wrong here add 50 or 90

bucks onto the cost of the treadmill you

know that 100% of the users that buy

this are not going to sell the treadmill

so you wouldn't even have to add $95 to

the cost of it if you want to make the

extra money if you wanted to make that

extra money from when they're used do

you wanted to make up for it you could

charge an additional 30 to 60 bucks for

the treadmill and you'd be fine and when

you're talking about a device that cost

something like $1,400 an additional $45

you could just say listen I know

inflation cost of bare Metals going up

that go into the treadmill cost of Labor

political climate whatever the hell else

and people would accept it far more than

they would accept a $95 activation fee

you know from a sheer business point of

view this is so [ __ ] stupid because

you're aggravating so many people when

you don't have to you could actually

make the same amount of money if not

more amount of money that you would make

via this fee by simply raising the cost

of your product a little bit that people

would accept based on the cost of the

product as it is but charging this type

of fee so that somebody could sell the

product for the ability to use something

they already bought and paid for it

feels like nickel and daming and people

don't like that [ __ ] and I hope that

people don't accept it I hope that they

just do the thing that they're supposed

to do and if you want to go running go

outside I do that in the morning and

it's free sometimes if I want something

that's a little bit lighter on my knees

I'll go over to Jessica Hollis park or

something like that or maybe Barton

Springs and I'll just go swimming in the

water would cost me

nothing nothing and that's how it's

supposed to be if I want to lift weights

if I Want to Get Swole I got to buy

weights I got to May go to a gym stuff

like that but cardio my friends is free

it's everywhere go outside trust me you

won't kill you that's it for today and

as always I hope you learned something

I'll see you all on the next video bye

now