Peloton’s New Fee Punishes Secondhand Buyers – This cannot be normalized!
Summary
TLDRIn 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
🏃♂️ 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.
💸 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.
Mindmap
Keywords
💡Ownership
💡Treadmill
💡Peloton
💡Cloud-connected devices
💡Right to Repair
💡Activation fee
💡Financials
💡Consumer psychology
💡Nickel and diming
💡Inflation
💡Exercise alternatives
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
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